ASHFORD INC. (NYSE:AHT) Files An 8-K Entry into a Material Definitive Agreement
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On January 24, 2017, Ashford Inc. (the Company) announced entry
into an agreement amending the Third Amended and Restated
Advisory Agreement, dated as of June 10, 2015, among the Company,
Ashford Hospitality Prime, Inc. (AHP) and certain of their
respective affiliates (the Existing Agreement). These changes are
reflected in an amended and restated agreement (the Amended
Agreement) that will be effective upon approval by AHPs
stockholders.
into an agreement amending the Third Amended and Restated
Advisory Agreement, dated as of June 10, 2015, among the Company,
Ashford Hospitality Prime, Inc. (AHP) and certain of their
respective affiliates (the Existing Agreement). These changes are
reflected in an amended and restated agreement (the Amended
Agreement) that will be effective upon approval by AHPs
stockholders.
A special committee of the Companys board of directors, comprised
solely of independent directors, with the assistance of legal
counsel retained by the committee, engaged with a special
committee of AHPs board of directors to negotiate the Amended
Agreement.
solely of independent directors, with the assistance of legal
counsel retained by the committee, engaged with a special
committee of AHPs board of directors to negotiate the Amended
Agreement.
A copy of the Amended Agreement is attached as an exhibit to this
Form 8-K and is incorporated herein by reference. Material terms
of the Amended Agreement include, without limitation, the
following terms:
Form 8-K and is incorporated herein by reference. Material terms
of the Amended Agreement include, without limitation, the
following terms:
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AHP will make a cash payment to the Company of $5.0
million at the time the Amended Agreement becomes effective; |
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the termination fee payable to the Company under the
Existing Agreement has been amended by eliminating the 1.1x multiplier and tax gross up components of the fee; |
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the Company will disclose publicly the revenues and
expenses used to calculate Net Earnings on a quarterly basis which is used to calculate the termination fee; the Company will retain an accounting firm to provide a quarterly report to AHP on the reasonableness of the Companys determination of expenses, which will be binding on the parties; |
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the right of the Company under the Existing Agreement to
appoint a Designated CEO has been eliminated; |
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the right of the Company to terminate the Existing
Agreement due to a change in a majority of the Company Incumbent Board (as defined in the Existing Agreement) has been eliminated; |
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AHP will be incentivized to grow its assets under a
growth covenant in the Amended Agreement under which AHP will receive a deemed credit against a base amount of $45.0 million for 3.75% of the total purchase price of each hotel acquired after the date of the Amended Agreement that was recommended by the Company, netted against 3.75% of the total sale price of each hotel sold after the date of the Amended Agreement. The difference between $45.0 million and this net credit, if any, is referred to as the Uninvested Amount. If the Amended Agreement is terminated, other than due to certain acts by the Company, AHP must pay the Company the Uninvested Amount, in addition to any other fees payable under the Amended Agreement; |
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the Amended Agreement requires AHP to maintain a net
worth of not less than $390 million plus 75% of the equity proceeds from the sale of securities by AHP after December 31, 2016 and a covenant prohibiting AHP from paying dividends except as required to maintain its REIT status if paying the dividend would reduce AHPs net worth below the required minimum net worth; |
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the initial term of the Amended Agreement ends on the
10th anniversary of its effective date, subject to renewal by the Company for up to seven additional successive 10-year terms; |
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the base management fee payable to the Company will be
fixed at 70 bps, and the fee will be payable on a monthly basis; |
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reimbursements of expenses to the Company will be made
monthly in advance, based on an annual expense budget, with a quarterly true-up for actual expenses; |
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the right of AHP to terminate the agreement due to a
change of control of the Company has been eliminated; |
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the rights of AHP to terminate the agreement at the end
of each term upon payment of the termination fee based on the parties being unable to agree on new market-based fees or the Companys performance have been eliminated; however, the Amended Agreement provides a mechanism for the parties to renegotiate the fees payable to the Company at the end of each term based on then prevailing market conditions, subject to floors and caps on the changes; |
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if a Change of Control (as defined in the Amended
Agreement) is pending, AHP has agreed to deposit not less than 50%, and in certain cases 100%, of the applicable termination fee in escrow, with the payment of any remaining amounts owed to the Company secured by a letter of credit or first priority lien on certain assets; |
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AHPs ability to terminate the Amended Agreement due to a
material default by the Company is limited to instances where a court finally determines that the default had a material adverse effect on AHP and the Company fails to pay monetary damages in accordance with the Amended Agreement; and |
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if AHP repudiates the Amended Agreement, AHP will be
liable to the Company for a liquidated damages amount. |
The foregoing is intended only as a summary of certain terms of
the Amended Agreement. It is not a complete description of the
Amended Agreement and is subject to and qualified in its entirety
by reference to the Amended Agreement, a copy of which is filed
as an exhibit to this Current Report.
the Amended Agreement. It is not a complete description of the
Amended Agreement and is subject to and qualified in its entirety
by reference to the Amended Agreement, a copy of which is filed
as an exhibit to this Current Report.
Safe Harbor for Forward-Looking Statements
This document contains statements that are forward-looking
statements made to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are
based on current expectations or beliefs about future events.
These statements are not guarantees of future events and involve
risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual events may differ materially from what
is expressed in such forward-looking statements due to numerous
factors. Further information and risks regarding factors that
could affect the Companys business, operations, financial results
or financial positions are discussed from time to time in the
Companys SEC filings and reports, including its Annual Report on
Form 10-K for the year ended December 31, 2015. The stockholders
of the Company and other readers are cautioned not to put undue
reliance on any forward-looking statements. The Company
undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
statements made to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are
based on current expectations or beliefs about future events.
These statements are not guarantees of future events and involve
risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual events may differ materially from what
is expressed in such forward-looking statements due to numerous
factors. Further information and risks regarding factors that
could affect the Companys business, operations, financial results
or financial positions are discussed from time to time in the
Companys SEC filings and reports, including its Annual Report on
Form 10-K for the year ended December 31, 2015. The stockholders
of the Company and other readers are cautioned not to put undue
reliance on any forward-looking statements. The Company
undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
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Exhibit
Number
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Description
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10.1
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Fourth Amended and Restated Advisory Agreement
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About ASHFORD INC. (NYSE:AHT)
Ashford Hospitality Trust, Inc. (Ashford), together with its subsidiaries, is an externally advised real estate investment trust (REIT). The Company operates through direct hotel investments segment. It is focused on investing in the hospitality industry with a focus on full-service upscale and upper-upscale hotels in the United States. The Company owns its lodging investments and conducts its business through Ashford Hospitality Limited Partnership, its operating partnership. Its hotels are operated under the brands of Hilton, Hyatt, Marriott, Starwood and Intercontinental Hotels Group. The Company’s hotels portfolio is asset-managed by Ashford LLC. The Company is focused on direct hotel investments and it may invest in a range of lodging-related assets. Its investments may include direct hotel investments; mezzanine financing through origination or acquisition; first-lien mortgage financing through origination or acquisition, and sale-leaseback transactions. ASHFORD INC. (NYSE:AHT) Recent Trading Information
ASHFORD INC. (NYSE:AHT) closed its last trading session up +0.08 at 7.94 with 584,601 shares trading hands.
