FOURTH AMENDED AND RESTATED ADVISORY AGREEMENT
ASHFORD HOSPITALITY PRIME, INC.

 

THIS FOURTH AMENDED AND RESTATED ADVISORY AGREEMENT (this “ Amended Agreement ”), is dated as of January 24, 2017, by and between ASHFORD HOSPITALITY PRIME, INC., a Maryland corporation (the “ Company ”), ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP, a Delaware limited partnership (the “ Operating Partnership ”), ASHFORD PRIME TRS CORPORATION, a Delaware corporation, ASHFORD INC., a Maryland corporation (“ Ashford Inc. ”), and ASHFORD HOSPITALITY ADVISORS LLC, a Delaware limited liability company which is the operating company of Ashford Inc. (“ Advisors LLC ” and, together with Ashford Inc., the “ Advisor ”).The parties to this Amended Agreement are sometimes referred to herein individually as a “ Party ” or collectively as the “ Parties .” Unless the context otherwise requires, the term “Company” and the term “ Advisor ” shall collectively include such Party and its respective Subsidiaries (including, with respect to the Company, the Operating Partnership and in the case of the Advisor, all Majority or Minority Subsidiaries). All capitalized terms used in this Amended Agreement shall have the meaning ascribed to those terms in Section 24 or as otherwise defined elsewhere in this Amended Agreement unless the context clearly provides otherwise.

 

WHEREAS, the Company invests primarily in high revenue per available room luxury hotels;

 

WHEREAS, the Parties entered into an Advisory Agreement dated and effective on November 19, 2013, which was amended and restated on May 13, 2014, again amended and restated on November 3, 2014 and again amended and restated on June 10, 2015 (the “ Existing Advisory Agreement ”), pursuant to which the Advisor agreed to perform certain advisory services identified in the Existing Advisory Agreement, on behalf of, and subject to the supervision of, the Board of Directors;

 

WHEREAS, the  Company and the Advisor have discussed the desirability of certain amendments to the Existing Advisory Agreement, and, in doing so, subject to the Company Stockholder Approval, to amend and restate the Existing Advisory Agreement to include these amendments;

 

WHEREAS, the Company desires to continue to avail itself of the experience, brand relationships, lender and capital provider sources and relationships, service provider and vendor relationships, asset management expertise, sources of information, advice, assistance and certain facilities of the Advisor and to have the Advisor continue to provide the services hereinafter set forth, on behalf of, and subject to the supervision of, the Board of Directors, all as provided herein; and

 

WHEREAS, the Advisor is willing to continue to provide such services to the Company on the terms set forth herein;

 

NOW, THEREFORE, in consideration of the mutual covenants set forth in this Amended Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

 

1.   APPOINTMENT OF ADVISOR.

 

(a)    The Company appoints the Advisor as the Company’s exclusive advisor of the Company pursuant to the terms of this Amended Agreement and acknowledges the continued role of the Advisor as the exclusive advisor of the Company, to provide the management and real estate services specified herein on the terms and conditions set forth in this Amended Agreement and the Advisor hereby acknowledges and accepts such appointment.

(i)        tax, legal, accounting, advisory, investment banking and other third party professional fees; Board of Directors’ fees, retainers and expense reimbursements, taxes and assessments on income or property and taxes as an expense of doing business;

 

(ii)       any deposits or retainers required by a third party prior to providing services required by the Company or the Advisor;

 

(iii)       underwriting and brokerage fees and charges;

 

(iv)       costs associated with insurance (including errors and omissions insurance requested by Section 8.2 purchased by the Advisor);

 

(v)       interest and fees and expenses arising out of borrowings made by the Company, including, but not limited to, costs associated with establishing and maintaining any of the Company’s credit facilities, other financing arrangements, or other indebtedness of the Company (including commitment fees, accounting fees, legal fees, closing and other similar costs) or any of the Company’s securities offerings;

 

(vi)       expenses connected with communications to holders of the Company’s securities and other bookkeeping and clerical work necessary in maintaining relations with holders of such securities and in complying with the continuous reporting and other requirements of governmental bodies or agencies, including, without limitation, all costs of preparing and filing required reports with the SEC, the costs payable by the Company to any transfer agent and registrar, expenses in connection with the listing or trading of the Company’s securities on any exchange, the fees payable by the Company to any such exchange in connection with its listing, costs of preparing, printing and mailing the Company’s annual report to the Company’s stockholders and proxy materials with respect to any meeting of the Company’s stockholders and any other reports or related statements;

 

(vii)       travel and entertainment expenses;

 

(viii)       conference sponsorships and other costs and expenses related to conferences;

 

(ix)        transaction diligence and closing costs;

 

(x)         dead deal costs or distributions paid by the Company;

 

(xi)       costs and expenses associated with administering all equity awards or compensation plans established by the Company, including the value of awards made by the Company to the employees, officers, Affiliates and representatives of the Advisor;

 

(xii)       expenses (including the Company’s pro rata portion of rent, telephone, printing, mailing, utilities, office furniture, equipment, machinery and other office and overhead expenses) relating to any office(s) or office facilities, including disaster backup

recovery sites and facilities, maintained for the Company or the investments of the Company, the Advisor or their Affiliates required for the operation of the Company;

 

(xiii)       any costs and expenses incurred by the Advisor to enforce its rights under Section 12 , Section 16 or Section 19 but only to the extent that the Advisor is the prevailing party in the applicable Proceeding; and

 

(xiv)       any other costs incurred or paid by the Advisor that the Advisor believes, in its sole discretion, are reasonably necessary for the performance by the Advisor of its duties and functions under this Amended Agreement and including any expenses incurred by Advisor to comply with applicable laws or governmental rules or regulations that impose duties on the Company or the Advisor in its capacity as advisor to the Company.

 

(b)       To the extent that any expenses or costs incurred or paid by the Advisor are also attributable to any other entity advised by the Advisor (including, without limitation, Ashford Trust), the Company shall only be responsible for its allocable share of the office and administrative expenses of the Advisor incurred in providing its duties pursuant to this Amended Agreement allocated as reasonably determined by the Advisor in its discretion pursuant to a methodology reviewed by the Audit Committee on a quarterly basis.

 

5.2           Advisory Agreement Matters .

 

(a)     Except as provided below, the Advisor shall be responsible for all wages, salaries, cash bonus payments and benefits related to all employees of the Advisor providing services to the Company (including any officers of the Company who are also officers of the Advisor), provided that the Company shall reimburse the Advisor or be directly responsible for: (i) any expenses for wages, salaries, cash bonus payments and benefits paid by the Advisor to employees providing services related to the Internal Audit Services described in the next sentence, (ii) expenses related to the equity compensation awarded by the Company to employees, officers, Affiliates and representatives of the Advisor pursuant to Section 6.3 below, and (iii) all reasonable international office expenses, overhead, personnel costs, travel and other costs directly related to Advisor’s non-executive personnel that are located internationally or that oversee the operations of international assets or related to Advisor’s personnel that source, investigate or provide diligence services in connection with possible acquisitions or investments internationally (“ International Expenses ”).   The Company shall reimburse the Advisor, on a monthly basis, the Company’s pro-rata portion (as reasonably agreed to between the Advisor and a majority of the Company’s Independent Directors or the Audit Committee, chairman of the Audit Committee or lead director) of all expenses related to (x) employment of the Advisor’s internal audit managers and other employees of the Advisor who are actively engaged in providing Internal Audit Services to the Company, (y) the reasonable travel and other out-of-pocket costs of the Advisor relating to the activities of the Advisor’s internal audit employees and the reasonable third party expenses which the Advisor incurs, in each case, in connection with providing Internal Audit Services, and (z) the International Expenses.  These expenses contemplated by this Section 5.2(a) shall include, but are not limited to, salary, wages, payroll taxes and the cost of employee benefit plans.

 

(b)         The Company also shall pay or reimburse the Advisor for any and all expenses incurred by the Advisor, its board of directors or any committee thereof related to:

 

(i)         the preparation, negotiation and execution of any further amendment of this Amended Agreement initiated or contemplated by the Company or any other third party including with respect to a potential transaction that could result in a Company Change of Control, for any reason, including but not limited to any third party’s interest in proposing, pursuing, evaluating, negotiating or completing a potential transaction that could result in a Company Change of Control, whether or not any amendment to this Amended Agreement is ultimately completed or abandoned and without regard to the status of the preparation and negotiation of any amendment and including but not limited to any discussion and analysis of the terms and provisions of this Amended Agreement or the process whereby services are performed hereunder that occurs in connection with the foregoing; and

 

(ii)        the costs and expenses, including but not limited to indemnification for Expenses pursuant Section 8.3(a) , related to discussion and analysis of, responding to or defending against any Proceeding related to this Amended Agreement or any amendment thereto, including actual or contemplated Proceedings brought by or against third parties by the Advisor, the Company or any other Indemnified Party but excluding any Proceeding brought by a stockholder of the Advisor against the Advisor.

 

(c)         Expenses and costs reimbursable under this Section 5.2 shall include the fees and disbursements of legal counsel (including counsel to the Advisor’s board of directors or any committee thereof) and other consultants, advisors or other professionals retained in connection with the matters described in Section 5.2(a) and any fees and expense reimbursements payable to members of the Advisor’s board of directors for service on any committee of thereof established in connection with the matters described in Section 5.2(a) but excluding, for these purposes, any costs incurred by the Advisor, its board of directors or any committee thereof prior to the date of this Amended Agreement to evaluate or negotiate this Amended Agreement.

 

5.3         Employee Costs .

 

(a)          Except as otherwise set forth herein, or agreed by the Parties, the Company shall have no obligation to reimburse the Advisor for any wages, salaries, payroll taxes, cash bonus payments, employee benefit plan costs and other benefits (“ Employee Costs ”) incurred by the Advisor with respect to employees of the Advisor providing services related to the day-to-day operation of the Company.

 

5.4          Reimbursement Procedures .

 

(b)         No later than forty-five (45) days following the end of the applicable fiscal quarter, the Advisor shall calculate (and provide the Company with a copy of the calculation) the costs and expenses that were actually reimbursable to the Advisor pursuant this Section 5 for each month (each amount, the “ Actual Monthly Reimbursements ”) in the fiscal quarter just ended.  The Company shall have ten (10) business days to review and comment upon the calculation provided by the Advisor.  If the aggregate Actual Monthly Reimbursements payable as calculated by the Advisor for the fiscal quarter just ended exceeds the aggregate Budgeted Monthly Reimbursements paid by the Company pursuant to Section 5.4(a) for the fiscal quarter (the difference being referred to as a “ Reimbursement Underpayment ”), then the Company shall pay the Advisor the full amount of the Reimbursement Underpayment no later than 55 days following the end of the applicable fiscal quarter.  If the aggregate Budgeted Monthly Reimbursements paid by the Company pursuant to Section 5.4(a) for the fiscal quarter just ended is greater than the aggregate Actual Monthly Reimbursements payable as calculated by the Advisor for the fiscal quarter (the difference being referred to as a “ Reimbursement Overpayment ”), then the Advisor shall repay the Reimbursement Overpayment to the Company no later than 55 days following the end of the applicable fiscal quarter.

 

6.           COMPENSATION.  For services rendered by the Advisor, the Company shall pay the Advisor the compensation set forth in this Section 6 .

 

6.1         Base Fee .

 

(a)         The Company shall, on a monthly basis, pay a fee (the “ Base Fee ”) in an amount equal to 1/12th of 0.70% of the sum of (i) the Total Market Capitalization for the prior month, and (ii) the Key Money Gross Asset Value, if any, on the last day of the prior month during which this Amended Agreement was in effect; provided, however in no event shall the Base Fee for any month be less than the Minimum Base Fee.

 

(b)         The Company shall pay the Base Fee or the Minimum Base Fee on the fifth business day of each month based on the calculation in Section 6.1(a) above.

 

6.2          Incentive Fee .

 

(a)         In each year that: (i) Company Common Stock is listed for trading on a national securities exchange for each day of the applicable year; and (ii) the Company’s Total Shareholder Return exceeds the simple average Total Shareholder Return for the Peer Group (the “ Incentive Fee Threshold ”) for the applicable year, the Company shall pay to the Advisor the Incentive Fee.

 

(b)         “ Incentive Fee ” means an amount calculated as:

 

(i)           the amount by which the Company’s annual Total Shareholder Return exceeds the Incentive Fee Threshold expressed as a percentage but capped at 25% (the “ Excess Return ”), multiplied by

 

(ii)         0.05, multiplied by

 

(iii)        the product of (A) the number of shares of Company Common Stock on a fully-diluted basis (assuming, for these purposes, all Common Units and long term incentive partnership units in the Operating Partnership to the extent these units have achieved economic parity with Common Units have been converted into shares of Company Common Stock) multiplied by (B) the Market Price of Company Common Stock at December 31 of the applicable calendar year (or last day of the stub period, if applicable).

 

(c)           With respect to any year that the Company Common Stock is not listed for trading on a national securities exchange for each day of the applicable year, by January 31 of the next year, the Company shall pay to the Advisor an amount equal to:

 

(i)          the Incentive Factor, multiplied by

 

(ii)          the Gross Asset Value of all of the Company’s assets on the last day of the year.

 

(d)          If this Amended Agreement is terminated on a day other than the last trading day of a calendar year, then the Company’s Total Shareholder Return, the Incentive Fee Threshold and the Total Shareholder Return for each Peer Group Member will be calculated using the closing trading price of Company Common Stock and each Peer Group Member’s common stock on the last trading day immediately preceding the date of termination of this Amended Agreement, and the Incentive Fee, if any, shall be reduced proportionately based on number of days in which this Amended Agreement is in effect for the applicable calendar year.

 

(e)          Except as otherwise provided herein, the Incentive Fee, if any, is not due and payable unless the FCCR Condition set forth in Section 6.2(g) is satisfied. Except as otherwise provided herein, any Incentive Fee that is earned by the Advisor shall be due and payable in three (3) equal annual installments with the first installment payable on January 15 following the applicable year for which the Incentive Fee is earned and on January 15 of the next two successive years.  Notwithstanding the foregoing, upon any termination of this Amended Agreement for any reason, any unpaid Incentive Fee (including any Incentive Fee installment for the stub period ending on the termination date) shall become fully earned and immediately due and payable without regard to the FCCR Condition defined below, and shall be included in Net Earnings for purposes of determining any Termination Fee, if applicable, relating to such termination.

 

(f)          Except when the Incentive Fee is due on the date of termination of this Amended Agreement, up to 50% of each installment of the Incentive Fee may be paid, at the option of the Company, in shares of Company Common Stock, with the balance payable in cash

and the number of shares of Company Common Stock to be issued being equal to the portion of the Incentive Fee being paid in shares of Company Common Stock divided by the Market Price of the Company Common Stock on the last trading day of the prior fiscal year or the stub period prior to the payment of the applicable installment of the Incentive Fee; provided, that the entire Incentive Fee must be paid by the Company entirely in cash if, at the time for payment of the Incentive Fee:

 

(i)         the Advisor (or its Affiliates) owns shares of Company Common Stock or Common Units in an amount (determined with reference to the Market Price of the Company Common Stock on the last trading day of the year or stub period) greater in value than or equal to three times the Base Fee actually paid for the preceding four quarters;

 

(ii)        payment in shares of Company Common Stock  would cause, based upon advice from counsel to the Advisor, the Advisor to be subject to the provisions of the Investment Company Act of 1940, as amended (“ Investment Company Act ”);

 

(iii)       the Company Common Stock is not listed on a national securities exchange (or it is reasonably foreseeable that the Company Common Stock will cease to be a listed on a national securities exchange during the next twelve (12) months); or

 

(iv)         payment in shares of Company Common Stock could have or cause, based upon advice from counsel to the Advisor, an adverse effect on the Company’s ability to maintain its status as a REIT or Remington’s ability to maintain its status as an “eligible independent contractor” as defined in Section 856(d)(9) of the Code or would otherwise not be legally permissible for any reason.

 

(g)          Upon determining the Incentive Fee, except in the case of any termination of this Amended Agreement in which case the Incentive Fee for the stub period and all unpaid installments of an Incentive Fee shall be deemed earned and fully due and payable, each one-third installment of the Incentive Fee shall not be deemed earned by Advisor or otherwise payable by the Company unless the Company, as of December 31 of the year immediately preceding the year of the due date for the payment of the Incentive Fee installment, has a FCCR of 0.20x or greater (the “ FCCR Condition ”).  For purposes hereof, “ FCCR ” shall mean the average ratio of the Company EBITDA to the Company Fixed Charges for the previous four consecutive fiscal quarters.

 

6.3          Equity Compensation .  To incentivize employees, officers, consultants, non-employee directors, Affiliates or representatives of the Advisor to achieve goals and business objectives of the Company, as established by the Board of Directors, in addition to the Base Fee and the Incentive Fee, the Board of Directors will have the authority to and shall make recommendations of annual equity awards to the Advisor or directly to employees, officers, consultants, non-employee directors, Affiliates or representatives of the Advisor, based on the achievement by the Company of certain financial or other objectives established by the Board of Directors or otherwise as the Board of Directors sees fit. The Company, at its option, may choose to issue such compensation in the form of equity awards in the Company or the Operating Partnership, unless and to the extent that receipt of such equity awards would adversely affect the

Company’s status as a REIT in which case, the equity awards shall be limited to equity awards in the Operating Partnership. For a period of one year from the date of issuance, any such equity awards in the Operating Partnership shall not be transferable, except by operation of law, without the written consent of the Company in its capacity as the general partner which consent may be withheld in the sole and absolute discretion of the general partner; provided , however , the Advisor may assign, without the consent of the general partner, such equity awards to employees, officers, consultants, non-employees, directors, Affiliates or representatives of Advisor provided the one-year restriction on transfer shall remain applicable to such assignee. In addition, except as expressly provided above, any transfer of such equity awards at any time must comply with the transfer restrictions of the Operating Partnership’s partnership agreement or the Company’s charter and bylaws, as applicable.

 

6.4          [RESERVED].

 

6.5          Fee Waiver . The Advisor, or its Subsidiaries or Affiliates, may, at its or their option and in its or their sole discretion, choose to waive any fee or reimbursement payable or owing by the Company to the Advisor under this Amended Agreement; provided, however that the Advisor shall be able   to offset any fees that it has waived against any reimbursement obligation that may at any time be owed by the Advisor or alleged to be owed to the Company.  Notwithstanding anything to the contrary herein, any waiver of fees or reimbursements for one period shall have no impact on the calculation of the fees or reimbursements payable in any future period that may be based on the past period during which the waiver occurred.

 

6.6          Fee Renegotiation . If the Advisor has given notice of its election to extend this Amended Agreement in accordance with Section 12.2 , either Party may then give written notice to the other Party at least one hundred eighty (180) days prior to the expiration of the then current term to renegotiate the amount of Base Fee or Incentive Fee payable by the Company. Following receipt of a renegotiation notice, each Party shall, for a period of up to sixty (60) days, use its commercially reasonable efforts to negotiate in good faith a revised compensation amount or amounts.  If the Parties are unable to agree on a revised Base Fee or Incentive Fee, then the revised compensation amount shall be determined by an “Arbitration Panel” comprised of three members all of whom have sufficient knowledge and experience of external asset management entities, the national hospitality lodging industry generally and industry standards and market trends for similar advisory agreements in the United States.  The Advisor shall have the right to select one member of the panel (the “Advisor Panel Member” ).  The Company shall have the right to select one member of the panel (the “ Company Panel Member” ).  The third member of the panel shall be selected by the mutual agreement of the Company Panel Member and the Advisor Panel Member; provided that in no event may the Arbitration Panel reduce the multiplier for the Base Fee below 0.65% or increase the multiplier for the Base Fee above 0.75% during the term of this Amended Agreement, including all extensions.  Further, in no event shall the Arbitration Panel reduce the Incentive Fee multiplier below 0.04 or increase the Incentive Fee multiplier above 0.06 during the term of this Amended Agreement.  Each Party shall submit, in writing, a statement summarizing its fee proposal and the underlying rationale therefor with ten (10) business days after selection of the Arbitration Panel is complete.  If the Arbitration Panel requests an in person meeting or teleconference in addition to written statements, the Parties shall use commercially reasonable efforts to attend, and the Parties shall promptly comply

with all other reasonable requests by the Arbitrator, including requests for information, books, records and similar items.  The Arbitration Panel shall make a final determination, and notify the parties in writing as soon as practicable but in no event later than thirty (30) days after the panel’s decision no later than thirty (30) days after the Arbitration Panel is selected.  The decision of the Arbitration Panel shall be final, binding and non-appealable on the Parties thereto.

 

6.7          Expense Reporting .  The Advisor shall disclose, in each Quarterly Report on Form 10-Q and each Annual Report on Form 10-K that it files under the Exchange Act, the total incremental expenses incurred by the Advisor (including all reimbursable expenses) as reasonably determined by the Advisor for the period covered by the report in connection with providing services to the Company under this Amended Agreement, which determination shall be conclusive and binding on the Parties. No later than 30 days after the end of each fiscal quarter or 45 days in the case of the fourth quarter, the Advisor shall provide the Audit Committee with a report, substantially in the form agreed upon by the Parties in connection with this Amended Agreement, of an Accounting Firm that the Advisor’s determination of the total incremental expenses for the applicable period is reasonable. So long as the Accounting Firm’s report is delivered to the Audit Committee in accordance with the form agreed upon by the Parties, the total incremental expenses determined by the Advisor for the applicable period covered by the Accounting Firm’s report shall be binding on both Parties and not subject to revision or challenge. The Advisor acknowledges and agrees that, to the extent it is no longer required to file reports under the Exchange Act, the Advisor will separately report the amount of total incremental expenses as reasonably determined by the Advisor for the applicable period to the Audit Committee.

 

7.           LIMITATION ON ACTIVITIES.  Except for actions taken at the direction of the Board or in good faith, subject to the Company complying with Section 9.1(c) and notwithstanding anything in this Amended Agreement to the contrary, the Advisor shall not take any action which would (a) adversely affect the then effective tax status of the Company as a REIT, (b) subject the Company to regulation under the Investment Company Act, (c) knowingly and intentionally cause the Company to violate any law, rule or regulation of any governmental body or agency having jurisdiction over the Company, (d) cause the Company to violate any of the rules or regulations of any exchange on which the Company’s securities are listed, the result of which is likely to cause the Company to be delisted or (e) cause the Company to violate the Company’s charter, the Company’s bylaws or any resolutions of the Board of Directors, all as in effect from time to time. The Advisor acknowledges that the Company maintains codes and policies intended to help maintain compliance with applicable laws and regulations and agrees to require its employees who provide services to the Company to comply with all applicable codes and policies.

 

8.           LIMITATION OF LIABILITY AND INDEMNIFICATION.

 

8.1          Limitation on Liability .  The Advisor shall have no responsibility other than to render the services and take the actions described herein in good faith and with the exercise of due care and shall not be responsible for any action of the Board of Directors in following or declining to follow any advice or recommendation of the Advisor. The Advisor

(including its officers, directors, managers, employees and members) will not be liable for any act or omission by the Advisor (or its officers, directors, managers, employees and members) performed in accordance with and pursuant to this Amended Agreement, except by reason of acts or omissions constituting gross negligence, bad faith, willful misconduct or reckless disregard of duties under this Amended Agreement.

 

8.2          Insurance Coverage of the Advisor .  The Advisor shall maintain errors and omissions insurance coverage and other insurance coverage in amounts which are customarily carried by asset managers performing functions similar to those of the Advisor under this Amended Agreement.  No fidelity bond shall be required.

 

8.3          Indemnification .

 

(a)          The Company shall reimburse, indemnify and hold harmless the Advisor and its Affiliates, and their respective partners, directors, officers, managers, members, agents, employees and each other Person, if any, controlling the Advisor (each, an “ Advisor Indemnified Party ”), to the fullest and broadest extent permitted under the Company’s charter and bylaws and the corporate law of the jurisdiction in which the Company is incorporated including all mandatory provisions that may not be waived from and against any and all losses, claims, damages, liabilities, costs and expenses of any nature whatsoever, including, without limitation, attorney’s fees, court costs, and similar fees and expenses (“ Expenses ”) with respect to or arising out of this Amended Agreement or the performance by the Advisor of its responsibilities and obligations hereunder (including any pending or threatened litigation except for any Proceeding filed by a stockholder of the Advisor against the Advisor), from any acts or omission of the Advisor (including ordinary negligence and any action taken by the Advisor following a directive by the Board of Directors in its capacity as such and Expenses incurred by the Advisor under Section 5 ), except with respect to Expenses with respect to or arising out of the Advisor Indemnified Party’s gross negligence, bad faith or willful misconduct, or reckless disregard of its duties under this Amended Agreement.

 

(b)          The Advisor shall reimburse, indemnify and hold harmless the Company, and its partners, directors, officers, managers, members, agents, employees and each other Person, if any, controlling the Company (each, a “ Company Indemnified Party; ” an Advisor Indemnified Party and a Company Indemnified Party are each sometimes hereinafter referred to as an “ Indemnified Party ”) from and against any and all Expenses in respect of or arising from (i) any acts or omissions of the Advisor constituting bad faith, willful misconduct, gross negligence or reckless disregard of duties of the Advisor under this Amended Agreement or (ii) any claims by employees of the Advisor relating to the terms and conditions of their employment by the Advisor.

 

(c)          The Company shall reimburse, indemnify and hold each Advisor  Indemnified Party harmless from and against any Expenses, joint or several, to which such Advisor Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Expenses (or Proceedings, whether commenced or threatened, in respect thereof) are arising out of or based upon any untrue statement or alleged untrue statement of any material fact contained in any filing with the SEC, any document related to a private

offering of securities or any statement of any kind made by the Company and arising out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a registration statement or prospectus related to an offering of securities registered under the Securities Act, in light of the circumstances under which they were made) not misleading, and will reimburse each such Advisor Indemnified Party for any legal or other expenses reasonably incurred or other Expenses by them in connection with investigating, defending or initiating any such Proceeding. The indemnity hereunder shall remain in full force and effect regardless of any investigation made by or on behalf of any Advisor Indemnified Party or any director, officer or controlling person of any Advisor Indemnified Party, and shall survive the termination of this Amended Agreement pursuant to Section 12 . If the indemnification provided for in this Section 8.3(c) is held by a court or government agency of competent jurisdiction to be unavailable to an Indemnified Party or is insufficient to hold the Indemnified Party harmless in respect of any Expenses, then each Indemnified Party shall contribute to the amount paid or payable by the Indemnified Party as between the Advisor, on the one hand, and the Company, on the other hand, in such proportion as is appropriate to reflect the relative fault of Advisor, on the one hand, and of the Company, on the other, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who is not guilty of fraudulent misrepresentation.

 

(d)          Promptly after receipt by an Indemnified Party of notice of the commencement (or threat of commencement) of any Proceeding, the Indemnified Party shall, if a claim in respect thereof is to be made pursuant hereto, notify the indemnifying party in writing of the commencement thereof; but the omission to so notify the indemnifying party shall not relieve it from any liability that it may have to any Indemnified Party pursuant to this Section 8.3 .  In case any such Proceeding shall be brought against an Indemnified Party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof, with counsel satisfactory to such Indemnified Party and, after notice from the indemnifying party to such Indemnified Party of the indemnifying party’s election to assume the defense thereof, the indemnifying party shall not be liable to such Indemnified Party under Section 8.3 hereof, as applicable, for any legal expenses of other counsel retained by the Indemnified Party or any of the expenses related thereto, in each case subsequently incurred by such Indemnified Party, unless (i) the indemnifying party and the Indemnified Party shall have mutually agreed to the retention of such counsel, or (ii) the named parties to any such Proceeding (including any impleaded parties) include both the indemnifying party and Indemnified Party and representation of both parties by the same counsel would be inappropriate in the reasonable opinion of the Indemnified Party, due to actual or potential differing interests between them. The obligations of the indemnifying party under this Section 8.3 shall be in addition to any liability which the indemnifying party otherwise may have under applicable law or otherwise.

 

(e)          The Company shall advance funds to an Advisor Indemnified Party upon request for any expenses and other costs incurred as a result of any pending or threatened Proceeding or the initiation of a Proceeding by any Advisor Indemnified Party if (i) such Proceeding relates to or arises out of, or is alleged to relate to or arise out of or has been caused or alleged to have been caused in whole or in part by, any action or inaction on the part of

the Advisor Indemnified Party in the performance of its duties or provision of its services hereunder; and (ii) the Advisor Indemnified Party undertakes to repay any funds advanced pursuant to this Section 8.3(e) in cases in which such Advisor Indemnified Party would not be entitled to indemnification under this Section 8.3 .  If advances are required under this Section 8.3(e) , the Advisor Indemnified Party shall furnish the Company with an undertaking as set forth in clause (ii) of the preceding sentence and shall thereafter have the right to bill the Company for, or otherwise require the Company to pay, at any time and from time to time after such Advisor Indemnified Party shall become obligated to make payment therefor, any and all reasonable amounts for which such Advisor Indemnified Party is entitled to indemnification under Section 8.3 , and the Company shall pay the same within thirty (30) days after request for payment. In the event that a determination is made by a court of competent jurisdiction or an arbitrator that the Company is not so obligated in respect of any amount paid by it to a particular Advisor Indemnified Party, such Advisor Indemnified Party will refund such amount within sixty (60) days of such determination, and in the event that a determination by a court of competent jurisdiction or an arbitrator is made that the Company is so obligated in respect to any amount not paid by the Company to a particular Advisor Indemnified Party, the Company will pay such amount to such Advisor Indemnified Party within thirty (30) days of such final determination, in either case together with interest at the current prime rate plus 2% from the date paid until repaid or the date it was obligated to be paid until the date actually paid.

 

9.           RELATIONSHIP OF ADVISOR AND COMPANY; CAPITALIZATION.

 

9.1         Contractual Relationship .

 

(a)          The relationship between the Company and the Advisor under this Amended Agreement shall be contractual in nature. The Company and the Advisor are not partners or joint venturers with each other, and   nothing in this Amended Agreement shall be construed to make the Company and the Advisor partners or joint venturers. Nothing herein contained shall prevent the Advisor from engaging in other activities, including, without limitation, the rendering of advice to other Persons (including other REITs) and to the management of Ashford Hospitality Trust, Inc. (“ Ashford Trust ”), or other programs advised, sponsored or organized by the Advisor, Ashford Trust or their Affiliates. The Company shall not revise its Investment Guidelines to be directly competitive with all or any portion of Ashford Trust’s Investment Guidelines in effect as of November 19, 2013 or with all or any portion of the initial Investment Guidelines of any Spin-Off Company.  The Company acknowledges that the Ashford Trust’s Investment Guidelines as of November 19, 2013 and as of the date hereof include all segments of the hospitality industry (including, without limitation, direct, joint venture and debt investments in hotels, condo-hotels, time-shares and other hospitality related assets), with revenue per available room (“ RevPAR ”) criteria less than two times the then-current U.S. average RevPAR.  The Company further acknowledges that any subsequent change to Ashford Trust’s Investment Guidelines, including in connection with any future spin-off, carve-out, split-off or other consummation of a transfer of a division or subset of assets for the purpose of forming a joint venture, a newly created private platform or a new publicly-traded company will not have any impact on or change Ashford Trust’s Investment Guidelines as of November 19, 2013 and as of the date hereof for purposes of enforcing this Section 9 .  Except as described in this Section 9.1 , this Amended Agreement shall not limit or restrict the right of any manager,

director, officer, employee or equityholder of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other Person. The Advisor may, with respect to any investment or activity in which the Company or its Affiliates is a participant, also render advice and service to each and every other participant therein associated with such investments or activities.