|
Item 1.01
|
Entry into a Material Definitive Agreement.
|
On March
12, 2021, Ashford Hospitality Trust, Inc. (the “Company”) and Lincoln Park Capital Fund, LLC (“Lincoln
Park”), entered into a purchase agreement (the “Purchase Agreement”), which provides that subject
to the terms and conditions set forth therein, the Company may sell to Lincoln Park up to 20,660,880 shares of common stock, par
value $0.01 per share, of the Company (the “Common Stock”), from time to time during the term of the Purchase
Agreement.
Additionally,
on March 12, 2021, the Company and Lincoln Park entered into a registration rights agreement (the “Registration Rights
Agreement”), pursuant to which the Company agreed to file a registration statement with the Securities and Exchange Commission
(“SEC”) covering the resale of shares of Common Stock that are issued to Lincoln Park under the Purchase Agreement.
Under the
terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln
Park, and Lincoln Park is obligated to purchase up to 20,660,880 shares of Common Stock. Such sales of Common Stock by the Company,
if any, will be subject to certain limitations, and may occur from time to time, at the Company’s sole discretion, over a
24-month period commencing on the date that a registration statement covering the resale of shares of Common Stock that are issued
under the Purchase Agreement, which the Company agreed to file with the SEC pursuant to the Registration Rights Agreement, is declared
effective by the SEC and a final prospectus in connection therewith is filed and the other conditions set forth in the Purchase
Agreement are satisfied. Lincoln Park has no right to require the Company to sell any Common Stock to Lincoln Park, but Lincoln
Park is obligated to make purchases as the Company directs, subject to conditions set forth in the Purchase Agreement.
Upon entering
into the Purchase Agreement, the Company issued 162,655 shares of Common Stock (the “Commitment Shares”) as
consideration for Lincoln Park’s execution and delivery of the Purchase Agreement.
Under the
Purchase Agreement, the Company may from time to time, at its discretion, direct Lincoln Park to purchase on any single business
day (a “Regular Purchase”) up to (i) 400,000 shares of Common Stock if the closing sale price of the Common
Stock is not below $5.00 per share on the New York Stock Exchange (the “NYSE”) or (ii) 300,000 shares of Common
Stock if the closing sale price of the Common Stock is below $5.00 per share on the NYSE. In any case, Lincoln Park’s commitment
in any single Regular Purchase may not exceed $3,000,000. The foregoing share amounts and per share prices will be adjusted for
any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring
after the date of the Purchase Agreement.
The purchase
price per share for each such Regular Purchase will be based on prevailing market prices of the Common Stock immediately preceding
the time of sale as computed under the Purchase Agreement. Under the Purchase Agreement, the Company may not effect any sales of
shares of Common Stock on any purchase date that the closing sale price of the Common Stock on the NYSE is less than the floor
price of $1.00 per share.
In addition
to Regular Purchases, the Company may also direct Lincoln Park to purchase other amounts as accelerated purchases or as additional
accelerated purchases on the terms and subject to the conditions set forth in the Purchase Agreement.
Under applicable
rules of the NYSE, in no event may the Company issue or sell to Lincoln Park under the Purchase Agreement shares of Common Stock
in excess of 20,660,880 shares (including the Commitment Shares), which represents 19.99% of the 103,356,082 shares of Common Stock
that were outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”), unless
the Company obtains stockholder approval to issue shares of Common Stock in excess of the Exchange Cap.
The Purchase
Agreement also prohibits the Company from directing Lincoln Park to purchase any shares of Common Stock if those shares, when aggregated
with all other shares of Common Stock then beneficially owned by Lincoln Park and its affiliates, would result in Lincoln Park
and its affiliates having beneficial ownership, at any single point in time, of more than 4.99% of the then total outstanding shares
of Common Stock.
The Purchase
Agreement contains customary representations, warranties, covenants, indemnification and termination provisions. Lincoln Park has
covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Common Stock.
There are no limitations on use of proceeds, financial or business covenants, restrictions on future financings (other than restrictions
on the Company’s ability to enter into an additional “equity line” or a substantially similar transaction whereby
a specific investor is irrevocably bound pursuant to an agreement with the Company to purchase securities over a period of time
from the Company at a price based on the market price of the Common Stock at the time of such purchase, subject to certain exceptions),
rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. The Purchase Agreement
may be terminated by the Company at any time, at the Company’s sole discretion, without any cost or penalty. During any “event
of default” under the Purchase Agreement, Lincoln Park does not have the right to terminate the Purchase Agreement; however,
the Company may not initiate any purchase of shares by Lincoln Park until such event of default is cured.
The net
proceeds under the Purchase Agreement to the Company will depend on the frequency of sales and the number of shares sold to Lincoln
Park and prices at which the Company sells shares to Lincoln Park. The Company expects that any net proceeds received by the Company
from such sales to Lincoln Park will be used for working capital and general corporate purposes. The Company believes that it is
prudent capital management to have the flexibility to sell Common Stock pursuant to the Purchase Agreement, subject to market conditions.
The foregoing
descriptions of the Purchase Agreement and the Registration Rights Agreement are qualified in their entirety by reference to the
full text of the Purchase Agreement and the Registration Rights Agreement, each of which is attached hereto as Exhibit 10.1 and
Exhibit 10.2, respectively, and each of which is incorporated herein by reference.
The Purchase
Agreement and Registration Rights Agreement contain customary representations and warranties, covenants and indemnification provisions
that the parties made to, and solely for the benefit of, each other in the context of all of the terms and conditions of such agreements
and in the context of the specific relationship between the parties thereto. The provisions of the Purchase Agreement and Registration
Rights Agreement, including any representations and warranties contained therein, are not for the benefit of any party other than
the parties thereto and are not intended as documents for investors and the public to obtain factual information about the current
state of affairs of the parties thereto. Rather, investors and the public should look to other disclosures contained in our annual,
quarterly and current reports we may file with the SEC.
This Current
Report on Form 8-K shall not constitute an offer to sell or a solicitation of an offer to buy any shares of Common Stock, nor shall
there be any sale of shares of Common Stock in any state or jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.