0001604738falsetrue12-3100016047382023-08-242023-08-240001604738us-gaap:CommonStockMember2023-08-242023-08-240001604738ainc:PreferredStockPurchaseRightMember2023-08-242023-08-24
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): August 24, 2023
ASHFORD INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | | | | |
| Nevada | | 001-36400 | | 84-2331507 |
(State or other jurisdiction of incorporation
or organization) | | (Commission
File Number) | | (IRS employer
identification number) |
| 14185 Dallas Parkway | | | | |
| Suite 1200 | | | | |
| Dallas | | | | |
| Texas | | | | 75254 |
| (Address of principal executive offices) | | | | (Zip code) |
Registrant’s telephone number, including area code: (972) 490-9600
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| | | | | | | | |
| ☐ | | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| | | | | | | | |
| ☐ | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| | | | | | | | |
| ☐ | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| | | | | | | | |
| ☐ | | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | | | | | | | |
| Title of each class | | Trading Symbol | | Name of each exchange on which registered |
| Common Stock | | AINC | | NYSE American LLC |
| Preferred Stock Purchase Rights | | | | NYSE American LLC |
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 24, 2023, Ashford Hospitality Advisors LLC (“Advisors”), the operating company of Ashford Inc. (the “Company”), entered into an Amended and Restated Employment Agreement (the “Amended and Restated Employment Agreement”) with Deric S. Eubanks, dated to be effective as of January 1, 2023 (the “Effective Date”), pursuant to which Mr. Eubanks will continue to serve as Chief Financial Officer of the Company, Ashford Hospitality Trust, Inc. and Braemar Hotels & Resorts Inc. The Amended and Restated Employment Agreement amends and restates his employment agreement with Advisors made on September 13, 2017 (the “Existing Agreement”).
The Amended and Restated Employment Agreement:
•Subject to early termination upon the occurrence of certain events, has an initial term ending December 31, 2026 with automatic one-year extensions unless either Mr. Eubanks or Advisors provides a written notice of non-extension to the other at least 60 days prior to the expiration of such initial term or, if applicable, extension term.
•Increases Mr. Eubanks’ annual base salary to $700,000 (the “Base Salary”), subject to periodic review and increase.
•Retains Mr. Eubanks’ eligibility for an annual Cash Incentive Bonus (as defined in the Amended and Restated Employment Agreement) on the same general terms as the Existing Agreement and provides for his eligibility for an equity- or deferred cash-based award determined in the sole discretion of the Compensation Committee of the Board of Directors of the Company.
•Expands the definition of “Cause” to expressly include, among other things, breaches of duty involving fraud, theft, or embezzlement, violations of policies of Advisors and its affiliates, and material breaches of agreements with Advisors, the Company, any entity advised by Advisors or the Company and their respective affiliates (“Ashford-Related Entities”) as determined in the sole discretion of Advisors.
•Modifies the severance benefits available for certain termination events by removing continued benefit coverage and including reimbursement (i) of premiums for continued coverage under Advisors’ group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 for up to 18 months and (ii) of the premium cost of life insurance and long-term disability insurance for the same level of coverage as was provided to him under Advisors’ life insurance and long-term disability plans for up to 24 months.
•Eliminates the continued benefit coverage in the event Mr. Eubanks terminates employment without Good Reason.
•Expands Mr. Eubanks’ existing non-solicitation obligations to apply during the two-year period following his termination of employment rather than the existing one-year period and expands the scope of the obligations to include not only employees but also certain other service providers, capital providers and clients.
•Adds a standstill clause prohibiting Mr. Eubanks, during the term of the Amended and Restated Employment Agreement and for two years thereafter, from, among other things, entering into any merger, consolidation or other extraordinary transaction involving any of the Ashford-Related Entities, tendering any equity securities of the Ashford-Related Entities into a tender or exchange offer, participating in the solicitation of proxies for any of the Ashford-Related Entities, and forming a group with respect to any equity securities in any of the Ashford-Related Entities, in any event without the prior written consent of Advisors.
•Adds a provision addressing the effect on certain terms of the Amended and Restated Employment Agreement in the event the non-competition, non-solicitation or standstill clauses are determined to be illegal or unenforceable. Such provision provides among other things that severance payments will cease if such clauses are determined unenforceable after the end of Mr. Eubanks’ term and that, if such clauses are determined unenforceable during the term, his employment will convert to at-will with fully discretionary salary adjustments and no severance benefits.
The above summary of the Amended and Restated Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended and Restated Employment Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On August 24, 2023, the Board of Directors (the “Board”) of the Company approved amendments to the Amended and Restated Bylaws of the Company (the “Bylaws”), effective immediately. The amendments to the Bylaws provide, among other things, that:
•the notice to be furnished to the Company by a stockholder seeking to bring a proposed director nomination before a meeting of the Company’s stockholders must include the information required pursuant to Rule 14a-19(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), if the stockholder intends to engage in a solicitation in support of director nominees other than the Company’s nominees;
•no stockholder may solicit proxies in support of any nominees other than individuals nominated by the Board unless such stockholder has complied with Rule 14a-19 under the Exchange Act in connection with the solicitation of such proxies, including the provision to the Company of notices required thereunder in a timely manner;
•if any stockholder provides notice pursuant to Rule 14a-19(b) under the Exchange Act and subsequently fails to comply with any of the requirements of Rule 14a-19 under the Exchange Act, then the Company will disregard any proxies or votes solicited for such stockholder’s nominee; and
•at the request of the Company, if any stockholder provides notice pursuant to Rule 14a-19(b) under the Exchange Act, such stockholder must deliver to the Company, no later than five business days prior to the applicable meeting of stockholders, reasonable evidence that such stockholder has met the requirements of Rule 14a-19 under the Exchange Act.
In addition, the amendments to the Bylaws include enhancements to certain advance notice procedures and disclosure requirements for a stockholder nomination of directors and the submission of proposals for consideration at annual meetings of the stockholders of the Company (other than proposals to be included in the Company’s proxy statement pursuant to Rule 14a-8 of the Exchange Act).
The above summary does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended and Restated Bylaws, as amended on August 24, 2023, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
ITEM 9.01 Financial Statements and Exhibits
(d) Exhibits
| | | | | |
| Exhibit Number | Description |
| 3.1 | |
| 10.1† | |
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
† Management contract or compensatory plan or arrangement.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 25, 2023 | | | | | | | | |
| ASHFORD INC. |
| | |
| By: | /s/ ALEX ROSE |
| | Alex Rose |
| | Executive Vice President, General Counsel & Secretary |
ASHFORD INC.
BYLAWS
Amended and Restated August 28, 2019
as amended by
Amendment No. 1 on August 24, 2023
ARTICLE I
STOCKHOLDERS
Section 1.Place. All meetings of stockholders shall be held at the principal executive office of Ashford Inc., a Nevada corporation (the “Corporation”), or at such other place as shall be set by the Corporation’s Board of Directors (the “Board”) in accordance with these Bylaws and stated in the notice of the meeting.
Section 2.Annual Meeting. An annual meeting of stockholders for the election of directors and the transaction of any other proper business shall be held on the date and at the time set by the Board.
Section 3.Special Meetings. Special meetings of the stockholders, for any purpose or purposes: (i) may be called by the Chairman of the Board or the Chief Executive Officer; and (ii) shall be called by the Chief Executive Officer or Secretary at the request in writing of a majority of the members of the Board or upon the written request of the holders of at least a majority of the voting power of the then issued and outstanding shares of capital stock of the Corporation, and may not be called by any other person or persons. Such request of the Board or the stockholders shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting shall be limited to the purpose or purposes stated in the notice.
Section 4.Notice. Notice of all meetings of stockholders stating the hour, date and place of such annual meetings and, in the case of a special meeting, the purpose or purposes for which the meeting has been called, shall be given by the Secretary (or other person authorized by these Bylaws or by law) not less than 10 days nor more than 60 days before the meeting, to each stockholder entitled to vote at such meeting and to each stockholder who, under the Corporation’s Articles of Incorporation, as amended or restated from time to time (the “Articles”), or under these Bylaws, is entitled to such notice, by delivering such notice, by mailing it, postage prepaid, addressed to such stockholder at the address of such stockholder as it appears on the Corporation’s stock transfer books, by electronic transmission or by any other means permitted by Nevada law. Except in the case of the annual meeting, the notice must also include the means of electronic communications, if any, by which stockholders and proxies shall be deemed to be present in person and vote. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s
address as it appears on the records of the Corporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by a form of electronic transmission consented to by the stockholders and directed to the address or number of the stockholder at which the stockholder consented to receive such electronic transmission and such transmission contains or is accompanied by information from which the recipient can determine the date of the transmission. Waiver by a stockholder in writing of notice of a stockholders’ meeting shall constitute a waiver of notice of the meeting, whether executed and/or delivered before or after such meeting.
The Board may postpone, reschedule or cancel a meeting of stockholders previously scheduled. The Board must fix a new record date if the meeting is adjourned or postponed to a date more than 60 days later than the meeting date set for the original meeting. If a new record date is fixed for the adjourned meeting, notice of the adjourned meeting must be given to each stockholder of record as of the new record date.
Section 5.Organization and Conduct. Every meeting of stockholders shall be conducted by the Chairman of the Board or, in the case of a vacancy in the office or absence of the Chairman of the Board, by one of the following officers present at the meeting in the following order: the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Chief Strategy Officer, the Vice Presidents in their order of rank and seniority, the Secretary, or, in the absence of such officers, a chairman chosen by a majority of the members of the Board in attendance at the meeting or if none, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy at the meeting. The Secretary, or, in the Secretary’s absence, an individual appointed by the Board or, in the absence of such appointment, an individual appointed by the chairman of the meeting shall act as secretary of the meeting. In the event that the Secretary presides at a meeting of stockholders, an individual appointed by the Board or the chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chairman and without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and such other individuals as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments; (e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (h) convening a meeting or (for any or no reason) recessing or adjourning the meeting to a later date and time and at a place announced at the meeting; and (i) complying with any state and local laws and regulations concerning safety and security. The chairman of the meeting of stockholders, in addition to making any other determinations that
may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such chairman should so determine, such chairman shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 6.Quorum. Except as otherwise provided by law, the Articles or these Bylaws, at each meeting of stockholders, the presence in person or by proxy of the holders of a majority in voting power of the outstanding shares of stock entitled to vote at such meeting shall constitute a quorum. If such quorum is not established at any meeting of the stockholders, the chairman of the meeting or the stockholders so present by a majority of voting power thereof may adjourn the meeting until a quorum shall attend. A meeting of stockholders convened on the date for which it was called may be adjourned from time to time without further notice to a date not more than 60 days after the original record date, if such meeting date is announced at the meeting at which adjournment is taken. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original meeting.
The stockholders present either in person or by proxy, at a meeting which has been duly called and at which a quorum has been established, may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than would be required to establish a quorum.
Section 7.Voting. A plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. Cumulative voting is not permitted. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by the Articles, these Bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities. Except as otherwise provided by law, abstentions and broker non-votes shall not be counted as votes cast for purposes of determining the outcome of any vote. Unless otherwise provided by statute or by the Articles, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power on the matter in question. Voting on any question or in any election may be viva voce unless the chairman of the meeting shall order that voting be by ballot or otherwise.
Section 8.Proxies. A holder of record of shares of stock of the Corporation may cast votes in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the Secretary before or at the meeting. No proxy shall be valid
more than 6 months after its date of creation unless a longer period is otherwise provided in the proxy. No proxy shall be valid for more than 7 years unless such proxy is coupled with an interest sufficient in law to support an irrevocable power.
Section 9.Voting of Stock by Certain Holders. Stock of the Corporation registered in the name of a corporation, partnership, trust, limited liability company or other entity, if entitled to be voted, may be voted by the president or a vice president, general partner, trustee, manager, or managing member thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any director or fiduciary may vote stock registered in the name of such person in the capacity of such director or fiduciary, either in person or by proxy.
Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted for purposes of determining the presence of a quorum, unless such shares are held by the Corporation in a fiduciary capacity, in which case they may be voted and shall be counted in determining the presence of a quorum.
Section 10.Inspectors. The Corporation shall appoint, before any meeting of stockholders, one or more inspectors to act at the meeting or any adjournment thereof and to make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace an inspector who fails to act. In the event that no inspector so appointed or designated is able to act at the meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall: (i) ascertain the number of shares of capital stock of the Corporation outstanding and the voting power of each such share; (ii) determine the number of shares of stock represented at the meeting, in person or by proxy, and the validity of proxies and ballots; (iii) tabulate all votes and ballots; (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and (v) certify their determination of the number of shares of capital stock of the Corporation represented at the meeting and such inspectors’ count of all votes and ballots. Such certificate and report shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the Corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.
Section 11.Advance Notice of Stockholder Nominees for Director and Other Stockholder Proposals.
(a)Annual Meetings of Stockholders.
(1)Nominations of individuals for election to the Board and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders: (i) pursuant to the Corporation’s notice of meeting (or any supplement thereto); (ii) by or at the direction of the Board or any committee thereof; or (iii) by any stockholder of the Corporation who: (a) has beneficially owned at least 1% of the outstanding shares of common stock of the Corporation (the “Required Shares”) continuously for at least one year both at the time of giving of notice by the stockholder as provided for in this Section 11(a) and through and including the time of the annual meeting (including any adjournment or postponement thereof); (b) who is a stockholder of record of the Corporation both at the time of giving notice as provided for in this Section 11(a) and as of the time of the annual meeting (including any adjournment or postponement thereof); and (c) is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who has complied with this Section 11(a).
(2)For any nomination or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 11, the stockholder must have given timely notice thereof in writing to the Secretary and any such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information required under this Section 11 and shall be delivered to the Secretary at the principal executive office of the Corporation not earlier than the 120th day nor later than 5:00 p.m., Eastern Time, on the 90th day prior to the first anniversary of the date of the proxy statement (as defined in Section 11(c)(3) of this Article I) for the preceding year’s annual meeting of stockholders; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, in order for notice by the stockholder to be timely, such notice must be so delivered not earlier than the 120th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 90th day prior to the date of such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by the Corporation. The postponement or adjournment of an annual meeting, or the public announcement thereof, shall not commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(3)Such stockholder’s notice shall set forth:
(i)as to any business other than the nomination of an individual for election or reelection as a director that the stockholder proposes to
bring before the meeting, a description of such business, the text of the proposal or business, the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom;
(ii)as to the stockholder giving notice and any Stockholder Associated Person, the information required pursuant to Rule 14a-19(b) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), if the stockholder, such Stockholder Associated Person or any of their respective affiliates, associates or others acting in concert intends to engage in a solicitation in support of director nominees other than the Corporation’s nominees;
(iii)as to the stockholder giving the notice, any individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”) and any Stockholder Associated Person:
(A)the class, series and number of all shares of stock or other securities of the Corporation or any affiliate thereof (collectively, the “Company Securities”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Company Security was acquired and the investment intent of such acquisition, any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person and a representation that such stockholder intends to maintain qualifying ownership of the Required Shares through the date of the annual meeting (including any adjournment or postponement thereof) to which the notice relates;
(B)the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person;
(C)whether and the extent to which such stockholder, Proposed Nominee or Stockholder Associated Person, directly or indirectly (through brokers, nominees or otherwise), is subject to or during the last six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (I) manage risk or benefit from changes in the price of Company Securities for such stockholder, Proposed Nominee or Stockholder Associated Person or (II) increase or decrease the voting
power of such stockholder, Proposed Nominee or Stockholder Associated Person in the Corporation or any affiliate thereof disproportionately to such person’s economic interest in the Company Securities; and
(D)any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with the Corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, in the Corporation or any affiliate thereof, other than an interest arising from the ownership of Company Securities where such stockholder, Proposed Nominee or Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis by all other holders of the same class or series;
(iv)as to the stockholder giving the notice, any Stockholder Associated Person with an interest or ownership referred to in clauses (i) or (iii) of this paragraph (3) of this Section 11(a) and any Proposed Nominee:
(A)the name and address of such stockholder of record, as they appear on the Corporation’s stock ledger, and the name and address of each such Stockholder Associated Person and any Proposed Nominee;
(B)(i) a description of the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and (ii) a copy of the prospectus, offering memorandum or similar document and any presentation, document or marketing material provided to third parties (including investors and potential investors) to solicit an investment in such stockholder and each such Stockholder Associated Person that contains or describes such stockholder’s and each such Stockholder Associated Person’s performance, personnel or investment thesis or plans or proposals with respect to the Corporation; and
(C)all information relating to the stockholder, the Proposed Nominee or the Stockholder Associated Person that would be required to be disclosed (i) in connection with the solicitation of proxies pursuant to Regulation 14A (or any successor provision) under the Exchange Act and (ii) in any notices, forms or filings required by U.S. federal laws, rules and regulations in connection with the direct or indirect acquisition by such person of control of the Corporation, whether through the acquisition of a majority of the outstanding securities of the Corporation, the acquisition of all or substantially all of the Corporation’s assets or otherwise (including all information required under any U.S. federal laws, rules and regulations that have been proposed and not withdrawn);
(v)the name and address of any person who contacted or was contacted by the stockholder giving the notice or any Stockholder Associated Person about the Proposed Nominee or other business proposal prior to the date of such stockholder’s notice;
(vi)a representation whether the stockholder or any Stockholder Associated Person intends or is part of a group which intends: (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee; and/or (b) otherwise to solicit proxies or votes from stockholders in support of such proposal or nomination;
(vii)a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination;
(viii)any other information relating to such stockholder and beneficial owner, if any, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder; and
(ix)to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice.
(4)Such stockholder’s notice shall, with respect to any Proposed Nominee, be accompanied by a certificate executed by the Proposed Nominee: (i) (a) certifying that such Proposed Nominee is not, and will not become, a party to any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation and (b) consenting to be named in the proxy statement as a nominee and serving as a director of the Corporation if elected; and (ii) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder, or would be required pursuant to the rules of any national securities exchange on which
any securities of the Corporation are listed or over-the-counter market on which any securities of the Corporation are traded). The foregoing notice requirements of this Section 11 shall be deemed satisfied by a stockholder with respect to business other than a nomination if the stockholder has notified the Corporation of his, her or its intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as the Corporation may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.
(5)Notwithstanding anything in this subsection (a) of this Section 11 to the contrary, in the event that the number of directors to be elected to the Board at the annual meeting is increased after the time period for which nominations would otherwise by due under paragraph (a)(2) of this Section 11, and there is no public announcement by the Corporation naming the nominees for the additional directorships at least 130 days prior to the first anniversary of the date of the proxy statement (as defined in Section 11(c)(3) of this Article I) for the preceding year’s annual meeting, a stockholder’s notice required by this Section 11(a) shall also be considered timely, but only with respect to nominees for the additional directorships created by such increase, if it shall be delivered to the Secretary at the principal executive office of the Corporation not later than 5:00 p.m., Eastern Time, on the tenth day following the day on which such public announcement is first made by the Corporation.
(6)For purposes of this Section 11, a “Stockholder Associated Person” of any stockholder shall mean any person (and such person’s affiliates and associates): (i) acting in concert with such stockholder; (ii) that has formed, or is acting together as, a group with such stockholder (or such stockholder’s affiliates or associates) for the purposes of acquiring, holding, voting or disposing Company Securities, regardless of whether such person is party to any written or unwritten agreement, arrangement or understanding; (iii) that shares, or with which is shared, information about an upcoming Schedule 13D filing (or amendment thereto) that such person and/or such stockholder and/or their respective affiliates and associates will be required to make, to the extent such information is not yet public and communicated with the purpose of causing others to make purchases, and such person and/or such stockholder and/or their respective affiliates and associates subsequently purchases Company Securities based on such information; (iv) that has entered into any pooling arrangement, whether formal or informal, written or unwritten, with such stockholder; (v) that, together with such stockholder and/or its affiliates and associates, has
engaged in activities undertaken with the purpose or effect of changing or influencing control of the Corporation or in connection with or as a participant in any transaction having such purpose or effect; (vi) that has taken concerted actions related to Company Securities where such person and such stockholder are directly or indirectly obligated to take such concerted action; (vii) that is the beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary); or (viii) directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or any other Stockholder Associated Person.
(b)Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting only: (i) by or at the direction of the Board or any committee thereof; or (ii) provided that the special meeting has been called in accordance with Section 3 of this Article I for the purpose of electing directors, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 11 and at the time of the special meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the notice procedures set forth in this Section 11. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the Board, any such stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice, containing the information required by paragraphs (a)(3) and (4) of this Section 11, is delivered to the Secretary at the principal executive office of the Corporation not earlier than the 120th day prior to such special meeting and not later than 5:00 p.m., Eastern Time, on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made by the Corporation of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(c)General.
(1)If information submitted pursuant to this Section 11 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate in any material respect, such information may be deemed not to have been provided in accordance with this Section 11. Any stockholder proposing a nominee for election as a director or any proposal of other business at a
meeting of stockholders shall notify the Corporation of any inaccuracy or change in such stockholder’s notice (within two Business Days (as defined below) of becoming aware of such inaccuracy or change). Upon written request by the Secretary or the Board, any such stockholder shall provide, within 5 Business Days of delivery of such request (or such other period as may be specified in such request):
(A)written verification, satisfactory, in the discretion of the Board or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 11; and (B) a written update of any information (including, if requested by the Corporation, written confirmation by such stockholder that it continues to intend to bring such nomination or other business proposal before the meeting) submitted by the stockholder pursuant to this Section 11 as of an earlier date. If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 11. For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.
(2)Except as otherwise expressly provided in any applicable rule or regulation promulgated under the Exchange Act, only such individuals who are nominated in accordance with this Section 11 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 11. Except as otherwise required by law, the chairman of the meeting shall have the power and duty: (a) to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 11 (including whether the stockholder or any Stockholder Associated Person solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies or votes in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (a)(3)(vi) of this Section 11); and (b) if any proposed nomination or business was not made or proposed in compliance with this Section 11, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of this Section 11, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that
proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 11, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
(3)For purposes of this Section 11, “the date of the proxy statement” shall have the same meaning as “the date of the company’s proxy statement released to shareholders” as used in Rule 14a-8(e) promulgated under the Exchange Act, as interpreted by the Securities and Exchange Commission from time to time. “Public announcement” shall mean disclosure: (A) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service; or (B) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.
(4)Notwithstanding the foregoing provisions of this Section 11, (i) a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 11, (ii) no stockholder, Stockholder Associated Person, or any of their respective affiliates, associates and other persons acting in concert therewith shall solicit proxies in support of any nominees other than the nominees of the Board of Directors unless such person has complied with Rule 14a-19 promulgated under the Exchange Act in connection with the solicitation of such proxies, including the provision to the Corporation of notices required thereunder in a timely manner and (iii) if such stockholder, Stockholder Associated Person, or any of their respective affiliates, representatives or others acting in concert therewith (1) provides notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act as required by Article I, Section 11(a)(3)(ii) and (2) subsequently fails to comply with any of the requirements of Rule 14a-19 promulgated under the Exchange Act, then the Corporation shall disregard any proxies or votes solicited for such stockholder’s nominees. Upon request by the Corporation, if any stockholder, Stockholder Associated Person, or any of their respective affiliates, associates and other persons acting in concert therewith provides notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act, such stockholder shall deliver to the Corporation, no later than five (5) business days prior to the applicable meeting, reasonable evidence that such stockholder, Stockholder Associated Person, and any of
their respective affiliates, associates or other persons acting in concert therewith have met the requirements of Rule 14a-19 promulgated under the Exchange Act. Except to the extent provided by Rule 14a-19 promulgated under the Exchange Act with respect to a nomination made pursuant to Article I, Section 11(a) and that otherwise complies with the applicable provisions of these Bylaws, nothing in these Bylaws shall be construed to grant any stockholder the right to include or have disseminated or described in the Corporation’s proxy statement any such nomination of directors. Nothing in this Section 11 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, or the right of the Corporation to omit a proposal from, the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 11 shall require disclosure of revocable proxies received by the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14A by such stockholder or Stockholder Associated Person under Section 14(a) of the Exchange Act.
Section 12.Action Taken Without A Meeting. Any action that may be taken at a meeting of the stockholders may be taken without a meeting if approved by the unanimous written consent of all stockholders entitled to vote on the matter.
ARTICLE II
DIRECTORS
Section 1.Powers. All of the powers of the Corporation shall be exercised by or under the direction of the Board except as otherwise provided by the Articles or required by law.
Section 2.Number of Directors and Terms. Members of the initial Board shall hold office until the first annual meeting of the stockholders and until their successors shall have been elected and qualified. At the first annual meeting of stockholders and at each annual meeting thereafter, the stockholders shall elect directors to hold office until the next succeeding annual meeting. Each director shall hold office for the term for which he or she is elected and until his or her successor shall be elected and qualified or until his or her earlier resignation or removal. Notwithstanding anything herein to the contrary, any director may be removed from office at any time by the vote or written consent of stockholders representing not less than two-thirds of the voting power of the issued and outstanding stock entitled to vote, with or without cause. The number of directors of the Corporation shall not be less than two (2) nor more than fifteen (15). The exact number of directors shall be fixed from time to time by the Board.
Section 3.Director Independence.
(a)Independence. The Board shall nominate candidates for election or re-election to the Board (or recommend the election or re-election of such candidates as nominated by others) such that, and shall take such other corporate actions as may be reasonably required to provide that, to the best knowledge of the Board, if such candidates are elected by the stockholders, at least a majority of the members of the Board shall be Independent Directors (as defined below). The Board shall only elect any person to fill a vacancy on the Board if, to the best knowledge of the Board, after such person’s election at least a majority of the members of the Board shall be Independent Directors. The foregoing provisions of this paragraph shall not cause a director who, upon commencing such director’s service as a member of the Board was determined by the Board to be an Independent Director but did not in fact qualify as such, or who by reason of any change in circumstances ceases to qualify as an Independent Director, from serving the remainder of the term as a director for which such director was selected. Notwithstanding the foregoing provisions of this paragraph and unless otherwise provided by law, no action of the Board shall be invalid by reason of the failure at any time of a majority of the members of the Board to be Independent Directors.
(b)Independent Director. The term “Independent Director” means a director who: (i) qualifies as an “independent director” within the meaning of the corporate governance listing standards from time to time adopted by the NYSE American (or, if at any time the Corporation’s common stock is not listed on the NYSE American and is listed on a securities exchange other than the NYSE American, the applicable corporate governance listing standards of such other securities exchange) with respect to the composition of the board of directors of a listed company (without regard to any independence criteria applicable under such standards only to the members of a committee of the board of directors); and (ii) also satisfies the minimum requirements of director independence of Rule 10A-3(b)(1) under the Exchange Act (as from time to time in effect), whether or not such director is a member of the Audit Committee of the Board.
Section 4.Qualification. No Director need be a stockholder of the Corporation. Unless waived by the Board, no individual may serve as a director of the Corporation if he or she has reached the age of 70 years at the time of election. Upon attaining the age of 70, a director shall tender a letter of resignation from the Board, effective upon the expiration of the calendar year in which such director attains the age of 70. Such director shall also tender a letter of resignation effective upon the expiration of each term served by the director after attaining the age of 70. Additionally, upon any change in employment of a director or a change in the duties of such director in connection with his or her employment, such director shall tender a letter of resignation effective upon the expiration of the calendar year in which such change occurs. Any such resignation shall be contingent upon acceptance by the Board, and the Board shall determine whether, in light of all the circumstances, it should accept such resignation.
Section 5.Vacancies. Except as provided in the Articles, including any certificate of designation, any vacancy occurring on the Board may be filled by the affirmative vote of the majority of the remaining directors though less than a quorum of the Board. A
Director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office, subject to removal as aforesaid.
Section 6.Resignation. Any Director may resign at any time by giving notice to the Board. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
Section 7.Regular Meetings. The regular annual meeting of the Board shall be held, without other notice than this Bylaw, on the same date and at the same place as the annual meeting of stockholders following the close of such meeting of stockholders. Other regular meetings of the Board may be held at such hour, date and place as the Board may by resolution from time to time determine without other notice than such resolution.
Section 8.Executive Sessions. To ensure free and open discussion and communication among the non-management directors, the non-management directors shall meet in executive session at least twice a year with no members of management present.
Section 9.Special Meetings. Special meetings of the Board may be called by a majority of the members of the Board, the Chairman of the Board, if one is elected, the lead Director, or the Chief Executive Officer. The person calling any such special meeting of the Board may fix the hour, date and place thereof.
Section 10.Notice of Meetings. Notice of the hour, date and place of all special meetings of the Board shall be given to each director by the Secretary, or in case of the death, absence, incapacity or refusal of such persons, by the Chairman of the Board, if one is elected, or the Chief Executive Officer or such other officer designated by the Chairman of the Board, if one is elected, or the Chief Executive Officer. Notice of any special meeting of the Board shall be given to each director in person or by telephone, electronic mail, facsimile transmission or by telegram sent to his or her business or home address at least 24 hours in advance of the meeting, or by written notice mailed to his or her business or home address at least 48 hours in advance of the meeting. Such notice shall be deemed to be delivered when hand delivered to such address, when read to such Director by telephone, when deposited in the mail so addressed with postage thereon prepaid, upon transmission of the message by electronic mail, upon completion of transmission of a facsimile message and receipt of a completed answer back indicating receipt or when delivered to the telegraph company if sent by telegram. Notice of any meeting of the Board may be waived in writing signed by the person or persons entitled to the notice, whether before or after the time of the meeting.
A waiver of notice executed before or after a meeting by a director and filed with the records of the meeting shall be deemed to be equivalent to an effective notice of the meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting solely for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting was not lawfully called or convened and does not further participate in the meeting. Except as otherwise required by law, by the Articles or by these Bylaws, neither the business to be
transacted at, nor the purpose of, any meeting of the Board need be specified in the notice or waiver of notice of such meeting.
Section 11.Quorum. At any meeting of the Board, a majority of the directors then in office shall constitute a quorum for the transaction of business, but if less than a quorum is present at a meeting, a majority of the directors present may adjourn the meeting from time to time. Any business which might have been transacted at the meeting as originally noticed may be transacted at such adjourned meeting at which a quorum is present.
Section 12.Action at Meeting. At any meeting of the Board at which a quorum is present, a majority of the directors present may take any action on behalf of the Board, unless otherwise required by law, by the Articles or these Bylaws.
Section 13.Action by Consent. Any action required or permitted to be taken by the directors of the Corporation, or by a committee thereof, may be taken without a meeting if a consent or consents in writing, setting forth the action so taken, is signed by all of the directors, or all of the members of such committee, as the case may be.
Section 14.Manner of Participation. Members of the Board or of any committee designated by the Board pursuant to Section 15 of this Article II may participate in a meeting of the Board or such committee through electronic communications, videoconferencing, teleconferencing or other available technology by means of which the Corporation has implemented reasonable measures to: (a) verify the identity of each person participating through such means as a director or member of the Board or a committee thereof, as the case may be; and (b) provide the directors or committee members a reasonable opportunity to participate in the meeting and to vote on matters submitted to the directors or committee members, as the case may be, including an opportunity to communicate and to read or hear the proceedings of the meeting in a substantially concurrent manner.
Section 15.Committees. The Board may designate one or more committees, including an Audit Committee, a Compensation Committee and a Nominating/Corporate Governance Committee, to consist of one or more of the members of the Board. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation. Except as the Board may otherwise determine or as required by law, by the Articles or by these Bylaws, any such committee may make rules for conduct of its business, but unless otherwise provided by the Board or in such rules, its business shall be conducted so far as possible in the same manner as is provided by the Articles and by these Bylaws for the Board. Any committee to which the Board delegates any of its powers or duties shall keep records of its meetings and shall report its action to the Board.
Section 16.Compensation of Directors. Directors shall receive compensation for their service as a director as shall be determined by a majority of the members of the Board, provided that directors who are serving the Corporation as officers or employees and who receive compensation for their services as such (collectively, the “Employee Directors”) shall not receive any salary or other compensation for their services as directors of the Corporation; provided, however, that such Employee Directors may be paid their reasonable expenses incurred as a director.
ARTICLE III
OFFICERS
Section 1.Enumeration. The officers of the Corporation shall consist of a Chairman of the Board ,a Chief Executive Officer, a President, a Secretary and a Treasurer and such other officers, including without limitation a Chief Operating Officer, a General Counsel, an Assistant General Counsel, a Chief Financial Officer, a Chief Accounting Officer, and one or more Vice Presidents (including Executive Vice Presidents or Senior Vice Presidents), as the Board may determine.
Section 2.Election and Appointment. At the regular annual meeting of the Board following the annual meeting of stockholders, the Board shall elect the Chief Executive Officer, the President, the Treasurer and the Secretary. Other officers may be appointed by the Board at such regular annual meeting of the Board or at any other regular or special meeting of the Board, or such other officers may be appointed by the Chief Executive Officer.
Section 3.Qualification. Officers must be stockholders of the Corporation. Any person may occupy more than one office of the Corporation at any time; however the Chief Executive Officer must be a different person than the President.
Section 4.Tenure. Except as otherwise provided by the Articles or by these Bylaws, each of the officers of the Corporation shall hold office until the regular annual meeting of the Board following the next annual meeting of stockholders and until his or her successor is elected and qualified or until his or her earlier resignation or removal. Election or appointment of an officer shall not of itself create contract rights. The Board may, however, authorize the Corporation to enter into an employment contract with any officer in accordance with law, but no such contract right shall prohibit the right of the Board to remove any officer at any time in accordance with Section 6 of this Article III.
Section 5.Resignation. Any officer may resign at any time by delivering his or her written resignation to the Corporation addressed to the Chief Executive Officer or the Secretary, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
Section 6.Removal. The Board may remove any officer with or without cause at any time.
Section 7.Absence or Disability. In the event of the absence or disability of any officer, the Board may designate another officer to act temporarily in place of such absent or disabled officer.
Section 8.Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board.
Section 9.Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board and at all meetings of stockholders. The Chairman of the Board shall have such other powers and shall perform such other duties as the Board may from time to time designate.
Section 10.Chief Executive Officer. In the absence of the Chairman of the Board, the Chief Executive Officer shall preside, when present, at all meetings of the Board. The Chief Executive Officer shall, subject to the direction of the Board, have general supervision and control of the Corporation’s business.
Section 11.President. The President shall have such powers and perform such duties as the Board or the Chief Executive Officer may from time to time designate.
Section 12.Chief Operating Officer, General Counsel, Chief Financial Officer and Chief Accounting Officer. Any Chief Operating Officer, General Counsel, Chief Financial Officer or Chief Accounting Officer shall have such powers and shall perform such duties as the Board or the Chief Executive Officer may from time to time designate.
Section 13.Vice Presidents. Any Vice President (including any Executive Vice President or Senior Vice President) shall have such powers and shall perform such duties as the Board or the Chief Executive Officer may from time to time designate.
Section 14.Treasurer. The Chief Financial Officer shall be the Treasurer, unless the Board shall elect another officer to be the Treasurer. The Treasurer shall, subject to the direction of the Board and except as the Board or the Chief Executive Officer may otherwise provide, have general charge of the financial affairs of the Corporation and shall cause to be kept accurate books of account. He or she shall have custody of all funds, securities and valuable documents of the Corporation. He or she shall have such other duties and powers as may be designated from time to time by the Board or the Chief Executive Officer. In the absence of a Chief Financial Officer, the Treasurer shall be the Chief Financial Officer of the Corporation and whenever the signature of the Chief Financial Officer is required on any document or instrument, by the laws of the United States or any state, or elsewhere in the Bylaws, to the extent permitted by law, the Treasurer shall have authority to affix his or her signature in such capacity.
Any Treasurer shall have such powers and perform such duties as the Board or the Chief Executive Officer may from time to time designate.
Section 15.Secretary. The Secretary shall record all the proceedings of the meetings of the stockholders and the Board (including committees of the Board) in books kept
for that purpose. In the absence of the Secretary from any such meeting, a temporary secretary chosen at the meeting shall record the proceedings thereof. The Secretary shall have charge of the stock ledger (which may, however, be kept by any transfer or other agent of the Corporation). The Secretary shall have such other duties and powers as may be designated from time to time by the Board or the Chief Executive Officer. In the absence of the Secretary, any Assistant General Counsel may perform the duties and responsibilities of the Secretary.
Any Assistant General Counsel shall have such powers and perform such duties as the Board or the Chief Executive Officer may from time to time designate.
Section 16.Other Powers and Duties. Subject to these Bylaws and to such limitations as the Board may from time to time prescribe, the officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the Board or the Chief Executive Officer.
ARTICLE IV
STOCK
Section 1.Certificates of Stock. The shares of the Corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by certificate until such certificate is surrendered to the Corporation. Each holder of stock represented by certificates shall be entitled to a certificate of the stock of the Corporation in such form as may from time to time be prescribed by the Board. Such certificate shall be signed by or in the name of the Corporation by the Chairman of the Board or the Vice Chairman of the Board, or the President or a Vice President, and countersigned by the Treasurer or the Secretary. Any and all signatures on the certificate may be a facsimile, including those of any transfer agent or registrar. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain such legend with respect thereto as is required by law.
Section 2.Transfers. Subject to any restrictions on transfer and unless otherwise provided by the Board, shares of stock may be transferred only on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, and with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably require.
Section 3.Dividends. Dividends upon the capital stock of the Corporation, subject to the requirements of the Nevada Revised Statutes (“NRS”) and the provisions of the Articles, if any, may be declared by the Board at any regular or special meeting of the Board (or any action by written consent in lieu thereof in accordance with Section 13 of Article II hereof), and may be paid in cash, in property, or in shares of the Corporation’s capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for purchasing any of the shares of capital stock, warrants, rights, options, bonds, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board may modify or abolish any such reserve.
Section 4.Record Holders. Except as may otherwise be required by law, by the Articles or by these Bylaws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of applicable law and these Bylaws.
It shall be the duty of each stockholder to notify the Corporation or its transfer agent of his or her post office address and any changes thereto.
Section 5.Record Date. In order that the Corporation may determine the stockholders entitled to receive notice of or to vote at any meeting of stockholders or any adjournments thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which shall not be more than 60 days nor less than 10 days before the date of such meeting. In such case, only stockholders of record on such record date shall be so entitled, notwithstanding any transfer of stock on the stock transfer books of the Corporation after the record date.
If no record date is fixed:
(a)the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders is the close of business on the day before the day on which the notice is given or, if notice is waived, at the close of business on the day before the meeting is held; and
(b)the record date for determining stockholders entitled to receive payment of a dividend or an allotment of any rights is the close of business on the day on which the resolution of the Board declaring the dividend or allotment of rights is adopted, but the payment or allotment may not be made more than 60 days after the date on which the resolution is adopted.
The Board may adopt a resolution prescribing a date upon which the stockholders of record entitled to give written consent without a meeting must be determined, which date may not precede or be more than 10 days after the date such resolution is adopted by the Board.
Section 6.Replacement of Certificates. The Corporation may issue a new certificate of stock in place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any certificate or the issuance of such new certificate.
Section 7.Transfer Agents and Registrars. The Corporation may serve as the transfer agent and registrar of the shares of stock of the Corporation, or the Board may, in its discretion, appoint one or more responsible bank, trust company or other entity as the Board may deem advisable, from time to time, to act as transfer agent and registrar of shares of stock.
Section 8.Stockholders’ Addresses. Every stockholder or transferee shall furnish the Secretary or a transfer agent with the address to which notice of meetings and all other notices may be served upon or mailed to such stockholder or transferee.
Section 9.Repurchase of Shares of Stock. Subject to the requirements of applicable law, the Corporation may purchase shares of its own stock and invest its assets in its own shares of stock, provided that in each case the consent of the Board shall have been obtained.
ARTICLE V
INDEMNIFICATION
Section 1.Director and Officer Indemnity for Claims Not in Name of Corporation.
(a)The Corporation must indemnify, to the maximum extent permitted by the law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the Corporation, by reason of the fact that he or she is or was a director or officer of the Corporation, or while serving as a director or officer of the Corporation and at the request of the Corporation, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding, if he or she acted in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, with respect to any criminal action, suit or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The Corporation may not indemnify any such person if it is proven his or her act, or failure to act, constituted a breach of his or her fiduciary duties as a director or officer, and his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law, making him or her liable pursuant to Section 78.138 of the NRS.
(b)The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person is liable pursuant to Section 78.138 of the NRS or did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, or that, with respect to any criminal action or proceeding, he or she had reasonable cause to believe that his or her conduct was unlawful.
Section 2.Director and Officer Indemnity for Claims in Name of Corporation.
(a)Subject to Subsection (b) below, the Corporation must indemnify, to the maximum extent permitted by the law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director or officer of the Corporation, or while serving as a director or officer of the Corporation and at the request of the Corporation, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee, against expenses, including amounts paid in settlement and attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit, if he or she acted in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation. The Corporation may not indemnify any such person if it is proven his or her act, or failure to act, constituted a breach of his or her fiduciary duties as a director or officer, and his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law, making him or her liable pursuant to Section 78.138 of the NRS.
(b)Indemnification may not be made for any claim, issue or matter as to which such person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Corporation or for amounts paid in settlement to the Corporation, unless and only to the extent that the court in which such action or suit was brought or other court of competent jurisdiction determines upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
Section 3.Indemnification of Directors and Officers of a predecessor of AINC. The Corporation will indemnify, to the maximum extent permitted by the law, such
indemnification as described in Section 1 and 2 above, to any current or former director or officer of Ashford Inc., a Maryland corporation (“AINC”), or any individual who, while a director or officer of AINC and at its request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee.
Section 4.Indemnification of Employees and Agents of the Corporation, AINC, or a Predecessor of AINC. With the approval of the Board, the Corporation will indemnify, to the maximum extent permitted by the law, to such extent as it shall deem appropriate under the circumstances, provide such indemnification as described in Section 1 and 2 above, to any current or former employee or agent of the Corporation, AINC, or a predecessor of AINC.
Section 5.Success on Merits. To the extent that a director, officer, employee or agent of the Corporation, AINC, or a predecessor of AINC has been successful on the merits or otherwise in defense of any action suit or proceeding subject to indemnification under Sections 1, 2, 3, and 4 above, or in defense of any claim, issue or matter therein, he or she shall be indemnified by the Corporation against expenses, including attorney’s fees, actually and reasonably incurred by him or her in connection therewith.
Section 6.Expenses.
(a)Expenses incurred in defending a civil, criminal, administrative or investigative action, suit or proceeding must be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by the Corporation as authorized in this Article V.
(b)Upon the Board’s approval to indemnify an employee or agent in Section 4 above, expenses incurred in defending a civil, criminal, administrative or investigative action, suit or proceeding must be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the employee or agent to repay such amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by the Corporation as authorized in this Article V.
Section 7.Right of Indemnitee to Bring Suit. If a claim under this Article V is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If the indemnitee is successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be paid the expense of prosecuting or defending such suit. In any suit brought by an indemnitee who is a present or former director to enforce a right to indemnification hereunder
(but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses), it shall be a defense that such indemnitee has not met the applicable standard of conduct set forth in the NRS. In addition, in any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the indemnitee who is a present or former director has not met the applicable standard of conduct set forth in the NRS. Neither the failure of the Corporation (including its Board, independent legal counsel, or stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the NRS, nor an actual determination by the Corporation (including its Board, independent legal counsel or stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article V or otherwise shall be on the Corporation.
Section 8.Other Sources of Indemnity. The indemnification provided by this Article V:
(a)does not exclude any other rights to which a person seeking indemnification may be entitled under any article of incorporation or any agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his or her official capacity or an action in another capacity while holding such office; and
(b)shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
Section 9.Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or any director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the NRS.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 1.Fiscal Year. The fiscal year of the Corporation shall end on December 31 of each year or on such other date as may be fixed by the Board.
Section 2.Execution of Instruments. All deeds, leases, transfers, contracts, bonds, notes and other obligations to be entered into by the Corporation in the ordinary course of
its business without action by the Board may be executed on behalf of the Corporation by the Chairman of the Board, if one is elected, the Chief Executive Officer, the President or the Treasurer or any other officer, employee or agent of the Corporation as the Board may authorize.
Section 3.Voting of Securities. Unless the Board otherwise provides by resolution, the Chairman of the Board, if one is elected, the Chief Executive Officer, the President or the Treasurer may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation or other entity, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation or other entity, or to consent in writing, in the name of the corporation as such holder, to any action by such other corporation or other entity, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consents, and may execute or cause to be executed in the name and on behalf of the Corporation, all such written proxies or other instruments as he or she may deem necessary or proper. Any of the rights set forth in this Section 3 of Article VI which may be delegated to an attorney or agent may also be exercised directly by the Chairman of the Board, the Chief Executive Officer, the President, or the Treasurer.
Section 4.Registered Agent. The Corporation shall have and maintain a registered agent in the State of Nevada upon whom legal process may be served in any action or proceeding against the Corporation.
Section 5.Amendments. These Bylaws may be altered, amended or repealed, and new bylaws adopted, by: (a) the vote of a majority of the entire Board; or (b) the vote of a majority of the voting power of the outstanding capital stock of the Corporation. Notwithstanding the preceding sentence, any repeal or amendment to the indemnification provisions in Article 5 which is adverse to any director, officer, employee, or agent shall apply to such director, officer, employee, or agent only on a prospective basis, and shall not limit the rights of an indemnitee to indemnification with respect to any action or failure to act occurring prior to the time of such repeal or amendment.
Section 6.Offices. The registered office of the Corporation within the State of Nevada shall be located at such place as the Board may designate. The Corporation may have additional offices, including a principal executive office, at such place or places both within and without the State of Nevada as the Board may from time to time determine or the business of the Corporation may require.
Section 7.Control Share Acquisitions. Pursuant to Section 78.378(1) of the NRS, the Corporation elects not to be governed by the provisions of Nevada state law applicable to the acquisition of a controlling interest in the stock of the Corporation, as set forth in NRS Sections 78.378 to 78.3793, involving the acquisition of a controlling interest in the stock of the Corporation by: (i) Archie Bennett, Jr.; (ii) Monty J. Bennett; (iii) MJB Investments LP; (iv) any present or future affiliate of Archie Bennett, Jr. or Monty J. Bennett; (v) Ashford
Hospitality Trust, Inc.; (vi) Braemar Hotels & Resorts Inc.; or (vii) any other entity that is advised by the Corporation or its controlled affiliates through an advisory agreement.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is by and between ASHFORD HOSPITALITY ADVISORS, LLC, a limited liability company organized under the laws of the State of Delaware and having its principal place of business at Dallas, Texas (the “Company”), a wholly-owned subsidiary of ASHFORD INC., a corporation organized under the laws of the State of Nevada and having its principal place of business at Dallas, Texas (“AINC”), and DERIC S. EUBANKS, an individual residing in Dallas, Texas (the “Executive”), and is dated to be effective January 1, 2023 (the “Effective Date”). The Executive and the Company are sometimes referred to collectively in this Agreement as the “Parties” and individually as a “Party.”
RECITALS:
WHEREAS, the Executive currently is employed by the Company pursuant to that certain Amended and Restated Employment Agreement dated September 13, 2017 (the “Current Employment Agreement”); and
WHEREAS, the Parties mutually desire to amend and restate the Current Employment Agreement in its entirety and to continue the Executive’s employment with the Company on the terms and conditions specified herein; and
WHEREAS, this Agreement shall therefore supersede and replace the Current Employment Agreement in its entirety;
NOW, THEREFORE, the Company and the Executive, in consideration of the respective covenants set out below, hereby agree as follows:
AGREEMENT:
1.EMPLOYMENT.
(a)POSITION. During the Term (defined in Section 2(a) below), the Executive shall be employed by the Company to serve as Chief Financial Officer (“CFO”) of the Company, AINC, Ashford Hospitality Trust, Inc. (“Ashford Trust”), and Braemar Hotels & Resorts Inc. (“Braemar”). In addition to the foregoing, the Executive shall serve the subsidiaries and affiliates of the Company, AINC, Ashford Trust, Braemar, and any other entities advised by AINC or its affiliates, and any such advised entities’ affiliates (each, an “Ashford Advised Entity” and collectively, the “Ashford Advised Entities”) in these or other offices and capacities, including as a consultant to such entities, in each case upon the reasonable request of the Company or AINC. If the Executive’s service in one or more of such additional capacities is terminated, the Executive’s compensation provided herein shall not be reduced for so long as the Executive otherwise remains employed by the Company under the terms of this Agreement.
(b)RESPONSIBILITIES. The Executive’s principal employment duties and responsibilities shall be those duties and responsibilities customary for the position of CFO and
such other executive duties and responsibilities as the Chief Executive Officer of AINC (“AINC CEO”) or the Board of Directors of AINC (the “AINC Board”) shall from time to time reasonably assign to the Executive, and the Executive shall comply with and, where applicable, enforce the personnel, ethical, and operational policies and procedures of the Company and its affiliates. With respect to Ashford Trust and Braemar, the Executive shall be required to follow all directives of the AINC CEO relating to the performance of the Company’s responsibilities pursuant to the applicable advisory agreements with each of Ashford Trust and Braemar, as may be amended, unless doing so would conflict with his fiduciary duties to Ashford Trust or Braemar, as applicable. The Executive shall report directly to the AINC CEO or such person(s) as the AINC CEO may designate from time to time.
(c)EXTENT OF SERVICES. Except for illnesses and vacation periods, the Executive shall devote substantially all of his working time and attention and his best efforts to the performance of his duties and responsibilities under this Agreement and shall not be otherwise employed. However, the Executive may (i) make any passive investments where he is not obligated or required to, and shall not in fact, devote material managerial efforts, (ii) participate in charitable, academic or community activities or in trade or professional organizations, (iii) hold directorships in charitable or non-profit organizations, or (iv) subject to AINC CEO and AINC Board approval (which approval shall not be unreasonably withheld or withdrawn), hold directorships in for profit companies, except only that the AINC CEO or the AINC Board shall have the right to limit such services as a director or such participation whenever the AINC CEO or the AINC Board shall reasonably believe that the time spent on such activities infringes in any material respect upon the time required by the Executive for the performance of his duties under this Agreement or is otherwise incompatible with those duties.
2.TERM.
(a)TERM. Subject to earlier termination pursuant to Section 6, the initial term of this Agreement shall be from the Effective Date through December 31, 2026 (the “Initial Term”), provided, that the Initial Term shall be automatically extended for successive one-year periods (each such period an “Extension Term”) unless either the Executive or the Company provides a written notice of non-extension (a “Notice of Non-Extension”) to the other at least sixty (60) days before the end of the Initial Term or, if applicable, the then-current Extension Term. The “Term” is the actual duration of the Executive’s employment under this Agreement taking into account any Extension Term and any termination of the Term before expiration of the Initial Term or any Extension Term pursuant to Section 6.
(b)EFFECT OF NON-EXTENSION. For purposes of Sections 7(b), 7(c), and 8, a termination of the Executive’s employment by reason of a Notice of Non-Extension given by the Company shall be considered a termination without Cause and a termination of the Executive’s employment by reason of a Notice of Non-Extension given by the Executive shall be considered a termination without Good Reason.
3.SALARY. During the Term, the Company shall pay the Executive a Base Salary (defined below), prorated for any partial period, which shall be payable in periodic installments according to the Company’s normal payroll practices. As of the Effective Date, the Executive’s Base Salary is $700,000.00. The AINC Board or a compensation committee duly appointed by the AINC Board (the “Compensation Committee”) shall review the Base Salary annually to determine in its sole discretion whether and to what extent the Base Salary may be adjusted (but never downward without the Executive’s consent). The “Base Salary” is the annualized amount established and adjusted from time to time pursuant to this Section 3.
4.BONUS AND INCENTIVE AWARDS.
(a)CASH INCENTIVE BONUS. In calendar year 2023 and thereafter for each full calendar year during the Term, the Executive will be eligible to receive a cash incentive bonus (the “Cash Incentive Bonus”) as determined in the sole discretion of the Compensation Committee based on its assessment of the level of accomplishment of personal, management, or performance objectives established by the Compensation Committee on an annual basis. The targeted Cash Incentive Bonus is 60% to 175% of the Base Salary.
(b)OTHER INCENTIVE BONUS. In calendar year 2023 and thereafter for each full calendar year during the Term, the Executive will be eligible to receive an award under AINC’s or an Ashford Advised Entity’s equity incentive plans, as they may be amended or established from time to time, or other equity-based award in the Company, AINC, any Ashford Advised Entity, or any of its or their affiliates (each, an “Ashford-Related Entity” and collectively, the “Ashford-Related Entities”) (the “Other Incentive Bonus”), as determined in the sole discretion of the Compensation Committee based on its assessment of the level of accomplishment of personal, management, or performance objectives established by the Compensation Committee. Any Other Incentive Bonus will be granted in the form of equity- or deferred cash-based awards on such terms and conditions as the Compensation Committee shall determine in its sole discretion. As of the Effective Date, and subject to any change hereafter made in the sole discretion of the Compensation Committee, each Other Incentive Bonus that is not immediately vested will be subject to a three (3) year vesting schedule.
(c)PAYMENT OR GRANTING OF BONUSES. Notwithstanding anything contained in this Agreement to the contrary, the Executive acknowledges and agrees that the decision to grant the Executive a Cash Incentive Bonus (including the amount) or an Other Incentive Bonus (including the types, amounts, and assigned values given with respect thereto and the terms and conditions thereof, including any holding or vesting periods) is subject to the sole discretion of the AINC CEO or the Compensation Committee. Any Cash Incentive Bonus or Other Incentive Bonus, will be paid or granted as soon as reasonably practicable during the calendar year following the calendar year to which such bonus relates, but generally not later than April 30th, provided, that, except as specifically provided to the contrary in Sections 7(a) or (b) or 8(b)(ii), to be eligible to receive any Cash Incentive Bonus or Other Incentive Bonus, the Executive must be employed by the Company at the time the Cash Incentive Bonus or Other Incentive Bonus, is to be paid or granted and, with respect to the Other Incentive Bonus, the
Executive must be employed by the Company on the scheduled vesting dates in order for the Other Incentive Bonus to vest.
5.BENEFITS.
(a)VACATION. The Executive will be entitled to paid vacation in conformance with the Company’s vacation policy for senior executives but in no event less than four (4) weeks of paid vacation per calendar year. Vacation time not used within the calendar year will not carry forward. The Executive shall not be entitled to cash in lieu of any unused vacation time except as specifically provided in Section 7(a).
(b)SICK LEAVE. The Executive shall be entitled to paid sick leave in accordance with the sick leave policies of the Company in effect for other senior executive officers.
(c)EMPLOYEE BENEFITS. The Executive and his spouse and eligible dependents, if any, and their respective designated beneficiaries where applicable, will be eligible for and entitled to participate in other benefits maintained by the Company or AINC for its senior executive officers, as such benefits may be modified from time to time and for all such employees, such as, without limitation, any medical, dental, vision, pension, 401(k), deferred compensation, accident, disability, and life insurance benefits, on a basis not less favorable than that applicable to other senior executives of the Company or AINC. The Executive will also be entitled to appropriate office space, administrative support, secretarial assistance, and such other facilities and services as are suitable to the Executive’s positions and as required for the performance of the Executive’s duties.
(d)EXPENSES. The Executive will be entitled to reimbursement of all reasonable expenses, in accordance with the Company’s policy as in effect from time to time and on a basis not less favorable than that applicable to other senior executives of the Company or AINC, including, without limitation, telephone (including in-home, office and cellular telephone, DSL and/or wi-fi costs), travel and entertainment expenses incurred by the Executive in connection with the business of the Company, promptly upon the presentation by the Executive of supporting receipts or documentation, provided, that in no event shall the Executive submit any required documentation later than sixty (60) days after the end of the calendar year in which such expense was incurred. Any such reimbursement shall be made as soon as reasonably practicable but in no event later than the 15th day of the third month following the calendar year in which the applicable expense was incurred.
(e)D&O INSURANCE COVERAGE. During and for a period three (3) years after the Term, the Executive shall be entitled to director and officer insurance coverage for his acts and omissions while an officer of the Company, AINC, and any of the other Ashford-Related Entities, on a basis no less favorable to him than the coverage provided current officers or directors.
6.TERMINATION.
(a)TERMINATION EVENTS. The Executive’s employment with the Company and the Term shall terminate upon the earliest to occur of the following: (i) the Executive’s death or Disability (defined in Section 6(b) below); (ii) the termination of the Executive’s employment by the Company with Cause (defined in Section 6(c) below) or without Cause; (iii) the termination of the Executive’s employment by the Executive with Good Reason (defined in Section 6(d) below) or without Good Reason; or (iv) the end of the then-current period of the Term after the timely provision by either Party to the other Party of a Notice of Non-Extension.
(b)DISABILITY. As used in this Agreement, “Disability” shall mean the Executive’s inability to perform the essential functions of his duties, with or without reasonable accommodation, for a period of 90 consecutive days or a total of 180 days, during any 365-day period, in either case as a result of incapacity due to mental or physical illness which is determined to be total and permanent. A determination of Disability shall be made by a physician satisfactory to both the Executive (or his guardian) and the Company, provided, that if the Executive and the Company do not agree on a physician, the Executive (or his guardian) and the Company shall each select a physician and these two together shall select a third physician, whose determination as to Disability shall be binding on all parties. The appointment of one or more individuals to carry out the offices or duties of the Executive during a period of the Executive’s inability to perform such duties and pending a determination of Disability shall not constitute Good Reason, a breach of this Agreement by the Company, or a termination of the Executive’s employment.
(c)CAUSE. For purposes of this Agreement, “Cause” means a determination by the Company in its sole discretion of acts of omissions of the Executive at any time which constitute, or the occurrence or existence at any time, of any of the following:
(i)a willful breach of duty involving disloyalty, dishonesty (other than inadvertent acts or omissions), fraud, theft, or embezzlement, which is materially detrimental to the Company, Ashford Inc. or any entity advised by the Company, except as permitted in Section 1(b);
(ii)a material violation of the personnel, ethical, and operational policies and procedures of the Company and its affiliates;
(iii)subject to Section 1(b), the failure or refusal to perform, carry out, or comply with the lawful directives of the AINC CEO, the officer to whom the Executive reports, or the AINC Board related to the reasonable job duties as chief financial officer, provided, that if there is an inconsistency in directives given by the AINC Board as compared to a directive from the AINC CEO, the AINC Board directives shall control;
(iv)the material neglect of, or material failure or refusal to substantially perform, the explicitly stated duties and responsibility of his position as chief financial officer (other than by reason of documented illness or injury or Disability or in connection with a period
of paid leave or approved leave of absence), including the Executive’s chronic absence from work;
(v)gross negligence or willful misconduct in the performance of his duties and responsibilities under this Agreement;
(vi)willful conduct by the Executive that has had or could reasonably be expected to have a material adverse effect on Ashford Inc. or any entity advised by the Company, whether monetarily, reputationally, or otherwise, or on his ability to function in his assigned role taking into account his position, duties, and responsibilities and the nature of the business of Ashford Inc. or any entity advised by the Company;
(vii)the failure or refusal to cooperate with any investigation or inquiry authorized by any of the Ashford-Related Entities or conducted by a governmental or regulatory authority related to any of the Ashford-Related Entities’ business or the Executive’s conduct related to any of the Ashford-Related Entities;
(viii)a material breach of this Agreement or other written agreement between the Executive and any of the Ashford-Related Entities; or
(ix)the Executive’s conviction of, or entry of a plea agreement or similar arrangement to, a felony (exclusive of a conviction, plea of guilty or nolo contendere arising under a statutory provision imposing criminal liability upon the Executive on a PER SE basis due to any offices held by the Executive pursuant to the terms of this Agreement, so long as any act or omission of the Executive with respect to such matter was not taken or omitted in contravention of any applicable policy or directive of the AINC CEO or the AINC Board except as permitted in Section 1(b)).
Before exercising its right to terminate the Executive’s employment with Cause in whole or part under clauses (i), (ii), (iii), or (iv), the Company must provide written notice to the Executive of its intent to do so, and that notice shall describe in reasonable detail the condition(s) believed to constitute Cause under such provision(s) (though in no event shall the Company be required to provide more than one such notice as to the same, or similar recurring conduct, act, or omission) and provide the Executive with a reasonable period of time to cure the condition(s) (the “Cure Period”), unless the Company reasonably determines that such condition is not reasonably capable of being cured. A thirty (30)-day Cure Period shall be presumptively reasonable. Any attempt by the Executive to cure a stated Cause condition shall not be deemed an admission by the Executive that the stated condition existed or constitutes Cause. Nothing in this Section 6(c) precludes discussions between the Executive and the Company, or personnel actions by the Company short of termination of employment, regarding such condition(s). For purposes of this Section, no act, or failure to act, on the Executive’s part will be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without a reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company, Ashford Inc. or the entities advised by the Company, as applicable. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the AINC Board, a directive of the AINC CEO, or based upon the advice of outside counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best interests of the Company, Ashford Inc. or the entities advised by the Company, as applicable.
(d)GOOD REASON. For purposes of this Agreement, “Good Reason” means the existence of one or more of the following conditions arising on or after the Effective Date without the consent of the Executive, as determined in a manner consistent with Treasury Regulation § 1.409A-1(n)(2)(ii):
(i)the assignment to the Executive of any duties, responsibilities, or reporting requirements inconsistent with Section 1(b), or any material diminishment, on a cumulative basis, of the Executive’s overall authority, duties, or responsibilities;
(ii)a reduction in the Executive’s Base Salary or targeted Cash Incentive Bonus, provided, that a reduction in the Executive’s Base Salary alone shall not be considered Good Reason if the reduction is the result of a generally applicable reduction and does not exceed the percentage reduction in the base salaries of similarly situated senior executives of the Company and its affiliates;
(iii)the requirement by the Company that the principal place of business at which the Executive performs his duties be changed to a location outside the greater Dallas metropolitan area; or
(iv)any other material breach by the Company of this Agreement.
To exercise his option to terminate employment with Good Reason, the Executive must provide written notice to the Company of his belief that Good Reason exists within sixty (60) days of the initial occurrence of the condition(s) giving rise to the Good Reason, and that notice shall describe in reasonable detail the condition(s) believed to constitute Good Reason. The Company shall have thirty (30) days to remedy the Good Reason condition(s). If not remedied within that thirty (30)-day period, or if the Company notifies the Executive that it does not intend to cure such condition(s) before the end of that thirty (30)-day period, the Executive may submit a Notice of Termination pursuant to Section 6(e); provided, that the Notice of Termination invoking the Executive’s right to terminate employment with Good Reason must be given no later than ninety-five (95) days after the initial occurrence of the condition(s) giving rise to the Good Reason. If the Executive does not either timely (x) provide written notice of his belief that Good Reason exists or (y) thereafter submit a Notice of Termination with Good Reason, then he will be deemed to have consented to or accepted the condition(s), or the Company’s cure of such condition(s), that may have given rise to the existence of Good Reason. Any attempt by the Company to cure a stated Good Reason condition shall not be deemed an admission by the Company that the stated condition existed or constitutes Good Reason.
(e)NOTICE OF TERMINATION. Any termination of the Executive’s employment (other than by reason of his death or the provision by either Party to the other Party of a Notice of Non-Extension) shall be communicated by a written Notice of Termination from the initiating Party to the other Party. For purposes of this Agreement, a “Notice of Termination” shall mean a notice (i) indicating the specific termination provision in this Agreement relied upon; (ii) in the
case of a termination with Cause by the Company or with Good Reason by the Executive, setting out in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision invoked; and (iii) setting out the Date of Termination (defined in Section 6(f) below). The failure by the Company or the Executive to set out in the Notice of Termination any fact or circumstance that contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive or preclude either of them from asserting such fact or circumstance in enforcing or defending their rights under this Agreement or otherwise.
(f)DATE OF TERMINATION. For purposes of this Agreement, the “Date of Termination” shall mean (i) if the Executive’s employment is terminated by reason of his death, the date of his death; (ii) if the Executive’s employment is terminated by reason of his Disability or by the Company with Cause, the date specified in the Notice of Termination, which date shall be no earlier than the date such notice is given; (iii) if the Executive’s employment is terminated by the Executive with Good Reason, the date specified in the Notice of Termination, which date shall be no earlier than the date such notice is given and no later than thirty (30) days after the date of the Notice of Termination; (iv) if the Executive’s employment is terminated by the Company without Cause or by the Executive without Good Reason, sixty (60) days after the date the Notice of Termination is given; or (v) if the Executive’s employment is terminated by reason of the timely provision by either Party to the other Party of a Notice of Non-Extension, the last day of the Term; provided, that in the event of a termination pursuant to clauses (iii), (iv), or (v) above, the Company may accelerate the Date of Termination by paying the Executive his Base Salary for the period by which the Date of Termination is so accelerated and such acceleration shall not change the characterization of the termination under such clause.
7.EFFECTS OF TERMINATION.
(a)TERMINATION FOR ANY REASON. Upon termination of the Executive’s employment for any reason, the Company shall pay to the Executive: (i) the Executive’s earned but unpaid Base Salary through the Date of Termination; (ii) if the Executive’s employment is terminated for any reason other than by the Company with Cause, by the Executive without Good Reason, or by reason of a Notice of Non-Extension given by the Executive, any Cash Incentive Bonus determined by the Company and communicated to the Executive for the calendar year preceding the year in which the Date of Termination occurs to the extent not previously paid; (iii) reimbursement of all expenses through the Date of Termination as required pursuant to Section 5(d); and (iv) if the Executive’s employment is terminated for any reason other than by the Company with Cause and unless required by law that supersedes this Agreement, any accrued but unused vacation (or equivalent paid leave) through the Date of Termination, (collectively, the “Accrued Obligations”). The amounts in clauses (i), (ii), and (iv), if any, shall be paid at the time and in the manner required by applicable law but in no event later than thirty (30) business days after the Date of Termination, and the amount, if any, in clause (iii) shall be paid in accordance with Section 5(d).
(b)TERMINATION BY COMPANY WITHOUT CAUSE OR BY EXECUTIVE WITH GOOD REASON. In addition to the Accrued Obligations and subject to the Executive’s satisfaction of the requirements set forth in Section 7(f), in the event the Executive’s employment
is terminated by the Company without Cause (including for this purpose, by reason of a Notice of Non-Extension given by the Company) or by the Executive with Good Reason, the Company shall pay or provide the Executive with the following severance benefits:
(i)The Company will pay the Executive at the time and in the manner set forth in Section 7(g) an amount equal to the Severance Multiple (defined below) times the sum of (x) the Base Salary in effect on the Date of Termination plus (y) the average Cash Incentive Bonus received by the Executive for the three (3) complete calendar years immediately prior to the Date of Termination, (the “Severance Payment”). The “Severance Multiple” for purposes of this Section 7(b)(i) is two (2).
(ii)The Company will pay the Executive at the time and in the manner set forth in Section 7(g) a pro-rated Cash Incentive Bonus in an amount equal to the product of (x) the amount of the Cash Incentive Bonus, if any, to which the Executive would have been entitled if the Executive’s employment had not been terminated and (y) a fraction, the numerator of which is the number of days in the applicable calendar year for which the Executive was employed through the Date of Termination and the denominator of which is the 365 days of the calendar year (the “Pro-Rated Bonus”).
(iii)If the Executive timely elects continued coverage under the Company’s group health plan pursuant to the Consolidated Budget Reconciliation Act of 1985 (“COBRA”) and timely makes the premium payments, the Company will reimburse the Executive on a monthly basis for the cost of such premiums for himself and any of his eligible dependents until the earlier of (x) the date the Executive (or any of his eligible dependents with respect to such dependents) becomes eligible to participate in another group health plan or otherwise is no longer eligible for COBRA participation coverage and (y) eighteen (18) months of continued coverage (the “COBRA Benefit”).
(iv)The Company will reimburse the Executive on a monthly basis for the premium cost of life insurance and long-term disability insurance, if any, for the same level of such benefits that were provided to the Executive under the Company’s life insurance and long-term disability plans in effect as of the Date of Termination until the earlier of (x) the date the Executive becomes eligible to participate or is covered under another employer’s life insurance or long-term disability plan, as applicable, and (y) the 24th month following the Date of Termination (the “Limited Benefit Reimbursement”), provided, that the Executive provides proof to the Company on a monthly basis of the premium cost and payment thereof.
(v)Despite the termination of the Executive’s employment, all unvested Other Incentive Bonus awards held by the Executive will vest in full as of the Date of Termination (the “Accelerated Vesting”).
The Severance Payment, Pro-Rated Bonus, COBRA Benefit, Limited Benefit Reimbursement, and Accelerated Vesting, as applicable, are the “Severance Benefits”. Notwithstanding any other provision of this Agreement, the Executive shall not be entitled to receive or continue to receive any of the Severance Benefits (including under Sections 7(d) or 8(b)(ii)), and the Executive shall immediately repay to the Company upon written demand any Severance Benefits that already
have been paid to him, if (I) he violates any of his continuing obligations under Sections 9, 10, 15, or 16(l); (II) any of the provisions of Sections 9, 10, or 16(l) are ever deemed to be void or unenforceable, with or without reformation, based on the application of the law of the state of the Executive’s residence (other than the State of Texas) at the time; or (III) the Company later determines in its reasonable discretion that a condition existed which, had the Company been fully aware of such condition, would have given the Company the right to terminate the Executive’s employment for Cause. For purposes of clarity only, the Executive (aa) shall not be entitled to receive any of the Severance Benefits if his employment is terminated by the Company with Cause; (bb) shall not be entitled to receive any of the Severance Benefits if his employment is terminated by the Executive without Good Reason (including for this purpose a Notice of Non-Extension given by the Executive) except as specifically provided for in Section 8(b)(ii); and (cc) shall not be entitled to receive any of the Severance Benefits if his employment is terminated by reason of his death or Disability except as specifically provided for in Section 7(d). The Executive agrees to inform the Company promptly of any event that would make himself or any of his eligible dependents ineligible for the COBRA Benefit or the Limited Benefit Reimbursement.
(c)TERMINATION BY EXECUTIVE WITHOUT GOOD REASON. If the Executive terminates employment without Good Reason (including for this purpose, by reason of a Notice of Non-Extension given by the Executive) and complies with his obligations under Section 10(a), then in addition to the Accrued Obligations and subject to the Executive’s satisfaction of the requirements set forth in Section 7(f), the Company shall pay the Executive a non-compete payment (the “Non-Compete Payment”) equal to the sum of (x) the Base Salary in effect on the Date of Termination plus (y) the average Cash Incentive Bonus received by the Executive for the three (3) complete calendar years immediately prior to the Date of Termination. The Non-Compete Payment will be paid in twelve (12) substantially equal monthly installments (each of which installments may be made in the Company’s discretion over one or more of the Company’s payroll dates in such month) beginning in the first month after the month in which the Date of Termination occurs and ending on the earlier of the month in which the last such installment has been paid and, if applicable, the month in which the Executive violates any of his obligations under Section 10(a), provided, that the first installment payment shall be paid, without interest, on the Company’s first regular payroll date that is at least five (5) business days after the Release (defined in Section 7(f) below) has become fully enforceable and irrevocable and include any installments (or fraction thereof) that would have been paid had the first installment been payable on the Company’s first payroll date in the first month after the month in which the Date of Termination occurs, and provided further, that if any portion of the Non-Compete Payment constitutes “nonqualified deferred compensation” for purposes of Code Section 409A (defined in Section 7(f) below) and the period in which the Executive has to review and revoke the Release begins in one calendar year and ends in another calendar year, the first installment of the Non-Compete Payment shall begin in such second calendar year and shall include payment of any amount that otherwise would be paid earlier absent this provision, and each payment hereunder shall be deemed a separate payment for purposes of Code Section 409A. The Executive shall not be entitled to receive or continue to receive the Non-Compete Payment, and the Executive shall immediately repay to the Company upon written demand any portion of the Non-Compete Payment that already has been paid to him, (x) if he violates or has violated his
obligations under Section 10(a), but his obligations under Section 10(a) shall continue, or (y) if Section 10(a) is ever deemed to be void or unenforceable, with or without reformation, based on the application of the law of the state of the Executive’s residence (other than the State of Texas). The Company’s right to cease making or to recoup any portion of the Non-Compete Payment pursuant to this Section 7(c) shall be in addition to any other remedy at law or in equity to which the Company may be entitled.
(d)TERMINATION BY REASON OF DEATH OR DISABILITY. In addition to the Accrued Obligations and subject to the Executive’s satisfaction of the requirements set forth in Section 7(f), in the event the Executive’s employment is terminated by reason of his death or Disability, then the Executive (or his estate, spouse, or dependents, as applicable) shall be entitled to the Severance Benefits, provided, that the Severance Multiple for purposes of calculating the Severance Payment under this Section 7(d) is one (1).
(e)TERMINATION OF AUTHORITY; DEEMED RESIGNATION. Immediately upon the Date of Termination, notwithstanding anything else to the contrary contained herein or otherwise, the Executive (i) will stop serving the functions of his terminated or expired positions, and shall be without any of the authority or responsibility for such positions; and (ii) shall be deemed to have resigned from all other positions he then holds as an employee, officer, director, manager, trustee, fiduciary, committee member, or other service provider, of or for the Ashford-Related Entities, and any employee benefit plans of any of the foregoing entities.
(f)RELEASE OF CLAIMS. The Executive shall not be entitled to receive any of the Severance Benefits (including under Sections 7(d) or 8(b)(ii)) or the Non-Compete Payment unless (x) such termination of employment constitutes a Separation from Service (defined below), (y) the Executive (or his representative or estate, if applicable) executes and returns to the Company a separation agreement containing a waiver and release of claims in the form prescribed by the Company (the “Release”) on or prior to the 50th day following the Date of Termination, or such shorter time as may be prescribed in the Release, and (z) where applicable, such Release shall not have been timely revoked by the Executive. For purposes of this Agreement, “Separation from Service” means a separation from service within the meaning of Section 409A of the Internal Revenue Code (the “Code”) and the regulations and other guidance thereunder (“Code Section 409A”).
(g)CODE SECTION 409A AND PAYMENT TERMS.
(i)Subject to Section 7(b) and the Executive’s satisfaction of the requirements set forth in Section 7(f), (x) the Severance Payment, if any, shall be paid in one lump sum on the 60th day following the Date of Termination (or the next business day if such date is a weekend or holiday) and (y) the Pro-Rated Bonus, if any, shall be paid in one lump sum at the time the other cash incentive bonuses of the type described in Section 4(a) are paid to similarly situated senior executives of the Company and its affiliates.
(ii)Notwithstanding anything herein to the contrary, to the extent that the AINC Board reasonably determines, in its sole discretion, that any payment or benefit to be provided under this Agreement to or for the benefit of the Executive would be subject to the
additional tax imposed under Section 409A(a)(1)(B) of the Code or a successor or comparable provision, the commencement of such payments and/or benefits shall be delayed until the earlier of (x) the date that is six (6) months following the Date of Termination or (y) the date of the Executive’s death, provided, that if at such time the Executive is a “specified employee” of the Company (as defined in Treasury Regulation Section 1.409A-1(i)) and if amounts payable under this Agreement are on account of an “involuntary separation from service” (as defined in Treasury Regulation Section 1.409A-1(m)), the Executive shall receive payments during the six (6)-month period immediately following the Date of Termination equal to the lesser of (aa) the amount payable under this Agreement, as the case may be, or (bb) two (2) times the compensation limit in effect under Code Section 401(a)(17) for the calendar year in which the Date of Termination occurs (with any amounts that otherwise would have been payable under this Agreement during such six (6)-month period being paid on the first regular payroll date following the six (6)-month anniversary of the Date of Termination). For the purposes of this Agreement, amounts payable under this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treasury Regulation Sections 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treasury Regulation Section 1.409A-1 through A-6.
(iii)Any reimbursement or in-kind benefit provided under this Agreement which constitutes a “deferral of compensation” within the meaning of Treasury Regulation Section 1.409A-1(b) shall be made or provided in accordance with the requirements of Code Section 409A, including, where applicable, the requirement that (w) any reimbursement is for expenses incurred during the period of time specified in this Agreement, (x) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (y) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred, and (z) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.
8.CHANGE OF CONTROL.
(a)CHANGE OF CONTROL. For purposes of this Section 8, a “Change of Control” will be deemed to have taken place upon the occurrence of any of the following events:
(i)any “person” (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as modified in Section 12(d) and 14(d) of the Exchange Act), other than (A) AINC or any of its subsidiaries or any of its officers or directors, (B) any employee benefit plan of AINC or the Company or any of their subsidiaries, (C) a company owned, directly or indirectly, by stockholders of AINC in substantially the same proportions as their ownership of AINC, or (D) an underwriter temporarily holding securities pursuant to an offering of such securities, becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of AINC representing 30% or more of the shares of voting stock of AINC then outstanding;
(ii)the consummation of any merger, reorganization, business combination or consolidation of AINC with or into any other company, other than a merger, reorganization, business combination or consolidation which would result in the holders of the voting securities of AINC outstanding immediately prior thereto holding securities which represent immediately after such merger, reorganization, business combination or consolidation more than 50% of the combined voting power of the voting securities of AINC or the surviving company or the parent of such surviving company;
(iii)the consummation of the sale or disposition by AINC of all or substantially all of AINC’s assets, other than a sale or disposition if the holders of the voting securities of AINC outstanding immediately prior thereto hold securities immediately thereafter which represent more than 50% of the combined voting power of the voting securities of the acquiror, or parent of the acquiror, of such assets; or the stockholders of AINC approve a plan of complete liquidation or dissolution of AINC; or
(iv)individuals who, as of the Effective Date, constitute the AINC Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the AINC Board; provided, that any individual becoming a director subsequent to the date hereof whose election to the Board was approved or recommended to stockholders of AINC by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an election contest with respect to the election or removal of directors or other solicitation of proxies or consents by or on behalf of a person other than the AINC Board.
(b)CERTAIN BENEFITS UPON A CHANGE OF CONTROL.
(i)If a Change of Control occurs during the Term and the Executive’s employment is terminated on or before the first anniversary of the effective date of the Change of Control by the Company without Cause (including for this purpose, by reason of a Notice of Non-Extension given by the Company) or by the Executive with Good Reason, then in addition to the Accrued Obligations and the Severance Benefits, all outstanding equity-based awards granted to the Executive under any of AINC’s equity incentive plans (or awards substituted therefore covering the securities of a successor company) or under any equity incentive plans of an Ashford Advised Entity shall become immediately vested and exercisable in full.
(ii)If a Change of Control occurs during the Term and the Executive’s employment is terminated on or before the first anniversary of the effective date of the Change of Control by the Executive without Good Reason (including for this purpose, by reason of a Notice of Non-Extension given by the Executive), then in addition to the Accrued Obligations and subject to the Executive’s satisfaction of the requirements set forth in Section 7(f), the Executive shall be eligible to receive the Pro-Rated Bonus at the time and in the manner set forth in Section 7(g), the COBRA Benefit, the Limited Benefit Reimbursement, and the Accelerated Vesting, provided, that the Accelerated Vesting shall be limited to any annual performance shares, restricted shares, LTIP units or options awarded before September 13, 2017 under any of AINC’s equity incentive plans or under any equity incentive plans of an Ashford Advised Entity. Any
unvested portion of annual performance shares, restricted shares, LTIP units or options awarded on or after September 13, 2017 (including such awards granted to the Executive on or after September 13, 2017 under equity incentive plans of any Ashford Advised Entity) shall be forfeited by the Executive on the Date of Termination.
9.CONFIDENTIAL INFORMATION. The Executive recognizes and acknowledges that the Executive has and will have access to confidential and proprietary information of the Ashford-Related Entities, which, in each case, constitute valuable, special, and unique assets of such entity. The term “Confidential Information” as used in this Agreement shall mean all proprietary information which is known only to the Executive, any Ashford-Related Entities, other employees of the Company, or others in a confidential relationship with any Ashford-Related Entities, and relating to the business of the Company, AINC or such other entity, as applicable (including, without limitation, information regarding clients, customers, pricing policies, methods of operation, proprietary company programs, sales, acquisitions, products, profits, costs, conditions (financial or other), cash flows, key personnel, formulae, product applications, technical processes, and trade secrets, as such information may exist from time to time), which the Executive acquired or obtained by virtue of work performed for the Company, or which the Executive may acquire or may have acquired knowledge of during the performance of said work.
The Executive acknowledges that the Company has put in place certain policies and practices to keep such Confidential Information secret, including disclosing the information only on a need-to-know basis. The Executive further acknowledges that the Confidential Information has been developed or acquired by the Company through the expenditure of substantial time, effort, and money and provides the Company with an advantage over competitors who do not know such Confidential Information. Finally, the Executive acknowledges that such Confidential Information, if revealed to or used for the benefit of the Company’s competitors or in a manner contrary to the Company’s interests, would cause extensive and immeasurable harm to the Company and to the Company’s competitive position.
The Executive shall not, during the Term or at any time thereafter, use for personal gain or detrimentally to any Ashford-Related Entities all or any part of the Confidential Information, or disclose or make available all or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder, unless and until such Confidential Information becomes publicly available other than as a consequence of the breach by the Executive of his confidentiality obligations hereunder. Notwithstanding the foregoing, the Executive shall not be restricted from disclosing or using Confidential Information that: (i) is or becomes generally available to the public other than as a result of an unauthorized disclosure by the Executive or his agent; (ii) becomes available to the Executive in a manner that is not in contravention of applicable law from a source (other than any Ashford-Related Entities or one of its or their officers, employees, agents or representatives) that is not known by the Executive, after reasonable investigation, to be bound by a confidential relationship with any Ashford-Related Entities by a confidentiality or other similar agreement; or (iii) is required to be disclosed by law, court order or other legal process; provided, that in the event disclosure is
required by law, court order or legal process, the Executive shall provide the Company, if legally permissible, with prompt notice of such requirement as set forth below in this Section 9.
The Executive acknowledges that the Confidential Information shall remain at all times the exclusive property of the Company, and no license is granted. In the event of the termination of his employment, whether voluntary or involuntary and whether by the Company or the Executive, or within seven (7) business days of the Company’s request under any other circumstances, the Executive shall deliver to the Company all Confidential Information, in any form whatsoever, including electronic formats, and shall not take with him any Confidential Information or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information. The Company acknowledges that prior to his employment with the Company, the Executive has lawfully acquired extensive knowledge of the industries in which the Company engages in business including, without limitation, markets, valuation methods and techniques, capital markets, investor relationships and similar items, and that the provisions of this Section 9 are not intended to restrict the Executive’s use of such previously acquired knowledge.
In the event that the Executive receives a request or is required (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to disclose all or any part of the Confidential Information, the Executive agrees, if legally permissible, to (a) promptly notify the Company of the existence, terms and circumstances surrounding such request or requirement, (b) consult with the Company on the advisability of taking legally available steps to resist or narrow such request or requirement and (c) assist the Company in seeking a protective order or other appropriate remedy; provided, that the Executive shall not be required to take any action in violation of applicable laws. In the event that such protective order or other remedy is not obtained or that the Company waives compliance with the provisions hereof, the Executive shall not be liable for such disclosure unless disclosure to any such tribunal was caused by or resulted from a previous disclosure by the Executive not permitted by this Agreement.
By this Agreement, the Company is providing the Executive with rights that the Executive did not previously have. In exchange for the foregoing and the additional terms agreed to in this Agreement, the Executive agrees that: (i) he is being provided with access to Confidential Information to which he has not previously had access; and (ii) all goodwill developed with the Company’s clients, customers and other business contacts by the Executive is the exclusive property of the Company. The Executive waives and releases any claim that he should be able to use, for the benefit of any competing person or entity, client and customer goodwill or Confidential Information that was previously received or developed by the Executive while working for the Company.
10.RESTRICTIVE COVENANTS.
(a)NON-COMPETITION. During the Term and thereafter for the period beginning on his Date of Termination and ending on the first anniversary of his Date of Termination (such period the “Non-Competition Restriction Period”), the Executive shall not, directly or indirectly, either as a principal, agent, employee, employer, stockholder, partner, or in any other individual
or representative capacity, engage in any Competitive Business (defined below); provided, that the foregoing shall not prohibit or limit the Executive’s right to pursue and maintain passive investments allowed pursuant to Section 1(c), and provided further, that during the Non-Competition Restriction Period, the prohibition in this Section 10(a) extends only to the performance by the Executive, directly or indirectly, of the same or similar activities the Executive performed for the Company for or on behalf of a Competitive Business that take place anywhere in, or are directed at any part of, the Specified Geographical Area (defined below), or such other activities that by their nature are likely to lead to the disclosure of Confidential Information.
For purposes of this Section 10, (i) “Competitive Business” means (x) acquiring, investing in or with respect to, owning, leasing, managing or developing hotel properties or (y) originating or acquiring loans in respect of hotel properties; and (ii) “Specified Geographical Area” means the United States and any international market in which any of the Ashford-Related Entities conducts such business as of the Date of Termination, in each case where the Executive had duties or responsibilities in respect of or performed services for the Company, which the Parties stipulate is a reasonable geographical restriction because of the scope of the Company’s operations and the Executive’s duties and responsibilities. The Executive may not avoid the purpose and intent of this restriction by engaging in conduct within the Specified Geographical Area from a remote location through means such as telecommunications, written correspondence, computer generated or assisted communications, or other similar methods.
The Executive acknowledges that the services provided by the Executive are of a special, unique, and extraordinary nature. The Executive further acknowledges that his work and experience with the Company will enhance his value to a Competitive Business, and that the nature of the Confidential Information to which the Executive has immediate access and will continue to have access during the course of his employment makes it difficult, if not impossible, for him to engage in any Competitive Business without disclosing or utilizing the Confidential Information. The Executive further acknowledges that his work and experience with the Company places him in a position of trust with the Company.
(b)NON-SOLICITATION OF SERVICE OR CAPITAL PROVIDERS. During the Term and thereafter for the period beginning on his Date of Termination and ending on the second anniversary of his Date of Termination (such period the “Non-Solicitation Restriction Period”), the Executive shall not, without the prior written consent of the Company, directly or indirectly, whether for his own account or on behalf of any person, firm, corporation, partnership, association or other entity or enterprise:
(i)(x) solicit, recruit, encourage, induce, persuade, or entice (or attempt to do any of the foregoing) any employees or individual service providers of any of the Ashford-Related Entities or any person who was an employee or individual service provider of any of the Ashford-Related Entities during the six (6) months preceding the Executive’s Date of Termination (each such person a “Subject Employee”) (I) to become employed or engaged by a Competitive Business, the Executive, or other entity with which the Executive is associated in any manner or (II) to leave the Subject Employee’s employment or engagement with any of the
Ashford-Related Entities; (y) hire or engage (or attempt to do so) or cause to be hired or engaged (or attempt to do so), or participate in any manner in the hiring or engagement of, any Subject Employee, including by suggesting, identifying, recommending, or endorsing any Subject Employee as a possible candidate for hire or engagement; or (z) deal with any Subject Employee in any way with respect to employment or engagement as a service provider. The Parties agree that (aa) the placement of general advertisements that may be targeted to a particular geographic or technical area but which are not targeted directly or indirectly towards any employees, officers, agents or representatives of any of the Ashford-Related Entities (or any successor entities) shall not be deemed a breach of this Section 10(b)(i) and (bb) the employment or engagement of a Subject Employee by an entity that is not controlled by the Executive and whom the Executive did not (I) suggest, identify, recommend, or endorse as a possible candidate for hire or engagement or (II) solicit, recruit, encourage, induce, persuade, or entice (or in any manner attempt to do any of the foregoing) to terminate his or her employment or service-provider relationship with any of the Ashford-Related Entities or accept such employment or engagement with such entity shall not be deemed a breach of this Section 10(b)(i).
(ii)(x) solicit, recruit, encourage, induce, persuade, or entice (or attempt to do any of the foregoing) any investor, financier, or other capital provider (I) that he introduced to, or was introduced to by, any of the Ashford-Related Entities, or about whom he had access to Confidential Information, during the Term, and with whom any of the Ashford-Related Entities had a business relationship or (II) with whom any of Ashford-Related Entities had material discussions in respect of a business relationship and such discussions were known to the Executive, in either case as of, or during the six months preceding, the Executive’s Date of Termination, (each such person or entity an “Investor”) to (A) refrain from entering into, extending, or renewing a business relationship with any the Ashford-Related Entities or (B) divert any the Investor’s business from the Ashford-Related Entities; or (y) suggest, identify, recommend, endorse, introduce or facilitate the introduction of an Investor to any non-Ashford-Related Entities for the purpose of making an investment in or financial commitment to, or otherwise becoming a capital provider to, such non-Ashford-Related Entities, provided, that the restrictions in this Section 10(b)(ii)(x)(B) and (y) shall not apply to any (aa) commercial financial institution lender or (bb) Investor who has a pre-existing business relationship with the non-Ashford-Related Entity on whose behalf the Executive is making or facilitating the introduction and whose pre-existing business relationship with such non-Ashford-Related Entity is of the same type as the Investor’s business relationship with the Ashford-Related Entities.
The Executive acknowledges that the foregoing restrictions are reasonable and necessary given the nature of the business of the Ashford-Related Entities, the significant efforts and resources the Ashford-Related Entities have expended in creating and maintain relationships and goodwill with their employees, other service providers, and investors, and the scope of the Executive’s duties and responsibilities.
(c)NON-INTERFERENCE WITH COMPANY OPPORTUNITIES. The Executive understands and agrees that all business opportunities with which he is involved during his employment with the Company constitute valuable assets of the Company and its affiliated entities, and may not be converted to the Executive’s own use or converted by the Executive for
the use of any person, firm, corporation, partnership, association or other entity or enterprise. Accordingly, the Executive agrees that during the Term, the Executive shall not, directly or indirectly, whether for his own account or on behalf of any person, firm, corporation, partnership, association or other entity or enterprise, interfere with, solicit, pursue, or in any manner make use of any such business opportunities.
(d)NON-SOLICITATION OF CLIENTS. The Executive understands and acknowledges that because of the Executive’s experience with and relationship to the Company, he will have access to much or all of the valuable information regarding the clients of the Ashford-Related Entities. The Executive understands and acknowledges that loss of those client relationships and/or goodwill will cause significant and irreparable harm to the Ashford-Related Entities. During the Term and the Non-Solicitation Restriction Period, the Executive therefore shall not, directly or indirectly, whether for his own account or on behalf of any person, firm, corporation, partnership, association or other entity or enterprise, solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact, or meet with any of the Ashford-Related Entities’ current, former or prospective clients that he had contact with or was aware of Confidential Information related to for purposes of offering or accepting goods or services similar to or competitive with those offered by any of the Ashford-Related Entities.
(e)STANDSTILL. The Executive covenants and agrees that during the Term and thereafter through the second anniversary of his Date of Termination (such period, the “Standstill Period”), without the prior written consent of the Company, the Executive will not at any time, directly or indirectly, acquire, make any proposal or offer to acquire, or propose or facilitate the acquisition of, directly or indirectly, by purchase or otherwise, record or Beneficial Ownership of any equity securities of the Ashford-Related Entities, or securities of any of the Ashford-Related Entities that are convertible, exchangeable, redeemable or exercisable into such equity securities except those granted to him before the Effective Date in connection with his employment by the Company or granted to him as contemplated by this Agreement. During the Standstill Period, without the prior written consent of the Company, the Executive covenants and agrees that he will not at any time, directly or indirectly:
(i)enter into, agree to enter into, commence or submit any merger, consolidation, tender offer, exchange offer, business combination, share exchange, recapitalization, restructuring or other extraordinary transaction involving any of the Ashford-Related Entities, or any subsidiary or division thereof, or any of their respective securities or assets or take any action that would reasonably be expected to require any of the Ashford-Related Entities to make a public announcement regarding the possibility of any such transaction;
(ii)tender any equity securities of the Ashford-Related Entities into a tender or exchange offer commenced by a third party other than a tender or exchange offer that the Board of Directors of one of the Ashford-Related Entities has affirmatively publicly recommended to such Ashford-Related Entity’s stockholders that such stockholders tender into such offer and has not publicly withdrawn or changed such recommendation (and in the case of
such a withdrawal or change of recommendation, it shall not be a breach of this clause (ii) if the tendered or exchanged securities are withdrawn prior to the expiration of such tender or exchange offer);
(iii)(x) make, or in any way participate in, any “solicitation” of “proxies” (as such terms are used in the proxy rules of the Securities and Exchange Commission promulgated pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) to vote any securities of any of the Ashford-Related Entities under any circumstances, or deposit any securities of any of the Ashford-Related Entities in a voting trust or subject them to a voting agreement, pooling agreement or other agreement of similar effect, (y) seek to advise or influence any person with respect to the voting of any securities of any of the Ashford-Related Entities (other than to vote as recommended by Board of Directors of any of the Ashford-Related Entities), or (z) grant any proxy with respect to any equity interests of any of the Ashford-Related Entities (other than to the applicable Ashford-Related Entity or a person specified by such Ashford-Related Entity in a proxy card provided to stockholders of such Ashford-Related Entity);
(iv)form, join or in any way participate in a “group” (as that term is used for purposes of Rule 13d-5 or Section 13(d)(3) of the Exchange Act) with respect to any equity securities of any of the Ashford-Related Entities;
(v)form or publicly disclose any intention, plan or arrangement to change any of the members of the Board of Directors or executive officers of any of the Ashford-Related Entities, any of the executive officers of any Ashford-Related Entity, or any of the governing documents of any of the Ashford-Related Entities;
(vi)call, request the calling of, or otherwise seek or submit a written request for the calling of a special meeting of, or initiate any stockholder proposal for the election of any director or any other action by, the stockholders of any of the Ashford-Related Entities;
(vii)make a public announcement in connection with seeking to influence or control the management of the Board of Directors, or the policies, affairs or strategy of any of the Ashford-Related Entities;
(viii)form or disclose any intention, plan or arrangement inconsistent with the foregoing;
(ix)advise, assist or encourage, or enter into any arrangements with, any other persons in connection with any of the matters set forth in this Section 10(e); or
(x)publicly request the Company to amend or waive any provision of this Section 10(e).
For purposes of this Section 10(e), “Beneficial Owner”, “Beneficially Own” and “Beneficial Ownership” have the meanings set forth in Rule 13d-3 promulgated under the Exchange Act; provided, that for purposes of determining whether the Executive is a Beneficial
Owner of a security, the Executive shall be deemed to be the Beneficial Owner of any securities which may be acquired by the Executive pursuant to any contract, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise (irrespective of whether the right to acquire such securities is exercisable immediately or only after the passage of time, including the passage of time in excess of sixty (60) days, the satisfaction of any conditions, the occurrence of any event or any combination of the foregoing); provided further, that for purposes of calculating the percentage of fully diluted shares of any of the Ashford-Related Entities Beneficially Owned by the Executive, all equity interests which may be acquired by the Executive shall be deemed to be outstanding shares of such applicable Ashford-Related Entity.
(f)REASONABLE RESTRAINTS. The Executive agrees that the restraints imposed upon him pursuant to this Section 10 are necessary for the reasonable and proper protection of the Company and its affiliates, and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area. The Parties further agree that, in the event that any provision of this Section 10 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, such provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law.
11.NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract agreement with the Company at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. Notwithstanding anything in this Agreement or any such plan, policy, practice or program noted above to the contrary, the timing of all payments pursuant to this Agreement or any such plan, policy, practice or program shall be subject to the timing rules specified in Section 7(g) of this Agreement.
12.FULL SETTLEMENT. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and except as expressly provided, such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay as incurred (within 30 days following the Company’s receipt of an invoice from the Executive), to the full extent permitted by law, all reasonable legal fees and expenses which the Executive or his beneficiaries may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee
of performance thereof (including as a result of any contest by the Executive or his beneficiaries about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(a) of the Code to the extent permitted by Code Section 409A. The preceding sentence shall not apply with respect to any such contest if the court having jurisdiction over such contest determines that the Executive’s claim in such contest is frivolous or maintained in bad faith. This reimbursement obligation shall remain in effect following the Executive’s termination of employment for the applicable statute of limitations period relating to any such claim, and the amount of reimbursements hereunder during any tax year shall not affect the expenses eligible for reimbursement in any other tax year. Such reimbursements are intended to comply with Treasury Regulation Section 1.409A-3(i)(1)(iv)(A).
13.DISPUTES.
(a)EQUITABLE RELIEF. The Executive acknowledges and agrees that upon any breach by the Executive of his obligations under Sections 9 or 10 hereof, the Company will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief. In the event an enforcement remedy is sought for a breach of Section 10, the Non-Competition Restriction Period and the Non-Solicitation Restriction Period, as applicable, shall be suspended and shall not run in favor of the Executive from the time the Executive first breached any of his obligations under Section 10 until the time when the Executive ceases such breach.
(b)ARBITRATION. Excluding only requests for equitable relief by the Company under Section 13(a) of this Agreement, in the event that there is any claim or dispute arising out of or relating to this Agreement, or the breach thereof, and the Parties shall not have resolved such claim or dispute within sixty (60) days after written notice from one Party to the other setting forth the nature of such claim or dispute, then such claim or dispute shall be settled exclusively by binding arbitration in Dallas, Texas in accordance with the Commercial Arbitration Rules of the American Arbitration Association by an arbitrator mutually agreed upon by the Parties hereto or, in the absence of such agreement, by an arbitrator selected according to such Rules. Notwithstanding the foregoing, if either the Company or the Executive shall request, such arbitration shall be conducted by a panel of three arbitrators, one selected by the Company, one selected by the Executive and the third selected by agreement of the first two, or, in the absence of such agreement, in accordance with such Rules. Neither Party shall have the right to claim or recover punitive damages. Judgment upon the award rendered by such arbitrator(s) shall be entered in any Court having jurisdiction thereof upon the application of either Party.
14.INDEMNIFICATION. The Company will indemnify the Executive, to the maximum extent permitted by applicable law, against all costs, charges and expenses incurred or sustained by the Executive, including the cost of legal counsel selected and retained by the Executive in connection with any action, suit or proceeding to which the Executive may be made a party by reason of the Executive being or having been an officer, director, or employee of the Company (or another Ashford-Related Entity as may be applicable) or entity to be created by, or
spun-off from, any Ashford-Related Entity. The Company’s obligations under this Section 14 shall be in addition to any other indemnification rights to which the Executive may be entitled.
15.COOPERATION IN FUTURE MATTERS. The Executive hereby agrees that, for a period of one (1) year following his termination of employment, he shall cooperate with the Company’s reasonable requests relating to matters that pertain to the Executive’s employment by the Company, including, without limitation, providing information or limited consultation as to such matters, participating in legal proceedings, investigations or audits on behalf of the Company, or otherwise making himself reasonably available to the Company for other related purposes. Any such cooperation shall be performed at times scheduled taking into consideration the Executive’s other commitments, including business and family matters, and the Executive shall be compensated at a reasonable hourly or PER DIEM rate to be agreed by the Parties to the extent such cooperation is required on more than an occasional and limited basis. The Executive shall not be required to perform such cooperation to the extent it conflicts with any requirements of exclusivity of services for another employer or otherwise, nor in any manner that in the good faith belief of the Executive would conflict with his rights under or ability to enforce this Agreement.
16.GENERAL.
(a)NOTICES. All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if sent by overnight courier or by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other Party hereto in accordance with this Section 16(a).
If to the Company, to: Ashford Hospitality Advisors, LLC
14185 Dallas Parkway, Suite 1200
Dallas, Texas 75254
Attn: Chief Executive Officer
with a copy to: Ashford Inc.
14185 Dallas Parkway, Suite 1200
Dallas, Texas 75254
Attn: General Counsel
and
Ashford Inc.
14185 Dallas Parkway, Suite 1200
Dallas, Texas 75254
Attn: Lead Director
If to the Executive, at his last residence shown on the records of the Company,
with a copy to: Deric Eubanks
7158 Briar Cove Dr.
Dallas, TX 75254
javbrod@gmail.com
Any such notice shall be effective (i) if delivered personally, when received, (ii) if sent by overnight courier, when receipted for, and (iii) if mailed, two (2) days after being mailed as described above.
(b)SEVERABILITY. Other than as provided in Section 18, if any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law or regulation, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.
(c)WAIVERS. Except as provided in Section 6(d), no delay or omission by either Party in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.
(d)COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. In making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
(e)ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the Company’s successors and the Executive’s personal or legal representatives, executors, administrators, heirs, distributees, devisees and legatees. This Agreement shall not be assignable by the Executive, it being understood and agreed that this is a contract for the Executive’s personal services. This Agreement shall not be assignable by the Company except in connection with a transaction involving the succession by a third party to all or substantially all of the Company’s business and/or assets (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise), in which case such successor shall assume this Agreement and expressly agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets that executes and delivers the assumption agreement described in the immediately preceding sentence or that becomes bound by this Agreement by operation of law.
(f)ENTIRE AGREEMENT. This Agreement contains the entire understanding of the Parties, supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter hereof, and may not be amended except by a written instrument hereafter signed by the Executive and the Company.
(g)GOVERNING LAW. This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of Texas, without giving effect
to principles of conflicts of law, except where federal law may preempt the application of state law and except with respect to Section 13(b) which is subject to the Federal Arbitration Act. The Parties submit and consent to the exclusive jurisdiction, including removal jurisdiction, of and venue in the state and federal courts located in Dallas County, Texas.
(h)CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction will be applied against any Party. The headings of sections of this Agreement are for convenience of reference only and shall not affect its meaning or construction.
(i)PAYMENTS AND EXERCISE OF RIGHTS AFTER DEATH. Any amounts due hereunder after the Executive’s death shall be paid to the Executive’s designated beneficiary or beneficiaries, whether received as a designated beneficiary or by will or the laws of descent and distribution. The Executive may designate a beneficiary or beneficiaries for all purposes of this Agreement, and may change at any time such designation, by notice to the Company making specific reference to this Agreement. If no designated beneficiary survives the Executive or the Executive fails to designate a beneficiary for purposes of this Agreement prior to his death, all amounts thereafter due hereunder shall be paid, as and when payable, to his spouse, if she survives the Executive, and otherwise to his estate.
(j)CONSULTATION WITH COUNSEL. The Executive acknowledges that he has had a full and complete opportunity to consult with counsel or other advisers of his own choosing concerning the terms, enforceability and implications of this Agreement, and that neither the Company nor AINC has made any representations or warranties to the Executive concerning the terms, enforceability and implications of this Agreement other than as are reflected in this Agreement.
(k)WITHHOLDING AND DEDUCTIONS. With respect to any payment to be made to the Executive under this Agreement or otherwise in connection with his employment, the Company (or an affiliate making the payment) shall deduct, where applicable, any amounts authorized by the Executive and permissible under applicable law, and shall withhold and report all amounts required to be withheld and reported by applicable law. The Company shall be entitled to rely on the opinion of counsel if any questions as to the amount or requirement of deductions or withholding shall arise.
(l)NON-DISPARAGEMENT. Subject to Section 17, the Executive agrees that, during the Term and thereafter (including following Executive’s termination of employment for any reason) he will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Company, AINC or their affiliates or their respective officers, directors, employees, advisors, businesses or reputations. Subject to Section 17, the Company agrees that, during the Term and thereafter (including following Executive’s termination of employment for any reason), the Company’s and AINC’s directors, officers or other employees will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may directly or indirectly, disparage Executive or his family or his business or reputation; provided, that the Company and AINC shall have no
liability for any communication by its employees (other than its officers) that violates this non-disparagement clause, unless an officer of the Company or AINC is made aware of such communication and fails to take appropriate action to enforce this non-disparagement clause on behalf of the Company and AINC.
(m)CODE SECTION 409A. It is the intention of the parties to this Agreement that no payment or entitlement pursuant to this Agreement will give rise to any adverse tax consequences to the Executive under Code Section 409A. The Agreement shall be interpreted to that end and, consistent with that objective and notwithstanding any provision herein to the contrary, the Company may unilaterally take any action it deems necessary or desirable to amend any provision herein to avoid the application of or excise tax under Code Section 409A. Further, no effect shall be given to any provision herein in a manner that reasonably could be expected to give rise to adverse tax consequences under that provision.
(n)SURVIVAL. The termination of the Executive’s employment shall not impair the rights or obligations of either Party that have accrued prior to such termination or which by their nature or terms survive the expiration or termination of the Term, including without limitation the Executive’s obligations under Sections 9, 10, 13, 15, and 16(l).
17.PERMITTED ACTIVITIES. Nothing in this Agreement or any policy of the Company or an affiliate is intended to, or does, prohibit any of the Company or any of its affiliates or the Executive from (i) reporting to, communicating with, responding to an inquiry from, cooperating with, providing truthful information to, or otherwise participating in an investigation being conducted by any law enforcement agency, governmental agency, or regulatory body (such as the U.S. Department of Justice, the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the U.S. Department of Labor, or another federal or state law enforcement, regulatory, or fair employment practices agency) regarding a possible or alleged violation of law or regulation and, with respect to the Executive, without prior authorization of or notice to the Company; (ii) giving truthful testimony or making truthful statements under oath in response to a subpoena or other valid legal process or in any legal proceeding; (iii) otherwise responding truthfully in response to inquiries by law enforcement agencies, governmental agencies, or regulatory bodies; or (iv) with respect to the Executive, pursuant to 18 U.S.C. § 1833(b), disclosing a trade secret in confidence to a governmental official, directly or indirectly, or to an attorney, if the disclosure is made solely for the purpose of reporting or investigating a suspected violation of law, or if the disclosure is made in a document filed under seal in a lawsuit or other proceeding, and a party cannot be held criminally or civilly liable under any federal or state trade secret law for such a disclosure.
18.EFFECT OF CERTAIN CHANGES IN APPLICABLE LAW. Notwithstanding any provision of this Agreement to the contrary, in the event that any of Sections 10 (a), (b), (d), or (e) are, become, or are found by a court, governmental agency, regulatory body, or adjudicative body to be, invalid, illegal or unenforceable in any respect under any law or regulation (other than by reason of such provision being extended over too great a time, too large a geographic area or too great a range of activities) after the expiration or termination of the Term and the Executive otherwise is entitled to receive or continue to receive any payments or benefits pursuant to Section 7(b), (c), or (d) (unless by reason of the Executive’s death) or Section 8, the Parties agree that the Company shall have no obligation to provide or continue to provide any such payments or benefits but that all other provision of this Agreement shall remain in effect. Further, notwithstanding any provision of this Agreement to the contrary, in the event that any of Sections 10 (a), (b), (d), or (e) are, become, or are found by a court, governmental agency, regulatory body, or adjudicative body to be, invalid, illegal or unenforceable in any respect under any law or regulation (other than by reason of such provision being extended over too great a time, too large a geographic area or too great a range of activities) during the Term, the Parties agree that this Agreement shall be automatically amended without further action of the Parties as follows:
(a)Section 2 of this Agreement shall read in its entirety as follows:
“2. TERM. The “Term” is the actual duration of the Executive’s employment under this Agreement.”
(b)The third sentence of Section 3 of this Agreement shall read as follows: “The AINC Board or a compensation committee duly appointed by the AINC Board (the “Compensation Committee”) shall review the Base Salary annually to determine in its sole discretion whether and to what extent the Base Salary may be adjusted.”
(c)The second sentence of Section 4(c) of this Agreement shall read as follows: “Any Cash Incentive Bonus or Other Incentive Bonus, will be paid or granted as soon as reasonably practicable during the calendar year following the calendar year to which such bonus relates, but generally not later than April 30th, provided, that to be eligible to receive any Cash Incentive Bonus or Other Incentive Bonus, the Executive must be employed by the Company at the time the Cash Incentive Bonus or Other Incentive Bonus, is to be paid or granted and, with respect to the Other Incentive Bonus, the Executive must be employed by the Company on the scheduled vesting dates in order for the Other Incentive Bonus to vest.”
(d)Section 6 of this Agreement shall read in its entirety as follows:
“6. TERMINATION.
(a) TERMINATION EVENTS. The Executive’s employment with the Company and the Term shall terminate upon the earliest to occur of the following: (i) the Executive’s death or Disability (defined in Section 6(b) below); (ii) the termination of the Executive’s employment by the Company for any reason; or (iii) the termination of the Executive’s employment by the Executive for any reason.
(b) DISABILITY. As used in this Agreement, “Disability” shall mean the Executive’s inability to perform the essential functions of his duties, with or without reasonable accommodation, for a period of 90 consecutive days or a total of 180 days, during any 365-day period, in either case as a result of incapacity due to mental or physical illness which is determined to be total and permanent. A determination of Disability shall be made by a physician satisfactory to both the Executive (or his guardian) and the Company, provided, that if the Executive and the Company do not agree on a physician, the Executive (or his guardian) and the Company shall each select a physician and these two together shall select a third physician, whose determination as to Disability shall be binding on all parties. The appointment of one or more individuals to carry out the offices or duties of the Executive during a period of the Executive’s inability to perform such duties and pending a determination of Disability shall not constitute a breach of this Agreement by the Company or a termination of the Executive’s employment.
(c) NOTICE OF TERMINATION. Any termination of the Executive’s employment (other than by reason of his death) shall be communicated by a written Notice of Termination from the initiating Party to the other Party. For purposes of this Agreement, a “Notice of Termination” shall mean a notice (i) indicating the specific termination provision in this Agreement relied upon; and (ii) setting out the Date of Termination (defined in Section 6(d) below).
(d) DATE OF TERMINATION. For purposes of this Agreement, the “Date of Termination” shall mean (i) if the Executive’s employment is terminated by reason of his death, the date of his death; (ii) if the Executive’s employment is terminated by reason of his Disability, the date specified in the Notice of Termination, which date shall be no earlier than the date such notice is given; (iii) if the Executive’s employment is terminated by the Executive, the date specified in the Notice of Termination, which date shall be no earlier than the date such notice is given and no later than thirty (30) days after the date of the Notice of Termination; (iv) if the Executive’s employment is terminated by the Company, the date specified in the Notice of Termination, which date shall be no earlier than the date such notice is given and no later than thirty (30) days after the date of the Notice of Termination; provided, that in the event of a termination pursuant to clauses (iii) above, the Company may accelerate the Date of Termination by paying the Executive his Base Salary for the period by which the Date of Termination is so accelerated and such acceleration shall not change the characterization of the termination under such clause.”
(e)Section 7 of this Agreement shall read in its entirety as follows:
“7. EFFECTS OF TERMINATION.
(a) TERMINATION FOR ANY REASON. Upon termination of the Executive’s employment for any reason, the Company shall pay to the Executive: (i) the Executive’s earned but unpaid Base Salary through the Date of Termination; (ii) reimbursement of all expenses through the Date of Termination as required pursuant
to Section 5(d); and (iii) any accrued but unused vacation (or equivalent paid leave) through the Date of Termination to the extent required by law or pursuant to written Company policy. The amounts in clauses (i) and (iii), if any, shall be paid at the time and in the manner required by applicable law but in no event later than thirty (30) business days after the Date of Termination, and the amount, if any, in clause (ii) shall be paid in accordance with Section 5(d).
(b) [INTENTIONALLY OMITTED]
(c) [INTENTIONALLY OMITTED]
(d) [INTENTIONALLY OMITTED]
(e) TERMINATION OF AUTHORITY; DEEMED RESIGNATION. Immediately upon the Date of Termination, notwithstanding anything else to the contrary contained herein or otherwise, the Executive (i) will stop serving the functions of his terminated or expired positions, and shall be without any of the authority or responsibility for such positions; and (ii) shall be deemed to have resigned from all other positions he then holds as an employee, officer, director, manager, trustee, fiduciary, committee member, or other service provider, of or for the Ashford-Related Entities, and any employee benefit plans of any of the foregoing entities.
(f) [INTENTIONALLY OMITTED]
(g) REIMBURSEMENT/IN-KIND BENEFIT. Any reimbursement or in-kind benefit provided under this Agreement which constitutes a “deferral of compensation” within the meaning of Treasury Regulation Section 1.409A-1(b) shall be made or provided in accordance with the requirements of Section 409A of the Internal Revenue Code (the “Code”) and the regulations and other guidance thereunder (“Code Section 409A”), including, where applicable, the requirement that (w) any reimbursement is for expenses incurred during the period of time specified in this Agreement, (x) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (y) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred, and (z) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.
(f)Section 8 shall read in its entirety as follows: “[INTENTIONALLY OMITTED]”
(g)Any of Sections 10 (a), (b), (d), or (e) that are, become, or are found by a court, governmental agency, regulatory body, or adjudicative body to be, invalid, illegal or unenforceable in any respect under any law or regulation (other than by reason of such provision being extended over too great a time, too large a geographic area or too great a range of activities) shall read in its entirety as “[INTENTIONALLY OMITTED]” and any references to any such provisions and terms defined in such provisions shall be deleted.
(h)The last sentence of Section 11 shall be deleted.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates shown below to be effective on the Effective Date.
COMPANY:
ASHFORD HOSPITALITY ADVISORS LLC
By: /s/ ERIC BATIS
Name: ERIC BATIS
Title: Chief Executive Officer
Date: August 24, 2023
EXECUTIVE:
/s/ DERIC S. EUBANKS
DERIC S. EUBANKS
Date: August 24, 2023
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-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityCentralIndexKey |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:centralIndexKeyItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionIndicate if registrant meets the emerging growth company criteria. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityEmergingGrowthCompany |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCommission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
| Name: |
dei_EntityFileNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:fileNumberItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTwo-character EDGAR code representing the state or country of incorporation.
| Name: |
dei_EntityIncorporationStateCountryCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarStateCountryItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityRegistrantName |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityTaxIdentificationNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:employerIdItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionLocal phone number for entity.
| Name: |
dei_LocalPhoneNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true only for a security having no trading symbol.
| Name: |
dei_NoTradingSymbolFlag |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:trueItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 13e
-Subsection 4c
| Name: |
dei_PreCommencementIssuerTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14d
-Subsection 2b
| Name: |
dei_PreCommencementTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTitle of a 12(b) registered security. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b
| Name: |
dei_Security12bTitle |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:securityTitleItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the Exchange on which a security is registered. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection d1-1
| Name: |
dei_SecurityExchangeName |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarExchangeCodeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Section 14a
-Number 240
-Subsection 12
| Name: |
dei_SolicitingMaterial |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTrading symbol of an instrument as listed on an exchange.
| Name: |
dei_TradingSymbol |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:tradingSymbolItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
| Name: |
dei_WrittenCommunications |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- Details
| Name: |
us-gaap_StatementClassOfStockAxis=us-gaap_CommonStockMember |
| Namespace Prefix: |
|
| Data Type: |
na |
| Balance Type: |
|
| Period Type: |
|
|
| X |
- Details
| Name: |
us-gaap_StatementClassOfStockAxis=ainc_PreferredStockPurchaseRightMember |
| Namespace Prefix: |
|
| Data Type: |
na |
| Balance Type: |
|
| Period Type: |
|
|
Ashford (AMEX:AINC)
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