Item 3.03. Material Modification to Rights of Security Holders.
On November 8, 2017, Ashford Hospitality Trust, Inc., a Maryland corporation (the
Company
) agreed to issue 5,400,000 shares of the Companys newly created 7.50% Series I Cumulative Preferred Stock (the
Series I Preferred Stock
) and all or any part of the 810,000 shares of Series I Preferred Stock subject to the Over-Allotment Option (as defined below) of the Underwriters (as defined below). As set forth in Articles Supplementary Establishing and Fixing the Rights and Preferences of a Series of Preferred Stock (the
Articles Supplementary
), filed with the Maryland State Department of Assessments and Taxation on November 14, 2017, the Series I Preferred Stock ranks: (i) senior to all classes or series of the Companys common stock and future junior securities; (ii) on a parity with each series of the Companys outstanding preferred stock (the 8.45% Series D Cumulative Preferred Stock (the
Series D Preferred Stock
), 7.375% Series F Cumulative Preferred Stock, 7.375% Series G Cumulative Preferred Stock and the 7.50% Series H Cumulative Preferred Stock), and with any future parity securities and (iii) junior to future senior securities and to all of the Companys existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Companys affairs.
The Company will pay cumulative dividends on the Series I Preferred Stock in the amount of $1.875 per share each year, which is equivalent to 7.50% of the $25.00 liquidation preference per share of Series I Preferred Stock. Dividends on the Series I Preferred Stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day). The first dividend on the Series I Preferred Stock sold in this offering will be paid on January 16, 2018 and will be in the amount of $0.229167 per share.
On and after November 17, 2022, the Company may, at its option, redeem the Series I Preferred Stock, in whole or in part, by paying $25.00 per share, plus all accrued and unpaid dividends to, but not including, the date of redemption. Except with respect to the special optional redemption described below, and in certain limited circumstances relating to the ownership limitation necessary to preserve the Companys qualification as a REIT, the Series I Preferred Stock will not be redeemable prior to November 17, 2022. Upon the occurrence of a Change of Control (as defined below), the Company may, at its option, redeem the Series I Preferred Stock, in whole or in part within 120 days after the first date on which such Change of Control occurred, by paying $25.00 per share, plus any accrued and unpaid dividends to, but not including, the date of redemption. If, prior to the Change of Control Conversion Date (as defined below), the Company has provided or provides notice of redemption with respect to the Series I Preferred Stock (whether pursuant to the Companys optional redemption right or the Companys special optional redemption right), the holders of Series I Preferred Stock will not have the conversion right described below.
A Change of Control is when, after the original issuance of the Series I Preferred Stock, the following have occurred and are continuing:
·
the acquisition by any person, including any syndicate or group deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of the Company entitling that person to exercise more than 50% of the total voting power of all shares of the Company entitled to vote generally in elections of directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and
·
following the closing of any transaction referred to in the bullet point above, neither the Company nor the acquiring or surviving entity has a class of common securities (or American Depositary Receipts representing such securities) listed on the New York Stock Exchange (
NYSE
), the NYSE American (
NYSE American
) or the NASDAQ Stock Market (
NASDAQ
) or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or NASDAQ.
Upon the occurrence of a Change of Control, each holder of Series I Preferred Stock will have the right, unless, prior to the Change of Control Conversion Date, the Company has provided or provides notice of the
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Companys election to redeem the Series I Preferred Stock, to convert some or all of the Series I Preferred Stock held by such holder on the Change of Control Conversion Date into a number of shares of the Companys common stock per share of Series I Preferred Stock to be converted equal to the lesser of:
·
the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any accrued and unpaid dividends to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a dividend record date for the Series I Preferred Stock and prior to the corresponding Series I Preferred Stock dividend payment date, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Stock Price (as defined below); and
·
8.06452, subject to certain adjustments;
subject, in each case, to provisions for the receipt of alternative consideration.
If, prior to the Change of Control Conversion Date, the Company has provided or provides notice of redemption with respect to the Series I Preferred Stock, whether pursuant to the Companys optional redemption right or the Companys special optional redemption right, the holders of Series I Preferred Stock will not have any right to convert the Series I Preferred Stock in connection with the Change of Control Conversion Right (as defined below), and any shares of Series I Preferred Stock subsequently selected for redemption that have been tendered for conversion will be redeemed on the related date of redemption instead of converted on the Change of Control Conversion Date. Except as provided above in connection with a Change of Control, the Series I Preferred Stock is not convertible into or exchangeable for any other securities or property.
The Change of Control Conversion Right is the right of each holder of Series I Preferred Stock to convert some or all of the Series I Preferred Stock held by such holder upon the occurrence of a Change of Control.
The Change of Control Conversion Date is the date the Series I Preferred Stock is to be converted, which will be a business day that is no fewer than 20 days nor more than 35 days after the date on which the Company provides the notice described above to the holders of Series I Preferred Stock.
The Common Stock Price will be: (i) the amount of cash consideration per share of the Companys common stock, if the consideration to be received in the Change of Control by the holders of the Companys common stock is solely cash; or (ii) the average of the closing prices for the Companys common stock on the NYSE for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Control, if the consideration to be received in the Change of Control by the holders of the Companys common stock is other than solely cash.
The description of the Series I Preferred Stock in this report does not purport to be complete and is qualified in its entirety by reference to the full text of the Articles Supplementary, which is filed as Exhibit 3.1 hereto and is incorporated herein by reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On November 13, 2017, the Company executed the Articles Supplementary for the purpose of establishing the terms of the Series I Preferred Stock and classifying and designating 6,210,000 shares of authorized, but unissued, preferred stock as Series I Preferred Stock. The information about the Articles Supplementary contained under Item 3.03 of this Current Report on Form 8-K, including the summary description of the rights and preferences of the Series I Preferred Stock, is incorporated into this Item 5.03 by reference.
The description of the Articles Supplementary contained in this Item 5.03 is qualified in its entirety by reference to the full text of the Articles Supplementary, which is filed as Exhibit 3.1 hereto and is incorporated by reference herein.
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