ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
As previously disclosed, Ashford Inc. ("AINC" or the "Company"), Ashford
Hospitality Trust, Inc. ("Ashford Trust"), Ashford Hospitality Limited
Partnership (the "Operating Partnership"), Ashford TRS Corporation ("TRS"), and
Ashford Hospitality Advisors LLC ("Ashford LLC" and together with AINC, the
"Advisor") previously entered into the Enhanced Return Funding Program Agreement
and Amendment No. 1 to the Amended and Restated Advisory Agreement, dated
effective as of June 26, 2018 (the "ERFP Agreement"). Although the ERFP
Agreement terminated in accordance with its terms on June 26, 2021, the Advisor
remained obligated to provide TRS with approximately $11,400,000 related to
Ashford Trust's acquisition of the Embassy Suites Manhattan hotel (the "ES
Manhattan ERFP Balance"), which such hotel constituted an Enhanced Return Hotel
Asset (as defined in the ERFP Agreement).
Side Letter
On December 16, 2022, the Advisor entered into a Side Letter (the "Side Letter")
with the Operating Partnership, TRS and Ashford Trust, pursuant to which the
parties agreed that on or before December 16, 2022, the Advisor will transfer to
Ashford Trust all right, title and interest held by the Advisor and its
subsidiaries in the Hilton Atlanta/Marietta Hotel and Conference Center (the
"Marietta Hotel") and, in exchange therefor, Ashford Trust will forgive, cancel
and discharge in full the outstanding ES Manhattan ERFP Balance.
The Side Letter and the Purchase Agreement (as defined below) were approved by
the independent directors of the Company.
Purchase Agreement
On December 16, 2022, the Operating Partnership, a subsidiary of Ashford Trust,
entered into an Agreement of Purchase and Sale (the "Purchase Agreement") with
Ashford LLC, pursuant to which, effective as of December 16, 2022, the Operating
Partnership acquired one hundred percent (100%) of the equity interests in (i)
Marietta Leasehold LP (the "Ground Lessee"), the ground lessee of the Marietta
Hotel, and (ii) Marietta Leasehold GP LLC, the sole general partner of the
Ground Lessee (collectively, the "Equity Interests") and, in exchange therefor,
Ashford Trust forgave, cancelled and discharged in full the outstanding ES
Manhattan ERFP Balance.
The Purchase Agreement contains customary representations and warranties of
Ashford LLC, including related to, among other items, the Equity Interests,
compliance with laws, litigation and labor and employment matters. The Purchase
Agreement also contains customary indemnification obligations of Ashford LLC,
including with respect to representations and warranties, covenants and Ashford
LLC's operation of the Marietta Hotel prior to the closing, including related to
liquor licenses. The representations and warranties, covenants and indemnities
of Ashford LLC survive for one year after the closing. Ashford LLC's aggregate
liability for claims under the Purchase Agreement is $500,000; provided, that
Ashford LLC shall not be liable for any claims except to the extent claims
exceed $25,000 in the aggregate.
The Operating Partnership also made customary representations and warranties,
including related to, among other items, organization, litigation and authority
to enter into the Purchase Agreement.
All closing costs, including taxes and title transfer costs, were split equally
between Ashford LLC and the Operating Partnership.
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The foregoing description of the Side Letter, the Purchase Agreement and the
transactions contemplated thereby does not purport to be complete and is subject
to, and qualified in its entirety by, the full text of the Side Letter and the
Purchase Agreement, copies of which are attached hereto as Exhibit 10.1 and
Exhibit 10.2, respectively, and are incorporated by reference herein.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
The following unaudited pro forma consolidated financial statements reflecting
the Equity Interests are filed as Exhibit 99.1 to this Form 8-K and are
incorporated by reference herein:
•the Company's unaudited pro forma consolidated statement of operations for the
year ended December 31, 2021;
•the Company's unaudited pro forma consolidated statement of operations for the
nine months ended September 30, 2022; and
•the Company's unaudited pro forma consolidated balance sheet as of September
30, 2022.
(d) Exhibits
Exhibit
No. Description
10.1 Side Letter, dated as of December 16, 2022, by and among, Ashford Hospitality
Trust, Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation,
Ashford Hospitality Advisors LLC and Ashford Inc.
10.2 Agreement of Purchase and Sale, dated as of December 16, 2022, by and between
Ashford Hospitality Limited Partnership and Ashford Hospitality Advisors LLC.
99.1 Unaudited Pro Forma Consolidated Financial Statements.
104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in
Exhibit 101)
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