Item 1.01
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Entry into a Material Definitive Agreement.
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On July 2, 2021,
Ashford Hospitality Trust, Inc. (the “Company”) and B. Riley Principal Capital, LLC (“B. Riley”),
entered into a common stock purchase agreement (the “Purchase Agreement”), which provides that subject to the terms
and conditions set forth therein, the Company may sell to B. Riley up to 46,227,744 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
July 2, 2021, the Company and B. Riley 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 B. Riley under the Purchase Agreement.
Under the terms
and subject to the satisfaction of the conditions set forth in the Purchase Agreement, the Company has the right, but not the obligation,
to sell to B. Riley, and B. Riley is obligated to purchase, up to 46,227,744 shares of Common Stock. Such sales of Common Stock by the Company,
if any, will be subject to certain limitations as set forth in the Purchase Agreement, and may occur from time to time, at the Company’s
sole discretion, over a 24-month period commencing on the date that all of the conditions to the Company’s right to commence such
sales are satisfied, including that the registration statement referred to above is declared effective by the SEC and a final form of
the prospectus included therein is filed with the SEC (the “Commencement Date”). B. Riley has no right to require the
Company to sell any Common Stock to B. Riley, but B. Riley is obligated to make purchases as the Company directs, subject to satisfaction
of the conditions set forth in the Purchase Agreement.
Under the Purchase
Agreement, the Company may, at its discretion, from time to time from and after the Commencement Date, direct B. Riley to purchase (a
“VWAP Purchase”) shares of Common Stock on any trading day on which the closing sale price of the Common Stock is not
below $1.00 per share on the New York Stock Exchange (the “NYSE”). The closing sale price referred to above 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 the shares of Common Stock that may be sold to B. Riley in a VWAP Purchase will be based on the volume weighted average
price as computed under the Purchase Agreement. There is no
upper limit on the price per share that B. Riley may be obligated to pay for the Common Stock in the VWAP Purchases we elect to make under
the Purchase Agreement.
Under applicable rules
of the NYSE, in no event may the Company issue or sell to B. Riley under the Purchase Agreement shares of Common Stock in excess of
46,227,744 shares, which maximum number of shares is equal to 19.99% of the 231,254,347 shares of Common Stock outstanding immediately prior
to the execution of the Purchase Agreement (the “Exchange Cap”).
The Purchase Agreement
also prohibits the Company from directing B. Riley to purchase any shares of Common Stock if those shares, when aggregated with all other
shares of Common Stock then beneficially owned by B. Riley and its affiliates, would result in B. Riley having beneficial ownership of
more than 4.99% of the outstanding shares of Common Stock.
The Purchase Agreement
contains customary representations, warranties, covenants, indemnification and termination provisions. B. Riley 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 additional “variable rate transactions” or substantially similar transactions as
the transactions contemplated by the Purchase Agreement, subject to certain exceptions, during certain periods beginning prior to
the applicable purchase dates for any VWAP Purchase ending after the dates on which such purchases are fully settled, as set forth
in the Purchase Agreement), 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, upon 10 trading days’ prior written notice to B. Riley. Neither the Company nor B. Riley may assign or
transfer its rights and obligations under the Purchase Agreement, and no provision of the Purchase Agreement or the Registration
Rights Agreement may be modified or waived by the parties.
The net proceeds
under the Purchase Agreement to the Company will depend on the frequency of sales and the number of shares sold to B. Riley and prices
at which the Company sells shares to B. Riley. The Company expects that any net proceeds received by the Company from such sales to B.
Riley 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.