ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Limited Waiver Under Advisory Agreement
On March 2, 2023, Ashford Hospitality Trust, Inc. (“Ashford Trust” or the “Company”) entered into a Limited Waiver Under Advisory Agreement (the “Advisory Agreement Limited Waiver”) with Ashford Hospitality Limited Partnership (the “Operating Partnership”), Ashford TRS Corporation (“TRS”), Ashford Inc. (“AINC”) and Ashford Hospitality Advisors LLC (together with AINC, the “Advisor”).
As previously disclosed, the Company, the Operating Partnership, TRS and the Advisor are parties to a Second Amended and Restated Advisory Agreement, dated as of January 14, 2021 (the “Advisory Agreement”), which (i) allocates responsibility for certain employee costs between the Company and the Advisor, and (ii) permits the board of directors of the Company (the “Board”) to issue annual equity awards in the Company or the Operating Partnership to employees and other representatives of the Advisor based on achievement by the Company of certain financial or other objectives, or otherwise as the Board sees fit.
Pursuant to the Advisory Agreement Limited Waiver, the Company, the Operating Partnership, TRS and the Advisor waive the operation of any provision in the Advisory Agreement that would otherwise limit the ability of the Company in its discretion, at the Company’s cost and expense, to award during the first and second fiscal quarters of calendar year 2023 (the “Waiver Period”), cash incentive compensation to employees and other representatives of the Advisor; provided that such awarded cash incentive compensation does not exceed $13,063,844, in the aggregate, during the Waiver Period.
The foregoing description of the Advisory Agreement Limited Waiver does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Advisory Agreement Limited Waiver, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Limited Waiver to Credit Agreement
As previously announced in our current report on Form 8-K filed on January 15, 2021, Ashford Trust and the Operating Partnership, as borrower (the “Borrower”), entered into a Credit Agreement (as amended, the “Credit Agreement”) with certain funds and accounts managed by Oaktree Capital Management, L.P. (the “Lenders”) and Oaktree Fund Administration, LLC, as administrative agent (the “Administrative Agent”).
On March 2, 2023, Ashford Trust and the Borrower entered into that certain Limited Waiver to Credit Agreement (the “Limited Waiver to Credit Agreement”) with the guarantors party thereto, the Lenders party thereto and the Administrative Agent. Pursuant to the Limited Waiver to Credit Agreement, the Borrower, the other Loan Parties (as defined in the Credit Agreement), the Lenders and the Administrative Agent acknowledged and agreed that:
(a) certain deferred cash grants were or are being awarded to employees and/or officers of the Advisor and/or their affiliates pursuant to equity compensation plans during 2022 and 2023, in aggregate amounts of $7,950,817 in 2022 and $13,063,844 in 2023 (i.e., $21,014,661 in the aggregate) (the “Specified Deferred Cash Grants”), which the parties agreed may be made (and were or are being made) in lieu of deferred stock grants that would otherwise be permitted and made under the terms of the Advisory Agreement;
(b) accordingly, (i) the departure from the terms of the Advisory Agreement in making the Specified Deferred Cash Grants as described in the foregoing clause (a) shall be deemed to be permitted under Section 7.13(b) of the Credit Agreement; provided, however, the Borrower and the other Loan Parties agree that the Specified Deferred Cash Grants, together with any other Restricted Payments (as defined in the Credit Agreement) made pursuant to Section 7.06(f) of the Credit Agreement, shall not exceed $30,000,000 in the aggregate; (ii) the Lenders and the Administrative Agent waive non-compliance with Section 7.13(b), if any, prior to March 2, 2023, which resulted or would result (absent the waiver) from the making of the Specified Deferred Cash Grants in accordance with the foregoing provisions of Section 2 of the Limited Waiver to Credit Agreement, and (iii) effective from March 2, 2023 Section 7.13(b) shall be deemed to be amended to permit the Specified Deferred Cash Grants in accordance with the foregoing provisions of Section 2 of the Limited Waiver to Credit Agreement; and
(c) the waiver contained in the Limited Waiver to Credit Agreement shall be effective only in this instance and for the specific purpose for which it was intended and shall not be deemed to be a consent to any other transaction or matter or waiver of compliance in the future, or a waiver of any preceding or succeeding breach of the same or any other covenant or provision of the Credit Agreement.
The foregoing description of the Limited Waiver to Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Limited Waiver to Credit Agreement, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
