Use these links to rapidly review the document
TABLE OF CONTENTS
Table of Contents 2
Table of Contents 3
Table of Contents 4

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 1)

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

ý

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

o

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

Ashford Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
    (4)   Proposed maximum aggregate value of transaction:
        
 
    (5)   Total fee paid:
        
 

o

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
    (2)   Form, Schedule or Registration Statement No.:
        
 
    (3)   Filing Party:
        
 
    (4)   Date Filed:
        
 

Table of Contents

PRELIMINARY COPY—SUBJECT TO COMPLETION

LOGO

14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254

To the stockholders of ASHFORD INC.,

        We cordially invite you to attend a special meeting of the stockholders of Ashford Inc., a Delaware corporation (the "Company"), to be held at [    :    ] [a.m./p.m.] Central time, on [                    ], 2016, at the Marriott Legacy Town Center, 7121 Bishop Road, Plano, Texas 75024.

        At the special meeting, you will be asked to consider and approve transactions contemplated by the Acquisition Agreement (the "Acquisition Agreement"), dated September 17, 2015, among the Company, Remington Holdings, LP, a Delaware limited partnership ("Remington"), Ashford Advisors, Inc., a wholly owned subsidiary of the Company ("Newco"), Remington Hospitality Management, Inc., a wholly owned subsidiary of Newco ("Newco Sub"), Archie Bennett, Jr., Monty J. Bennett, MJB Investments, LP (together with Archie Bennett, Jr. and Monty J. Bennett, the "Bennetts"), Mark A. Sharkey (together with the Bennetts, the "Remington Sellers"), Remington Holdings GP, LLC ("Remington Holdings GP"), Ashford GP Holdings I, LLC and Remington GP Holdings, LLC.

        Generally, the transactions consist of (i) the Company's acquisition, through Newco and direct and indirect subsidiaries of Newco, of an 80% limited partnership interest in Remington from the Remington Sellers and 100% of the general partnership interests in Remington from Remington Holdings GP in exchange for non-voting preferred stock and non-voting common stock of Newco and a promissory note issued by Newco Sub, and (ii) the contribution of substantially all of our assets and all of our business operations to Newco in exchange for voting common stock of Newco. If the transactions are consummated, substantially all of our assets will be held directly or indirectly by, and our business operations will be conducted through, Newco, and Newco will be owned by the Company and the Remington Sellers. The Company will own 100% of the voting common stock of Newco, but the combined voting and non-voting common stock in Newco will initially be owned 70.6% by the Company and 29.4% by the Bennetts. If the preferred stock of Newco owned by the Remington Sellers is fully converted into non-voting common stock of Newco in the future pursuant to its terms, the Company will own 43.8% of Newco common stock and the Remington Sellers will own 56.2% of Newco common stock. The Bennetts will continue to retain the 20% limited partnership interest in Remington that is not being sold to Newco.

        The Company's board of directors formed a special committee consisting of three independent and disinterested directors to evaluate and negotiate the transactions and the transaction documents, to consider and evaluate alternatives for the Company, and to alleviate any potential conflicts of interest. The special committee unanimously determined that the transaction documents and the transactions are advisable, fair to, and in the best interest of the Company and its stockholders, approved and adopted the transaction documents and the transactions and recommended that (i) our board of directors approve and adopt the transaction documents and the transactions, and (ii) our stockholders, to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT LLC, approve and adopt the transaction documents and the transactions.

        Following the recommendation of the special committee, the Company's board of directors unanimously (with Monty Bennett and J. Robison Hays, III recusing themselves due to Monty Bennett's interest in the transactions and Mr. Hays' status as an executive officer of the Company who


Table of Contents

reports to Monty Bennett), (i) approved and adopted the favorable recommendation of the special committee in respect of the transactions and the transaction documents; (ii) approved the form, terms and provisions of the transaction documents; and (iii) determined to recommend that the stockholders of the Company vote to approve the transactions to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT LLC.

        Accordingly, our board (with Monty Bennett and J. Robison Hays, III recusing themselves) unanimously recommends that stockholders vote "FOR" the approval of each of the proposals set forth in this proxy statement.

        In considering the recommendation of our board of directors, you should be aware that some of the Company's directors and executive officers have interests in the transactions that are different from, or in addition to, the interests of the stockholders generally. Monty Bennett, who is our chairman and chief executive officer, and his father, Archie Bennett Jr., own directly or indirectly 100% of Remington, subject to a certain profits interest.

        We encourage you to read the accompanying proxy statement carefully as it sets forth the specifics of the transactions and transaction documents and other important information. In addition, you may obtain information about us from documents we file with the Securities and Exchange Commission.

        Regardless of the number of shares of the Company's common stock that you own, your vote is important. If you fail to vote or abstain from voting on the contribution of assets proposal, the effect will be the same as a vote against that proposal. The failure to approve either of the first two proposals will result in the transactions not being consummated. The Remington Sellers currently own or control 15.5% of the outstanding voting common stock of the Company and have informed the Company that they intend to vote in favor of the transactions. Ashford Hospitality Trust, Inc. and Ashford Hospitality Prime, Inc. own 29.8% and 9.7% of our common stock, respectively, and have informed us that each of their respective boards of directors have delegated the decision as to how to vote on the transactions to special committees composed of independent directors, pursuant to previously-adopted policies that delegate exclusive power to vote the Company shares solely to the independent directors of such boards. These committees have each engaged independent financial advisors and legal counsel to assist them, and as of the date hereof, neither has informed the Company as to how Ashford Trust or Ashford Prime intend to vote.

        Thank you for your attention to this matter.

    Sincerely,

 

 

Monty J. Bennett
Chief Executive Officer and Chairman of the Board

        Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the transactions, passed upon the merits or fairness of the transactions or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

        The accompanying proxy statement is dated [                        ], 2016, and, together with the enclosed form of proxy, is first being mailed to stockholders on or about [                        ], 2016.


Table of Contents

LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held [                        ], 2016

To the stockholders of ASHFORD INC.:

        Notice is hereby given that a special meeting of the stockholders of Ashford Inc., a Delaware corporation (the "Company"), will be held at [        :        ] [a.m./p.m.] Central time, on [                        ], 2016, at the Marriott Legacy Town Center, 7121 Bishop Road, Plano, Texas 75024.

        At the special meeting, you will be asked to consider and approve transactions contemplated by the Acquisition Agreement, dated September 17, 2015, among the Company, Remington Holdings, LP, a Delaware limited partnership ("Remington"), Ashford Advisors, Inc., a wholly owned subsidiary of the Company ("Newco"), Remington Hospitality Management, Inc., a wholly owned subsidiary of Newco ("Newco Sub"), Archie Bennett, Jr., Monty J. Bennett, MJB Investments, LP (together with Archie Bennett, Jr. and Monty J. Bennett, the "Bennetts"), Mark A. Sharkey (together with the Bennetts, the "Remington Sellers"), Remington Holdings GP, LLC ("Remington Holdings GP"), Ashford GP Holdings I, LLC and Remington GP Holdings, LLC (the "Acquisition Agreement" and together with the other agreements, certificates, notes and documents contemplated thereby, the "Transaction Documents").

        Generally, the transactions consist of (i) the Company's acquisition, through Newco and direct and indirect subsidiaries of Newco, of an 80% limited partnership interest in Remington from the Remington Sellers and 100% of the general partnership interests in Remington from Remington Holdings GP in exchange for non-voting preferred stock and non-voting common stock of Newco and a promissory note issued by Newco Sub, and (ii) the contribution of substantially all of our assets and all of our business operations to Newco in exchange for voting common stock of Newco. If the transactions are consummated, substantially all of our assets will be held directly or indirectly by, and our business operations will be conducted through, Newco, and Newco will be owned by the Company and the Remington Sellers. The Company will own 100% of the voting common stock of Newco, but the combined voting and non-voting common stock in Newco will initially be owned 70.6% by the Company and 29.4% by the Bennetts. If the preferred stock of Newco owned by the Remington Sellers is fully converted into non-voting common stock of Newco in the future pursuant to its terms, the Company will own 43.8% of Newco common stock and the Remington Sellers will own 56.2% of Newco common stock. The Bennetts will continue to retain the 20% limited partnership interest in Remington that is not being sold to Newco.

        The proposals to be considered by our stockholders at the special meeting are set forth below. In order for the transactions to be consummated, both Proposal 1 and Proposal 2 must be approved. The failure of either proposal to be approved will result in the transactions not being consummated.


Table of Contents

        These matters are described more fully in the accompanying proxy statement, which you are urged to read thoroughly. The Company's board of directors formed a special committee consisting of three independent and disinterested directors to evaluate and negotiate the transactions and the Transaction Documents, to consider and evaluate alternatives for the Company, and to alleviate any potential conflicts of interest. The special committee unanimously recommended that the Company's board of directors approve and recommend that stockholders approve and adopt the Transaction Documents and the transactions. Our board of directors (with Monty Bennett and J. Robison Hays, III recusing themselves) unanimously recommends that stockholders vote "FOR" the approval of each of the above proposals.

        Stockholders of record at the close of business on [                        ], 2016 will be entitled to notice of and to vote at the special meeting. The accompanying proxy statement, proxy card, a copy of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and the Company's Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2015, June 30, 2015 and September 30, 2015 are first being mailed to stockholders on or about [                        ], 2016.

        It is important that your shares be represented at the special meeting regardless of the size of your holdings. If you fail to vote or abstain from voting on Proposal 1 regarding the Contribution, the effect will be the same as a vote "AGAINST" such proposal. The failure by the stockholders to approve either Proposal 1 or Proposal 2 will result in the transactions not being consummated.

        Whether or not you plan to attend the special meeting in person, please vote your shares by signing, dating and returning the enclosed proxy card as promptly as possible. A postage-paid envelope is enclosed if you wish to vote your shares by mail. If you hold shares in your own name as a holder of record and vote your shares by mail prior to the special meeting, you may revoke your proxy by any one of the methods described herein if you choose to vote in person at the special meeting. Voting promptly saves us the expense of a second mailing. You may also submit your proxy over the internet or by telephone. For specific instructions, please see the section of this proxy statement titled "Questions and Answers about the Special Meeting—Voting and Voting Procedures" beginning on page 22.

        We encourage you to read the proxy statement accompanying this notice as it sets forth the specifics of the transactions and Transaction Documents, including the Contribution and the Share Issuances, and other important information related to the transactions.

    By order of the Board of Directors,

14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254
[                        ], 2016

 

David A. Brooks
Secretary

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [                        ], 2016.

This notice and the accompanying proxy statement, proxy card, the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and the Company's Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2015, June 30, 2015 and September 30, 2015 are available at www.ashfordinc.com under the "Investor" link, at the "Special Meeting Material" tab.


Table of Contents


TABLE OF CONTENTS

SUMMARY TERM SHEET

    1  

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING

   
22
 

FORWARD-LOOKING STATEMENTS

   
26
 

RISK FACTORS

   
28
 

SPECIAL FACTORS

   
38
 

Background of the Transactions

    38  

Reasons for the Transactions; Recommendation of the Special Committee; Recommendation of the Board of Directors

    53  

Description of Fairness Opinion of BMO Capital Markets

    59  

Projected Financial Information

    70  

Interests of the Company's Directors and Executive Officers in the Transactions; Potential Conflicts of Interest

    72  

Intent to Vote

    73  

Estimated Fees and Expenses of the Transactions

    74  

No Appraisal Rights

    75  

Anticipated Accounting Treatment of the Transactions

    75  

Regulatory Approvals

    75  

Stockholder Litigation Related to the Transactions

    75  

THE TRANSACTION DOCUMENTS

   
76
 

Acquisition Agreement

    76  

Certificate of Designation of Newco Preferred Stock

    84  

Investor Rights Agreement

    86  

Limited Partnership Agreement

    93  

Letter Agreements

    97  

PROPOSAL 1: THE CONTRIBUTION

   
98
 

The Proposal

    98  

Company Board Recommendation and Required Vote

    98  

PROPOSAL 2: THE SHARE ISSUANCES

   
99
 

The Proposal

    99  

Company Board Recommendation and Required Vote

    99  

PROPOSAL 3: ADJOURNMENT OR POSTPONEMENT OF SPECIAL MEETING

   
101
 

The Proposal

    101  

Company Board Recommendation and Required Vote

    101  

FINANCIAL INFORMATION

   
102
 

Unaudited Pro Forma Financial Statements of Ashford Inc. and Subsidiaries. 

    102  

Consolidated Financial Statements of Remington and Subsidiaries

    102  

Non-GAAP Financial Measures of Remington and Subsidiaries

    102  

INFORMATION ABOUT ASHFORD INC.

   
104
 

Security Ownership of Certain Beneficial Owners and Management

    104  

Certain Relationships and Related Person Transactions

    105  

OTHER MATTERS

   
108
 

Stockholder Proposals

    108  

Multiple Stockholders Sharing One Address

    108  

i


Table of Contents

Where You Can Find Additional Information

    108  

Information Incorporated by Reference

    109  

ANNEXES

   
 
 

Annex A—Ashford Inc. and Subsidiaries Unaudited Pro Forma Financial Statements

   
 
 

Annex B—Consolidated Financial Statements of Remington and Subsidiaries

       

Annex C—Acquisition Agreement

       

Annex D—Form of Certificate of Designation of Newco Preferred Stock

       

Annex E—Form of Investor Rights Agreement

       

Annex F—Form of Limited Partnership Agreement

       

Annex G—Fairness Opinion

       

ii


Table of Contents

ASHFORD INC.

14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254

PROXY STATEMENT

SPECIAL MEETING OF STOCKHOLDERS
To Be Held [                        ], 2016

        This proxy statement, together with the enclosed proxy, is solicited by and on behalf of the board of directors of Ashford Inc., a Delaware corporation ("Ashford" or the "Company"), for use at the special meeting of stockholders to be held at the Marriott Legacy Town Center, 7121 Bishop Road, Plano, Texas 75024 beginning at [    :    ] [a.m./p.m.] Central time, on [                        ], 2016. The board of directors of the Company is requesting that you allow your shares to be represented and voted at the special meeting of stockholders by the proxies named on the enclosed proxy card. This proxy statement and accompanying proxy will first be mailed to stockholders on or about [                        ], 2016.




SUMMARY TERM SHEET

        This summary discusses selected information contained elsewhere in this proxy statement, but may not contain all of the information that is important to you. We urge you to read this entire proxy statement carefully, including the attached schedules and appendices. For additional information on the Company included in documents incorporated by reference into this proxy statement, see the section of this proxy statement titled "Other Matters—Information Incorporated by Reference" beginning on page 109. The items in this summary include page references directing you to a more complete description of that topic in this proxy statement.


The Principal Parties

Ashford

Ashford Inc.
14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254
Telephone: (214) 490-9600
http://www.ashfordinc.com

        The Company was formed in April 2014 and became a public company in November 2014 when Ashford Hospitality Trust, Inc., a NYSE-listed real estate investment trust ("Ashford Trust"), completed the spin-off of approximately 70% of the common stock of the Company through the distribution of shares of the Company's stock to its stockholders.

        The Company provides asset management and advisory services to other entities within the hospitality industry. We serve as the advisor to both Ashford Trust and Ashford Hospitality Prime, Inc., a NYSE-listed real estate investment trust ("Ashford Prime") that became a public company in November 2013 upon the completion of its spin-off from Ashford Trust. As an advisor, we are responsible for implementing the investment strategies and managing day-to-day operations of Ashford Trust and Ashford Prime. We provide the personnel and services necessary to allow Ashford Trust and Ashford Prime to conduct their respective businesses. We may also perform similar functions for new or additional real estate investment vehicles. We are not responsible for managing the day-to-day operations of any individual hotel properties.

1


Table of Contents

        Our business is currently conducted through Ashford Hospitality Advisors LLC, a Delaware limited liability company formed in April 2013 ("Ashford LLC"). We currently own 99.8% of Ashford LLC, and Ashford LLC owns substantially all of our assets. We recently formed Ashford Advisors, Inc., a wholly owned subsidiary of the Company ("Newco"), and Remington Hospitality Management, Inc., a wholly owned subsidiary of Newco ("Newco Sub"), in connection with entering into the transactions described in this proxy statement.

        As of January 22, 2016, Ashford Trust and Ashford Prime held 29.8% and 9.7% of our outstanding common stock, respectively. For additional information, see "Information about Ashford Inc." beginning on page 104.

Remington

Remington Holdings, LP
14185 Dallas Parkway, Suite 1150
Dallas, Texas 75254
Telephone: (972) 980-2700
http://www.remingtonhotels.com

        Remington Holdings, LP, a Delaware limited partnership ("Remington"), was formed in December 2008, and is a hotel property and project management company. The services that Remington provides include (i) property management services, which consist of the day-to-day operations of hotels; (ii) project management services, which consist of planning, management and implementation of capital improvements and plans related to capital projects; and (iii) development services, which consist of building hotel properties or constructing hotel improvements.

        We have entered into a mutual exclusivity agreement with Remington pursuant to which we agreed to utilize Remington to provide property management, project management and development services for all hotels, if any, that we may acquire, as well as all hotels that future companies that we advise may acquire, to the extent that we have the right, or control the right, to direct such matters. We are not required to utilize Remington to provide such services, however, if our independent directors either (i) unanimously vote not to utilize Remington for such services or (ii), based on special circumstances or past performance, by a majority vote elect not to engage Remington because our independent directors have determined that it would be in our best interest not to engage Remington or that another Company could perform the duties materially better. In exchange for our agreement to engage Remington for such services, Remington has agreed to grant to any such companies advised by us a right of first refusal to purchase any investments identified by Remington and any of its affiliates that meet the initial investment criteria of such entities, as identified in the advisory agreement between us and such entities, subject to any prior rights granted by Remington to other entities, including Ashford Trust, Ashford Prime and us. For additional information, see "Information about Ashford Inc.—Certain Relationships and Related Person Transactions."

Monty Bennett and Archie Bennett, Jr.

        Monty Bennett has served as our chief executive officer since our formation and has served as chairman of our board of directors since November 2014. As of January 22, 2016, he was the beneficial owner of 11.0% of our outstanding common stock. He has also served as the chief executive officer of Ashford LLC since its formation. Monty Bennett is the chief executive officer and chairman of each of Ashford Trust and Ashford Prime, and as of January 22, 2016, he was the beneficial owner of 6.4% of the outstanding common stock of Ashford Trust (assuming all common units, including the long-term incentive partnership ("LTIP") units, of the operating partnership of Ashford Trust held by Monty Bennett are redeemed for common stock) and 5.5% of the outstanding common stock of Ashford Prime (assuming all common units, including the LTIP units, of the operating partnership of Ashford Prime held by Monty Bennett are redeemed for common stock). He is also a 50% (direct and indirect) owner and the chief executive officer of Remington.

2


Table of Contents

        As a result, Monty Bennett's duties to us as a director and officer may conflict with his duties to, and pecuniary interest in, Remington, Ashford Trust and Ashford Prime.

        Archie Bennett, Jr. served as chairman of Ashford Trust since its formation in 2003 until January 2013, when he assumed the role of chairman emeritus to Ashford Trust. As of January 22, 2016, he was the beneficial owner of 4.2% of our outstanding common stock, 4.5% of the outstanding common stock of Ashford Trust and 3.8% of the outstanding common stock of Ashford Prime. Archie Bennett, Jr. is a 50% beneficial owner of Remington and the father of Monty Bennett. Monty Bennett, Archie Bennett, Jr. and MJB Investments, LP are collectively referred to as the "Bennetts."

        Because of the conflicts of interest created by the relationships among the Remington Sellers, the Company, Remington and each of their respective affiliates, many of the responsibilities of our board of directors have been delegated to independent directors, as discussed below and under "Information about Ashford Inc.—Certain Relationships and Related Person Transactions—Conflicts of Interest."

Ownership of Ashford, Ashford Trust and Ashford Prime

        The Remington Sellers' beneficial ownership of Ashford, Ashford Trust and Ashford Prime and the ownership of Ashford, Ashford Trust and Ashford Prime by and among such entities as of January 22, 2016 is set forth below. For additional information, see "Information about Ashford Inc.—Certain Relationships and Related Person Transactions."

GRAPHIC


(1)
Includes common stock, common units and LTIPs.

(2)
Excludes potential shares issued from deferred compensation plan.

(3)
Excludes stock options.

(4)
Excludes performance stock units.

3


Table of Contents


The Transactions

Overview

        On September 17, 2015, the Company, Remington, Newco, Newco Sub, Archie Bennett, Jr., Monty J. Bennett, Remington Holdings GP, LLC ("Remington Holdings GP"), MJB Investments, LP ("MJB Investments"), Mark A. Sharkey, Ashford GP Holdings I, LLC ("GP Holdings I"), and Remington GP Holdings, LLC ("GP Holdings") entered into the Acquisition Agreement (the "Acquisition Agreement" and, together with the other agreements, certificates, notes and documents contemplated thereby, the "Transaction Documents"), pursuant to which the parties agreed upon the terms and conditions of the transactions being considered by our stockholders at the special meeting.

        Generally, the transactions contemplated by the Acquisition Agreement consist of (i) the Company's acquisition of an 80% limited partnership interest in Remington from the Remington Sellers and 100% of the general partnership interests in Remington from Remington Holdings GP through Newco and direct and indirect subsidiaries of Newco in exchange for securities of Newco and a promissory note issued by Newco Sub, and (ii) the contribution of substantially all of our assets and business operations to Newco (including the contribution of Ashford LLC to Newco) in exchange for voting common stock of Newco.

        The aggregate consideration that we will pay or exchange for the 80% limited partnership interest in Remington and 100% of the general partnership interests in Remington is $331,650,000 (based on the values agreed by the parties to the Acquisition Agreement as set forth below) and consists of:

        If the closing of the transactions occurs, in addition to the Company paying its and its subsidiaries' transaction expenses, Newco will also pay up to an aggregate of $2,750,000 for (i) transaction expenses incurred by Remington, Archie Bennett, Jr., Monty Bennett and Remington Holdings GP, and (ii) bonus and other payments made to employees and agents of Remington and its subsidiaries in connection with the transactions.

        As a result of the transactions, substantially all our assets will be held directly or indirectly by, and our business operations will be conducted directly or indirectly through, Newco. After the closing of the transactions, the Company will own 100% of the voting stock of Newco, but the Company will own 70.6% of the combined voting and non-voting common stock in Newco and the Bennetts will own 29.4%. Assuming the full conversion of the Newco preferred stock to be issued to the Remington Sellers into non-voting common stock of Newco pursuant to its terms, the Remington Sellers will own 56.2% of the combined voting and non-voting common stock in Newco and the Company will own 43.8%. In addition, immediately following the transactions, Newco will contribute the 80% limited partnership interest in Remington acquired from the Remington Sellers to Newco Sub, a newly formed, wholly owned subsidiary of Newco. The Bennetts will continue to retain the 20% limited partnership interest in Remington that is not being sold to Newco. For additional information, see "The Transaction Documents" beginning on page 76.

4


Table of Contents

Proposals at the Special Meeting

        We are submitting Proposal 1 and Proposal 2 to our stockholders at the special meeting because Delaware law and the rules and regulations of the NYSE MKT LLC ("NYSE MKT"), the exchange on which our common stock is listed, require that our stockholders approve certain aspects of the transactions contemplated by the Acquisition Agreement.

        Pursuant to Section 271 of the Delaware General Corporation Law (the "DGCL"), the contribution of our assets and business operations (including Ashford LLC and our other subsidiaries) to Newco constitutes a sale of substantially all of our assets to a subsidiary that is not wholly owned by us. The DGCL requires that the Contribution be approved by the holders of a majority of our outstanding common stock entitled to vote on such matter. As a result, failures to vote, abstentions and broker non-votes will have the same effect as a vote "AGAINST" Proposal 1.

        The Share Issuances could occur in the future because the preferred stock and common stock issued to the Remington Sellers by Newco may, under specified circumstances described below, be exchanged for (i) shares of the Company's common stock or (ii) shares of the Company's preferred stock, which would be convertible into shares of the Company's common stock. In addition, the 20% Remington limited partnership interest retained by the Bennetts may in the future, under specified circumstances described below, be acquired by us in exchange for shares of the Company's common stock. The formulas used to calculate the number of shares of the Company's common stock that could be issued to the Remington Sellers in the future pursuant to the Transaction Documents are subject to several factors that may be adjusted or cannot be calculated until the time of issuance. For a description of these events and calculations, see "The Transaction Documents—Investor Rights Agreement—Put and Call Options." A maximum number of approximately 4,156,000 shares of the Company's common stock could be issued to the Remington Sellers if certain events occurred at some point in the future, subject to specific assumptions described in the section entitled "The Transaction Documents—Investor Rights Agreement—Put and Call Options."

        In any of the foregoing events, the potential Share Issuances could exceed 20% of our outstanding common stock, and, under these circumstances, the rules and regulations of the NYSE MKT require that the potential issuances be approved by a majority of the total votes cast on such matter. An abstention is a vote cast under NYSE MKT rules and will have the same effect as a vote "AGAINST" Proposal 2. Failures to vote or a broker non-votes, however, are not votes cast under NYSE MKT rules and will have no effect on the outcome of Proposal 2. For additional information, see "The Transaction Documents" beginning on page 76.

5


Table of Contents

Tax Treatment

        The parties intend that the contributions to Newco in exchange for Newco stock will be treated as an overall plan of exchange under Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"). Assuming that the transactions so qualify, it is expected that no gain or loss should be recognized by the Bennetts or the Company as a result of the receipt of Newco stock in exchange for the contributions to Newco pursuant to the transactions.

        The obligations of each party to the Acquisition Agreement to consummate the transactions are subject to, among other conditions:

        Remington is or will be obligated in its management agreements with the REIT Clients at all times to qualify as an eligible independent contractor. If Remington would cease to be treated as an eligible independent contractor with respect to the REIT Clients, but continue to manage hotels owned by the REIT Clients, rent received by the REIT Clients with respect to such hotels would not be qualifying rent for purposes of the U.S. federal income tax rules and regulations governing the tax treatment of REITs, and, as a result, the REIT Clients would no longer qualify for treatment as REITs for federal income tax purposes. The federal income tax rules governing REITs also require that, subject to certain exceptions, a REIT may not hold securities possessing more than 10% of the voting rights or 10% of the total value of outstanding securities in any one issuer. Ashford Trust currently owns more than 10% of the outstanding common stock of the Company, which has been permitted under an available exception to this rule. However, in connection with the transactions, Ashford Trust's ownership of stock in the Company will no longer satisfy such exception. As a result, Ashford Trust must reduce its ownership of our outstanding common stock to 10% or less as a condition of the consummation of the transactions.

        The obligations of Archie Bennett, Jr., Monty Bennett, Remington Holdings GP and Remington to consummate the transactions are also subject to the receipt by Archie Bennett, Jr. and Monty Bennett of a satisfactory opinion of their tax counsel, at a confidence level of "more likely than not" or higher, that:

6


Table of Contents

        In general, under Section 351(a) of the Code, no gain or loss will be recognized if property (such as ownership interests in Remington and Ashford LLC) is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such persons are in "control" of the corporation within the meaning of Section 368(c) of the Code. For this purpose, control means ownership of at least 80% of (i) the total combined voting power of all classes of stock entitled to vote and (ii) the total number of shares of all other classes of stock of the corporation. The control requirement is expected to be satisfied in the transactions because the Company and the Remington Sellers collectively will hold all of the voting and non-voting stock of Newco after the transactions.

        As an exception to the general rule described above, gain (but not necessarily loss) would be recognized by a transferor of property on an exchange otherwise subject to Section 351(a) of the Code if stock received by the transferor in the exchange is "nonqualified preferred stock" ("NQPS"). For this purpose, in general, stock is treated as "preferred" if it "is limited and preferred as to dividends and does not participate in corporate growth to any significant extent." Preferred stock may be "nonqualified" if, among other circumstances, the issuer or a related person has a right to redeem or purchase the stock, and, as of the issue date, this right is "more likely than not" to be exercised. If the Newco preferred stock received by the Bennetts in the transaction were to be treated as NQPS, in general, the Bennetts would recognize gain on their exchange of interests in Remington for Newco stock in an amount up to the fair market value of the Newco preferred stock received.

Interests To Be Acquired

        Specifically, in the transactions:

        The 80% LP Interest, the GP Interests, the Economic Interests and the Profits Interest are collectively referred to as the "Transferred Securities."

        In addition, Remington will acquire all of the outstanding limited partnership interests in Marietta Leasehold LP, a Texas limited partnership, from Monty Bennett, Archie Bennett, Jr. and the other three limited partners, resulting in Marietta Leasehold LP being wholly owned by Remington as of the closing of the transactions.

        Following the consummation of the transactions, Newco will contribute the 80% LP Interest to Newco Sub in exchange for Newco Sub common stock, resulting in the limited partners of Remington being Newco Sub, holding the 80% LP Interest, and the Bennetts, who will together retain a 20% limited partnership interest in Remington. For additional information, see "The Transaction Documents" beginning on page 76.

7


Table of Contents

Corporate Structure

        The current simplified corporate structures of Ashford and Remington as of January 22, 2016 are set forth below.

GRAPHIC


(1)
Includes common stock, common units and LTIPs.
(2)
Excludes potential shares issued from deferred compensation plan.
(3)
Excludes stock options.

GRAPHIC

8


Table of Contents

        The simplified corporate structure of Ashford after consummation of the transactions will be as set forth below.

GRAPHIC

Consideration from the Company

        In consideration for the Transferred Securities, the respective holders thereof will receive aggregate consideration of $331,650,000 (based on the values agreed by the parties to the Acquisition Agreement as set forth below) as follows:

        In the event the closing of the transactions occurs, Newco will also pay up to an aggregate of $2,750,000 for (a) transaction expenses incurred by Remington, Archie Bennett, Jr., Monty Bennett and Remington Holdings GP, and (b) bonus and other payments made to employees and agents of

9


Table of Contents

Remington and its subsidiaries in connection with the closing. For additional information, see "The Transaction Documents" beginning on page 76.

Newco Ownership and Voting Limitations

        The Newco common stock to be issued to the Bennetts initially will be non-voting, and the Newco common stock issued to the Company will be voting. Upon the consummation of an initial public offering by Newco, the Newco non-voting common stock automatically will convert into voting common stock. The Newco Preferred Stock is non-voting, and if converted after an initial public offering by Newco, the common stock issued by Newco upon conversion would be voting common stock. The Transaction Documents permanently limit the voting power of the Remington Sellers and their controlled affiliates at Newco, with respect to shares of Newco common stock acquired in the transactions (which amount may be increased by post-closing acquisitions of Newco voting common stock acquired from non-Newco affiliates), to no more than 25%.

        In addition, the Transaction Documents provide that for four years after the consummation of the transactions, the voting power of the Remington Sellers' and their controlled affiliates at the Company with respect to the Company's common stock acquired as a result of the transactions (which amount may be increased by post-closing acquisitions of Company voting common stock acquired from non-Company affiliates), taking into account any subsequent conversion of the Newco common stock or Newco Preferred Stock into shares of the Company's common stock, will be limited to no more than 25%.

        After the closing of the transactions, including the issuance of the Newco common stock and Newco Preferred Stock and the completion of the Contribution, the Company will own 70.6% of the common stock (combined voting and non-voting) in Newco, and the Bennetts will own collectively 29.4% of the common stock (combined voting and non-voting) in Newco. Assuming the conversion of the Newco Preferred Stock into shares of Newco non-voting common stock pursuant to its terms, the Remington Sellers will own 56.2% of the Newco common stock (combined voting and non-voting), and the Company will own 43.8% of the Newco common stock (combined voting and non-voting). For additional information, see "The Transaction Documents" beginning on page 76.

Regulatory Approvals

        Hart-Scott-Rodino Antitrust Improvements Act of 1976.    As a condition to the consummation of the transactions contemplated by the Acquisition Agreement, the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") requires parties to observe the HSR Act's notification and waiting period. The HSR Act provides for an initial 30-day waiting period, subject to possible extensions, following the necessary filings by the parties to the transactions. The Company filed a notification and report form for the transactions with the Federal Trade Commission and the Antitrust Division and received notification of early termination of the waiting period as of December 8, 2015.

        Internal Revenue Service.    As a condition to the consummation of the transactions contemplated by the Acquisition Agreement, the IRS must issue a Private Letter Ruling that Remington will not fail to qualify as an "eligible independent contractor" within the meaning of Section 856(d)(9)(A) of the Code, with respect to specified clients as a result of certain circumstances specified in the Acquisition Agreement. On July 31, 2015, a request for the Private Letter Ruling was filed with the IRS.

Stockholder Litigation

        On December 11, 2015, a purported stockholder class action and derivative complaint challenging the transactions was filed in the Court of Chancery of the State of Delaware and styled Campbell v. Bennett et al., Case No. 11796. For additional information, see "Special Factors—Stockholder Litigation Related to the Transactions" beginning on page 75.

10


Table of Contents


Special Committee and Company Board

        On December 15, 2014, our board of directors (the "Company Board") formed a special committee consisting of three disinterested and independent directors—Brian Wheeler, Dinesh P. Chandiramani and Gerald J. Reihsen, III (the "Special Committee")—for the purpose of evaluating and negotiating the terms of the potential acquisition of all or a controlling portion of the assets or interests of Remington.

        On March 3, 2015, the Company Board revised and expanded its prior resolutions to empower the Special Committee to exercise all lawfully delegable powers of the Company Board in accordance with a statement of purpose and authority that included, among other things, the power and authority to:

        On September 14, 2015, the Special Committee unanimously determined that the Transaction Documents and the transactions are advisable, fair to, and in the best interest of the Company and its stockholders, approved and adopted the Transaction Documents and the transactions and recommended that (i) the Company Board approve and adopt the Transaction Documents and the transactions, and (ii) our stockholders, to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT, approve and adopt the Transaction Documents and the transactions.

        On September 17, 2015, the Company Board unanimously (with Monty Bennett and J. Robison Hays, III recusing themselves due to Monty Bennett's interest in the transactions and Mr. Hays' status as an executive officer of the Company who reports to Monty Bennett), (i) approved and adopted the favorable recommendation of the Special Committee in respect of the transactions and the Transaction Documents; (ii) approved the form, terms and provisions of the Transaction Documents; and (iii) determined to recommend that the stockholders of the Company vote to approve the transactions to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT.

        The Special Committee and the Company Board considered numerous factors, potential benefits, risks, negative factors, and procedural safeguards before reaching their determinations, and these are more fully described under "Special Factors—Reasons for the Transaction; Recommendation of the Special Committee; Recommendation of the Board of Directors."

11


Table of Contents

        The Special Committee's recommendation and the Company Board's approval and recommendation were based in part on a fairness opinion issued to the Special Committee and the Company Board by BMO Capital Markets.

        For additional information, see "Special Factors—Background of the Transactions" beginning on page 38.


Description of Fairness Opinion of BMO Capital Markets

        On September 14, 2015, at the request of the Special Committee, BMO Capital Markets rendered an oral opinion to the Special Committee, which was subsequently confirmed in a written opinion as of the same date (the "Opinion"), to the effect that as of such date, and based upon and subject to the assumptions made, matters considered and limitations and qualifications upon the review undertaken by BMO Capital Markets, the aggregate consideration to be paid by the Company in the transactions was fair, from a financial point of view, to the Company. See "Special Factors—Description of Fairness Opinion of BMO Capital Markets" beginning on page 59.

        The full text of the Opinion is attached hereto as Annex G and is incorporated into this document by reference in its entirety. The summary of the Opinion set forth herein is qualified in its entirety by reference to the full text of the Opinion. Stockholders are urged to read the Opinion carefully and in its entirety for a discussion of, among other things, the scope of review undertaken and the assumptions made, matters considered and limitations and qualifications upon the review undertaken by BMO Capital Markets in connection with such Opinion.


Acquisition Agreement

Conditions to Transactions

        The Company's and each of Archie Bennett, Jr., Monty J. Bennett and Remington Holdings GP, LLC's (collectively, the "Remington Holders") obligation to consummate the transactions is subject to conditions, including:

        Our obligation to consummate the transactions is also conditioned on there not having occurred a material adverse effect with respect to Remington.

        The Remington Holders' obligation to consummate the transactions is also conditioned on:

12


Table of Contents

Representations, Warranties and Covenants

        The Remington Holders, Remington and the Company have each made customary representations and warranties and covenants in the Acquisition Agreement. Generally, the representations and warranties survive for 18 months after the consummation of the transactions; however, specified fundamental representations of the parties survive indefinitely, the Remington Holders' representations and warranties with respect to environmental and employee benefit matters survive for the respective statute of limitations plus three months, and the parties' representations and warranties with respect to tax related matters survive for the statute of limitations plus six months.

        Except for breaches of fundamental representations and warranties, neither the Company nor the Remington Holders will be liable for breaches of representations and warranties until the aggregate amount of all damages suffered by the indemnified parties exceeds $5,000,000, in which event the breaching party is liable from the first dollar. Except for breaches of fundamental representations and warranties and tax related matters, the aggregate liability for damages for breach of the representations and warranties for each of the Company and the Remington Holders is $50,160,000. The aggregate liability for damages for each of the Company and the Remington Holders is $331,650,000 for all breaches of representations and warranties by such party. No right or remedy in the Acquisition Agreement is intended to be exclusive or to preclude a party from pursuing other rights and remedies to the extent available under the Acquisition Agreement, at law or in equity.

        The Remington Holders will satisfy obligations to pay damages in shares of Newco common stock with a value agreed by the Company and the Remington Holders at $100 per share, and, to the extent that shares of Newco common stock are insufficient, in Newco Preferred Stock valued at $25 per share which was agreed by the parties to the Acquisition Agreement.

"No-Shop" Restrictions and "Fiduciary Out"

        Remington is subject to customary "no-shop" restrictions on its ability to solicit alternative acquisition proposals from third parties and to provide information to, and participate in discussions and engage in negotiations with, third parties regarding alternative acquisition proposals.

        The Company is also subject to customary "no-shop" restrictions on its ability to solicit acquisition proposals from third parties and to provide information to, and participate in discussions and engage in negotiations with, third parties regarding alternative acquisition proposals. Prior to our stockholders approving the proposals at the special meeting, however, the "no-shop" provision is subject to a customary "fiduciary-out" provision that allows us, under certain circumstances and in compliance with specified procedures, to provide information to and participate in discussions and engage in negotiations with third parties with respect to an acquisition proposal that the Company Board determines (acting through the Special Committee) is reasonably likely to result in a superior proposal.

13


Table of Contents

The Special Committee may exercise a termination right in order to accept a superior proposal, subject to matching rights for the Remington Holders and other conditions.

        In addition, prior to our stockholders considering the proposals at the special meeting, the Company Board may change its recommendation with respect to the proposals in response to an intervening event if the Special Committee determines in good faith, after consultation with counsel, that the failure to do so would be inconsistent with the Company Board's fiduciary duties under applicable law, but only if we have first negotiated in good faith to adjust the terms of the Acquisition Agreement so that there is no longer a basis for such change.

        If we terminate the Acquisition Agreement for a superior proposal, we will be required to pay the Remington Holders a termination fee of $6,688,000 plus the costs and expenses incurred by them in connection with the transactions.

Termination

        In addition to our right to terminate the Acquisition Agreement for a superior proposal, the Acquisition Agreement contains termination rights for both the Company and the Remington Holders. Also, either the Company or the Remington Holders may terminate the Acquisition Agreement if the transactions are not consummated by June 30, 2016.

        For additional information on the Acquisition Agreement, see "The Transaction Documents—Acquisition Agreement" beginning on page 76 and Annex C to this proxy statement.


Newco Preferred Stock

        The rights, terms and preferences of the Newco Preferred Stock will be established by Newco filing a Certificate of Designation with the Delaware Secretary of State effective as of the closing of the transactions (the "Certificate of Designation").

Terms of Newco Preferred Stock

        The Certificate of Designation will provide that each share of Newco Preferred Stock will:

        The Certificate of Designation also will provide for customary anti-dilution protections.

Board Designation Rights

        In the event Newco fails to pay a dividend at the rate of 6.625% per annum for two consecutive quarterly periods, then, until such arrearage is paid in cash in full, (i) the dividend rate on the Newco Preferred Stock will increase to 10% per annum; (ii) no dividends may be declared and paid, and no other distributions or redemptions may be made, on the Newco common stock; and (iii) the Newco board of directors and the Company Board will be increased by two seats and the holders of Newco Preferred Stock will be entitled to designate two individuals to fill such newly created seats.

14


Table of Contents

Restrictive Covenants

        The Certificate of Designation will provide that, so long as any shares of Newco Preferred Stock are outstanding, Newco is prohibited from taking specified actions without the consent of 66.67% of the holders of Newco Preferred Stock, including:

        For additional information on Newco Preferred Stock, see "The Transaction Documents—Certificate of Designation of Newco Preferred Stock" beginning on page 84 and Annex D to this proxy statement.


Investor Rights Agreement and Remington Limited Partnership Agreement

        At the closing of the transactions, the parties will enter into an investor rights agreement (the "Investor Rights Agreement") that will provide for, among other items, governance rights, operating agreements, noncompetition agreements, transfer restrictions, put and call rights and obligations of the parties with respect to the Company and its subsidiaries, including Remington. In addition, the Remington limited partnership agreement will be amended and restated (the "Limited Partnership Agreement"), and will include, among other items, governance rights, tax agreements and operating provisions with respect to Remington.

Board Designation Rights

        The Investor Rights Agreement will provide that the board of directors of Newco will, at all times until the occurrence of Newco's initial public offering, be made up of the same individuals serving on the Company Board, including the Holder Group Investors' nominee. In the event that Newco fails to pay a dividend at the rate of 6.625% per annum for two consecutive quarterly periods on the Newco Preferred Stock, both the Company Board and the Newco board of directors will be increased by two seats and the individuals filling such newly created seats will be the same.

        The Investor Rights Agreement will also provide that for so long as the Bennetts and MJB Investments (together with their controlled affiliates that become transferees, the "Holder Group Investors") beneficially own at least 20% of the common stock of Newco (taking into account the Newco Preferred Stock on an as-converted basis), a majority in interest of the Holder Group Investors will be entitled to nominate one individual for election as a member of Company Board and, until a majority in interest of the Holder Group Investors otherwise determine, Monty Bennett will serve as the nominee. In the event that Newco fails to pay a dividend at the rate of 6.625% per annum for two consecutive quarterly periods on the Newco Preferred Stock, the Company Board will be increased by

15


Table of Contents

two seats and a majority in interest of the Holder Group Investors will be entitled to designate two individuals to fill such newly created seats.

        In addition, for so long as the Holder Group Investors hold any of the 20% limited partnership interest in Remington initially retained by the Bennetts (the "Retained Interest"): (i) a majority in interest of the Holder Group Investors will be entitled to nominate one individual for election as a member of the board of directors of Newco Sub; and (ii) the independent directors of Newco will be entitled to nominate two individuals for election as members of the board of directors of Newco Sub. Until a majority in interest of the Holder Group Investors otherwise determine, Monty Bennett will serve as the Holder Group Investors' nominee.

Operating Provisions

        The Investor Rights Agreement will also provide that for so long as the Holder Group Investors beneficially own no less than 20% of the issued and outstanding shares of the common stock of Newco (taking into account Newco Preferred Stock on an as-converted basis), the Company, Newco and Newco Sub are prohibited, without the prior written consent of a majority in interest of the Holder Group Investors, from, among other actions :

Governance Provisions

        Newco will not take, and the Company will not cause or permit Newco to take, any corporate action that, if taken by the Company, would require the approval of our stockholders under the DGCL or the rules and regulations of any stock exchange on which our voting securities are then listed, unless such corporate action has been approved by our stockholders by the same vote as would be required if the Company were taking such corporate action.

        Except for issuances contemplated by the Transaction Documents, none of the Company, Newco or Newco Sub will issue any equity securities, rights to acquire equity securities of the Company, Newco or Newco Sub or debt convertible into equity securities of the Company, Newco or Newco Sub, unless the Company, Newco or Newco Sub, as the case may be, gives each Holder Group Investor notice of its respective intention to issue new securities and the right to acquire such Holder Group Investor's pro rata share of the new securities. Further, if the Company issues shares for cash, it must contribute the net proceeds of such offering to Newco in exchange for additional shares of Newco voting common stock.

Limited Partnership Agreement

        The Limited Partnership Agreement will provide for additional approval rights with respect to the operation of Remington in favor of the Holder Group Investors, including limiting Remington's ability to incur indebtedness, issue additional interests, and amend the Limited Partnership Agreement.

16


Table of Contents

Back-Office Services

        In addition, pursuant to the Limited Partnership Agreement, Remington will continue to provide back-office services previously provided to Archie Bennett, Jr. and Monty Bennett for administrative, legal, tax, accounting and financial services, at no charge for ten years from the date of the closing of the transactions.

Incentive Fees

        Pursuant to the terms and conditions of hotel management agreements to which Remington is a party, Remington receives annual incentive management fees based on the preceding year's hotel operations subject to such hotel management agreements. The incentive fees are calculated as of the end of each fiscal year and paid in the first fiscal quarter of the following year.

        The Investor Rights Agreement will provide that for the calendar year in which the closing occurs, the net amount of the aggregate incentive fees less the aggregate amount of officer and executive employee bonuses paid by Remington will be prorated as of the date of the closing based upon the actual number of days elapsed from January 1 through the date of the closing. The net prorated amounts will be paid by Remington to the Bennetts and MJB Investments in cash with respect to the period of time prior to the date of the closing.

Newco Initial Public Offering

        The Investor Rights Agreement will provide that, as soon as practicable after the second anniversary of the closing of the transactions, Newco, at its expense, will use its best efforts to prepare and file with the U.S. Securities and Exchange Commission (the "SEC") a registration statement providing for either, or both, an initial public offering of the voting common stock of Newco or the registration and resale of all of the registrable securities of Newco, and to cause the corresponding registration statement to become effective no later than the third anniversary of the closing of the transactions.

        In addition, Newco's certificate of incorporation provides that any shares of the non-voting common stock of Newco will automatically convert into an equivalent number of shares of voting common stock of Newco upon the consummation of an initial public offering of the voting common stock of Newco.

Transfer Restrictions

        The Investor Rights Agreement will provide that for three years after the closing of the transactions, each of Monty Bennett, Archie Bennett, Jr., MJB Investments, Mark Sharkey and their permitted transferees (collectively, the "Covered Investors") are prohibited from transferring common stock of Newco or Newco Preferred Stock, except to family members and in connection with estate planning, unless the transfer has been approved by an independent committee of the Company Board.

        Covered Investors will also be prohibited from transferring the Retained Interest except to family members or to a charitable foundation, unless approved by an independent committee of the Company Board, and provided that the Company failed to exercise its right of first refusal to purchase the Retained Interest on the same terms as the proposed transfer. In each case, assignment of any economic interest (separate from any voting interest) will be permitted.

17


Table of Contents

Put and Call Options

Preferred Call Option

        Pursuant to the Investor Rights Agreement, after the fifth anniversary of the closing of the transactions, Newco will have the option to purchase all or any portion of the Newco Preferred Stock in $25,000,000 increments on a pro rata basis among all Covered Investors (the "Preferred Call Option") at a price per share equal to the sum of (i) not more than $25.125, plus (ii) all accrued but unpaid dividends. The purchase price is payable only in cash. The notice of exercise of the Preferred Call Option does not limit or restrict any Covered Investor's right to convert the Newco Preferred Stock into shares of Newco common stock prior to the closing of the Preferred Call Option.

Remington Call Option

        The Investor Rights Agreement will provide that after the tenth anniversary of the closing of the transactions, Newco Sub will have an option to require the Covered Investors to sell to Newco Sub the Retained Interest (the "Remington Call Option"). In the event that the Remington Call Option is exercised, the price to be paid will be an amount equal to 110% of the Retained Interests Purchase Price (defined below), and the price will be payable at each Covered Investor's individual election in any combination of:

        The "Retained Interests Purchase Price" is an amount equal to the product of (a) the Multiple (defined below), multiplied by (b) Remington's adjusted earnings before interest and taxes for the prior 12-month rolling period, multiplied by (c) the percentage ownership interest of Remington on a fully diluted basis represented by the Retained Interests. "Multiple" means a factor not less than 10.25 and not greater than 16.25 that will be determined by agreement between the Company and the Covered Investors or, if no agreement is reached, by appraisal and arbitration procedures.

Change of Control Put Option

        The Investor Rights Agreement will provide each Covered Investor with the option, exercisable on one occasion, to sell to the Company all of the Retained Interests, Newco common stock (unless an initial public offering of Newco has occurred) and/or the Newco Preferred Stock then owned by such Covered Investor (the "Change of Control Put Option"), during the ten consecutive business day period following the consummation of a Change of Control (as defined below). In the event that a Covered Investor exercises the Change of Control Put Option, the price to be paid to such exercising Covered Investor will be:

18


Table of Contents

        The $120 conversion price is subject to adjustment in the event of stock dividends on Newco common stock or any subdivision or combination of Newco common stock.

        A "Change of Control" means any of the following, in each case that was not consented to, voted for or otherwise supported by Monty Bennett: (a) any person (other than Archie Bennett, Jr., Monty Bennett, MJB Investments, their controlled affiliates, trusts or estates in which any of them has a substantial interest or as to which any of them serves as trustee or a similar capacity, any immediate family member of Archie Bennett, Jr. or Monty Bennett or any group of which they are a member) acquires beneficial ownership of securities of the Company or Newco that, together with the securities of the Company or Newco previously beneficially owned by the first such person, constitutes more than 50% of the total voting power of the Company's or Newco's outstanding securities; or (b) the sale, lease, transfer or other disposition (other than as collateral) of all or a majority of the Company's or Newco's (taken as a whole) assets or income or revenue generating capacity, other than to any direct or indirect majority-owned and controlled affiliate of the Company.

The Bennetts' Noncompetition Agreement

        The Investor Rights Agreement will provide that for a period of the later of (i) three years following the closing of the transactions, or (ii) three years following the date Monty Bennett is not the principal executive officer of the Company, each of Archie Bennett, Jr., Monty Bennett, and MJB Investments will not, directly or indirectly:

19


Table of Contents

Voting Limitations at the Company and Newco

The Company

        The Investor Rights Agreement will provide that, on matters submitted to a vote of our stockholders, the Covered Investors have the right to vote as they determine, except if, prior to the fourth anniversary of the closing of the transactions, the combined voting power of the Reference Shares (as defined below) of the Company exceeds 25% (plus the combined voting power of any Company common stock purchased after the closing of the transactions in an arm's length transaction from a person other than the Company or a Company subsidiary, including through open market purchases, privately negotiated transactions or any distributions by either Ashford Trust or Ashford Prime to its respective stockholders pro rata) of the combined voting power of all of the outstanding voting securities of the Company entitled to vote, then Reference Shares of the Company representing voting power equal to such excess will be deemed to be "Company Cleansed Shares." The Covered Investors will vote Company shares with voting power equal to the voting power of the Company Cleansed Shares in the same proportion as our stockholders vote their shares with respect to such matters, inclusive of the Reference Shares of the Company voted by the Covered Investors.

Newco

        On matters submitted to a vote of Newco stockholders, the Covered Investors will have the right to vote as they determine, except if at any time the combined voting power of the Reference Shares of Newco exceeds 25% (plus the combined voting power of any Newco common stock purchased after the closing of the transactions in an arm's length transaction from a person other than Newco or a Newco subsidiary, including through open market purchases or privately negotiated transactions) of the combined voting power of all of the outstanding voting securities of Newco entitled to vote, then Reference Shares of Newco representing voting power equal to such excess will be deemed to be "Newco Cleansed Shares." The Covered Investors will vote Newco shares with voting power equal to the voting power of the Newco Cleansed Shares in the same proportion as Newco stockholders vote their shares with respect to such matters, inclusive of the Reference Shares of Newco voted by the Covered Investors.

        These voting restriction may be waived by two-thirds majority vote or consent of the independent directors of the Company or Newco, as applicable, that have no personal interest in the matter to be voted upon.

        "Reference Shares" means all voting securities of the Company or Newco, as applicable, that are (a) beneficially owned by any Covered Investor; (b) beneficially owned by any member of a group of which any Covered Investor is a member; or (c) subject to or referenced in any derivative or synthetic interest that (i) conveys any voting right in the common stock of the Company or Newco, as applicable, or (ii) is required to be, or is capable of being, settled through delivery of common stock of the Company or Newco, as applicable, in either case, that is held or beneficially owned by any Covered Investor or any controlled affiliate or any Covered Investor.

Termination

        The Investor Rights Agreement will provide that it terminates on the earliest of (i) the written agreement of the Company and a majority in interest of the Covered Investors, (ii) the fifth anniversary of the closing of the transactions, and (iii) the date on which the Covered Investors no longer own any Retained Interests, Newco common stock or Newco Preferred Stock; provided that operational covenants, the noncompetition agreement, board designation rights, voting limitations and restrictions

20


Table of Contents

on Newco dividends will last for the time periods provided by their terms and that the call options, put options and the Private Letter Ruling compliance covenant will last indefinitely.

        A Covered Investor will automatically cease to be bound by the Investor Rights Agreement at such time as such Covered Investor no longer owns any Retained Interests, any Newco common stock or Newco Preferred Stock.

        For additional information on the Investor Rights Agreement and the Limited Partnership Agreement of Remington, see "The Transaction Documents—Investor Rights Agreement" beginning on page 86, "The Transaction Documents—Limited Partnership Agreement" beginning on page 93, Annex E and Annex F to this proxy statement.


Voting at the Special Meeting

        The following parties have voting power with respect to the specified number of shares of the Company's common stock, which represents the specified percent of our outstanding voting power as of January 22, 2016:

Holder
  Number of Shares   Voting Power  

Monty Bennett

  221,172 common shares     11.0 %

Archie Bennett, Jr. 

  85,160 common shares     4.2 %

Ashford Trust

  598,163 common shares     29.8 %

Ashford Prime

  194,880 common shares     9.7 %

Directors and Officers of the Company (excluding Archie Bennett, Jr.)

  326,996 common shares     16.3 %

        Each of the Remington Sellers and the directors and officers of the Company has informed us that, as of the date of this proxy statement, they intend to vote their shares in favor of each proposal presented to the stockholders at the special meeting.

        Ashford Trust and Ashford Prime have informed us that each of their respective boards of directors have delegated the decision as to how to vote on the proposals to special committees composed of independent directors, pursuant to previously-adopted policies that delegate exclusive power to vote the Company shares solely to the independent directors of such boards. These committees have each engaged independent financial advisors and legal counsel to assist them, and as of the date hereof, neither has informed the Company as to how Ashford Trust or Ashford Prime intend to vote.

        For additional information, see "Special Factors—Intent to Vote" beginning on page 73.

21


Table of Contents


QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING

General Information

Q.
When and where is the special meeting?

A.
The special meeting will be held at [    :    ] [a.m./p.m.] Central time, on [                        ], 2016, at the Marriott Legacy Town Center, 7121 Bishop Road, Plano, Texas 75024.

Q.
What is the purpose of the special meeting?


Voting and Voting Procedures

Q.
What shares can be voted at the special meeting?

A.
Holders of our common stock as of the close of business on [                        ], 2016, the record date for the special meeting, are entitled to notice of, and to vote at, the special meeting and any postponements or adjournments of the special meeting. Our only outstanding voting equity securities are shares of our common stock. Each share of common stock entitles the holder to one vote. As of the record date, there were [            ] shares of common stock outstanding and entitled to vote.

Q.
What is the quorum required for the special meeting?

A.
The representation in person or by proxy of holders of a majority of the issued and outstanding shares of our common stock entitled to vote at the special meeting is necessary to constitute a quorum for the transaction of business at the special meeting. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum. If a quorum is not present, the special meeting of stockholders may be adjourned by the chairman of the meeting or by a vote of a majority of the shares represented at the special meeting until a quorum has been obtained.

22


Table of Contents

Q.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?

A.
Many of our stockholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own names. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
Q.
How can I vote my shares without attending the special meeting?

A.
Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct your vote without attending the special meeting. You may vote by granting a proxy or, for shares held in street name, by submitting voting instructions to your broker or nominee. In most instances, you will be able to do this by mail, over the Internet or by telephone. Please refer to the summary instructions below or, for shares held in street name, the voting instruction card included by your broker or nominee.
Q.
How do I vote my shares in person at the special meeting?

A.
Shares held directly in your name as the stockholder of record may be voted in person at the special meeting. If you choose to do so, please bring proof of identification and request a ballot at the meeting. Even if you currently plan to attend the special meeting, we recommend that you also submit your proxy as described above so that your vote will be counted if you later cannot attend or decide not to attend the special meeting.

Q.
What does it mean if I receive more than one proxy or voting instruction card?

A.
It means you have shares that are registered in different ways or are held in more than one account. Please provide voting instructions for all proxy and voting instruction cards you receive.

23


Table of Contents

Q.
Can I revoke my proxy?

A.
You may change your proxy instructions at any time prior to the vote at the special meeting. For shares held directly in your name, you may accomplish this by granting a new proxy by Internet, telephone or mail. If shares of common stock are held on your behalf by a broker, bank or other nominee, you must contact them to receive instructions as to how you may revoke your proxy instructions. Proxies may also be revoked by written notice to the Secretary of the Company or by attending and voting in person at the meeting. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. You must meet the same deadline when revoking your proxy as when voting your proxy.

Q.
What vote is required to approve the proposals to be voted upon at the special meeting?

A.
Proposal 1 (The Contribution):    The proposal to approve the Contribution requires the affirmative "FOR" vote of a majority of the shares of our outstanding common stock and entitled to vote at the special meeting.
Q.
What are the effects of not voting or abstaining? What are the effects of broker non-votes?

A.
Abstentions:    Abstentions, if any, will have the same effect as a vote "AGAINST" Proposal 1 and Proposal 2. However, abstentions, if any, will not be considered as votes cast under the Company's bylaws, and accordingly will have no effect on the outcome of Proposal 3.
Q.
What is a broker non-vote?

A.
A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner. Your broker does not have discretionary authority to vote your shares with respect to Proposal 1 (The Contribution) or Proposal 2 (The Share Issuances), but does have discretionary authority to vote your shares with respect to Proposal 3 (Adjournment or Postponement of the Special Meeting).


Other Matters

Q.
I share an address with another stockholder, and we received only one paper copy of the proxy materials. How can I obtain an additional copy of the proxy materials?

24


Table of Contents

Q.
What if other matters are presented for consideration at the special meeting?

A.
As of the date of this proxy statement, the Company does not know of any matters that will be presented for consideration at the special meeting other than those matters described in this proxy statement. If any other matters properly come before the special meeting, the proxies solicited hereby will be voted on such matters in accordance with the discretion of the proxy holders named therein.

Q.
Who is soliciting my proxy? Who is paying expenses relating to the solicitation?

A.
The enclosed proxy is solicited by and on behalf of the Company Board. In addition to the solicitation of proxies by use of the mail, officers and other employees of the Company may solicit the return of proxies by personal interview, telephone, e-mail or facsimile. We will not pay additional compensation to our officers and employees for their solicitation efforts, but we will reimburse them for any out-of-pocket expenses they incur in their solicitation efforts. We also intend to request persons holding shares of our common stock in their name or custody, or in the name of a nominee, to send proxy materials to their principals and request authority for the execution of the proxies, and we will reimburse such persons for their expense in doing so. We will bear the expense of soliciting proxies for the special meeting of stockholders, including the cost of mailing.
Q.
How can I obtain additional information?

A.
If you would like additional copies of this proxy statement, without charge, or if you have questions about the procedures for voting your shares, please follow the instructions provided in the section of this proxy statement titled "Other Matters—Where You Can Find Additional Information."

25


Table of Contents


FORWARD-LOOKING STATEMENTS

        Certain statements and assumptions in this proxy statement contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements. Such statements are subject to numerous assumptions and uncertainties, many of which are outside of our control. Such forward-looking statements include, but are not limited to:

        These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation:

26


Table of Contents

        These and other risk factors are more fully discussed in the section titled "Risk Factors" in this proxy statement and in our Annual Report on Form 10-K, and from time to time, in the Company's other filings with the SEC. The forward-looking statements included in this proxy statement are only made as of the date of this proxy statement. Investors should not place undue reliance on these forward-looking statements. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise.

27


Table of Contents


RISK FACTORS

        In addition to the other information contained and incorporated by reference into this proxy statement, including the matters addressed in the section entitled "Forward-Looking Statements" beginning on page 26, you should carefully consider the following risks before deciding whether to vote for the proposals. In addition, you should read and consider the risks associated with each of the businesses of the Company and Remington because these risks will also affect the Company on a post-closing basis. Descriptions of some of these risks can be found in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as updated by any subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and incorporated by reference into this proxy statement. You should also read and consider the other information in this proxy statement and the other documents incorporated by reference into this proxy statement. See the section entitled "Other Matters—Where You Can Find Additional Information" beginning on page 108 and "Other Matters—Information Incorporated by Reference" beginning on page 109.

RISKS RELATED TO THE STRUCTURE OF THE TRANSACTIONS

Following the transactions, the Company will be dependent upon the profitability of Newco, and the failure to receive regular distributions from Newco will adversely affect the availability of cash at the Company.

        Following the consummation of the transactions, the Company will be a holding company owning shares of Newco. The Company will conduct no material activities other than activities incidental to holding the shares of Newco. As a result, the Company will be substantially dependent on the ability of Newco and its subsidiaries to fund the cash needs of the Company. If Newco is not able to make cash distributions, we may not be able to fund our cash obligations, and if Newco is less profitable than we anticipate, we may not be able to fund our operating expenses.

Our holding company structure following the transactions will result in structural subordination that may affect our ability to make distributions and payments on our obligations.

        Following the transactions, as a result of our holding company structure, we will receive substantially all of our cash from distributions made to us by Newco. Newco's payment of distributions to us may be subject to claims by Newco's creditors and to limitations applicable to Newco under federal and state laws, including securities and bankruptcy laws. Furthermore, our equity interests in Newco and its subsidiaries following the transactions will rank junior to all of the respective indebtedness, whenever incurred, the Newco Preferred Stock, and all equity interests of Newco's subsidiaries in the event of their respective liquidation or dissolution. The right of our stockholders, therefore, to participate in such liquidation or dissolution would be subordinated to the claims of Newco's creditors and to all equity interests of Newco.

The holders of Newco Preferred Stock will have rights that are senior to our rights as a holder of Newco's common stock, which may decrease the likelihood, frequency and amount of dividends to us as holders of Newco common stock, which in turn will affect dividends, if any, declared by the Company and paid to our stockholders.

        As part of the consideration for the transactions, Newco will issue all of the Newco Preferred Stock to the Remington Sellers. In addition, the Bennetts will receive Newco non-voting common stock, and the Company will hold all of the Newco voting common stock. We will receive substantially all of our cash from distributions made to us by Newco on the Newco common stock. The Newco Preferred Stock requires that dividends be paid on the Newco Preferred Stock before any distributions can be paid to holders of Newco's common stock and that, in the event of our bankruptcy, dissolution or liquidation, the holders of Newco Preferred Stock must be satisfied before any distributions can be made to the holders of Newco's common stock. In addition, if Newco declares or pays a dividend on its

28


Table of Contents

common stock, the holders of the Newco Preferred Stock will participate, on an as-converted basis, in such dividend with the holders of Newco's common stock, unless otherwise approved by the holders of at least 66.67% of the shares of Newco Preferred Stock. As a result of the Newco Preferred Stock's superior rights relative the common stock of Newco, including its right to participate in any dividends to the holders of Newco's common stock, our right to receive distributions from Newco is limited and diluted. Moreover, because our rights to dividends from Newco are limited and diluted, we may not be incentivized to cause Newco to declare and pay dividends to us, as holders of Newco common stock.

        The extent to which we receive cash from distributions from Newco will in turn determine the likelihood, frequency and amount of dividends, if any, that the Company will declare and pay to our stockholders.

If dividends from Newco to the Company are reduced by federal income taxes, proceeds available for distribution to our stockholders as dividends, if any, would be reduced and our stock price may be adversely affected.

        As a result of the transactions, we will receive substantially all of our cash from distributions made to us by Newco. Unless otherwise approved by holders of at least 66.67% of the shares of Newco Preferred Stock, Newco may only make any distributions to us by means of a dividend pro rata to the holders of Newco's common stock. Following the transactions, we will not own sufficient stock in Newco to file federal income tax returns with Newco on a consolidated basis. As a result, we will not be entitled to a 100% dividend received deduction for federal income tax purposes on dividends paid to us by Newco. Rather, in general, we will be required to pay federal income tax on an amount equal to 20% of any dividends paid to us by Newco. Such dividends may also be subject to state income taxes. Accordingly, income taxes payable by us on dividends received from Newco would ultimately result in less proceeds available for distribution as dividends to our stockholders. As a result, the market price of our common stock may be adversely affected.

Part of the consideration for the transactions to the Remington Sellers creates significant cash flows for the Remington Sellers that may create conflicts of interest in the management of the Company and Remington following the transactions.

        As part of the consideration for the transactions, the Remington Sellers will receive Newco Preferred Stock and Remington Holdings GP will receive the Newco Sub Promissory Note. Each share of Newco Preferred Stock has a cumulative dividend rate of 6.625% per annum, which dividends are payable in cash quarterly in arrears, and the Newco Sub Promissory Note is payable in 16 consecutive and equal quarterly installments. As a result of this consideration, as well as the Bennetts retaining 20% of the limited partnership interests in Remington, the Remington Sellers and Remington Holdings GP have the right to receive significant cash flow. The Remington Sellers may be incentivized by this consideration to maximize the cash flow of the Company and its subsidiaries, and thus Monty Bennett may have conflicts of interest in making management decisions that might be to the detriment of the Company's long-term strategy and success.

If the Company is considered an "investment company" under the Investment Company Act of 1940 following the transactions, we may incur significant costs and be subject to restrictions on our ability to pursue our fundamental business strategy.

        We may incur significant costs and be subject to restrictions on our ability to pursue our fundamental business strategy if the Company is subject to regulation under the Investment Company Act of 1940, as amended (the "Investment Company Act"). The Investment Company Act requires registration as an investment company for companies that are engaged primarily in the business of investing, reinvesting, owning, holding or trading securities. Registration as an investment company would subject us to restrictions that would significantly impair our ability to pursue our fundamental

29


Table of Contents

business strategy of providing asset and property management services. As an investment company, we would be forced to comply with substantive requirements of the Investment Company Act, including:

        We do not believe that our ownership of 100% of the voting shares of Newco, a non-wholly owned subsidiary, will subject us to regulation under the Investment Company Act. Our determination of whether we will be an investment company is based on our holding at least a majority of the voting securities of Newco. As a result, we could inadvertently become an investment company if the Bennetts distribute their non-voting shares of Newco, causing those shares to become voting stock of Newco. It is not feasible for us to be regulated as an investment company because application of Investment Company Act regulations are inconsistent with our strategy of providing asset and property management services.

RISKS RELATED TO THE TRANSACTIONS

If the transactions do not occur, we may incur payment obligations to the Remington Sellers.

        If the Acquisition Agreement is terminated by the Company as a result of a Company Intervening Event or a Company Superior Proposal, we will be obligated to pay the Remington Holders a termination fee of up to $6,688,000 plus the actual, documented out-of-pocket costs and expenses actually incurred by the Remington Holders in connection with the Acquisition Agreement and the transactions.

The transactions may not be completed on the terms or timeline currently contemplated or at all. Failure to complete the transactions in a timely manner could negatively affect our ability to achieve the benefits associated with the transactions and could negatively affect our share price and future business and financial results.

        The transactions are currently expected to close during the first quarter of 2016, assuming that all of the conditions in the Acquisition Agreement are satisfied or waived. The Acquisition Agreement provides that either the Company or the Remington Sellers may terminate the Acquisition Agreement if the closing of the transactions has not occurred by June 30, 2016. To complete the transactions, our stockholders must approve the Contribution and the Share Issuances. In addition, the Acquisition Agreement contains additional closing conditions, which may not be satisfied or waived. Certain events outside our control may delay or prevent the consummation of the transactions. Delays in consummating the transactions or the failure to consummate the transactions at all may cause us to incur significant additional costs and to fail to achieve the anticipated benefits associated with the transactions. In addition, pursuant to the Acquisition Agreement, both the Company and Remington are subject to certain restrictions on the conduct of their respective businesses prior to completing the transactions. These restrictions may prevent us from pursuing certain strategic transactions, undertaking certain significant capital projects, undertaking certain significant financing transactions and otherwise pursuing other actions that are not in our ordinary course of business, even if such actions would prove beneficial. We cannot assure you that the conditions to the completion of the transactions will be

30


Table of Contents

satisfied or waived or that any adverse event, development, or change will not occur, and we cannot provide any assurances as to whether or when the transactions will be completed.

        Delays in consummating the transactions or the failure to consummate the transactions at all could also negatively affect our future business and financial results, and, in that event, the market price of our common stock may decline significantly, particularly to the extent that the current market price reflects a market assumption that the transactions will be consummated. If the transactions are not consummated for any reason, our ongoing business could be adversely affected, and we will be subject to several risks, including:

        In addition, if the transactions are not completed, the Company may experience negative reactions from the financial markets and from its employees and other stakeholders. The Company could also be subject to litigation related to any failure to complete the transactions or to enforcement proceedings commenced against us to compel to perform our obligations under the Acquisition Agreement. If the transactions are not completed, the Company cannot assure its stockholders that these risks will not materialize and will not materially affect our business, financial results and the stock price.

We will incur significant non-recurring costs in connection with the transactions.

        We expect to incur a number of non-recurring closing costs associated with the transactions. Under the terms of the Acquisition Agreement, regardless of whether the closing of the transactions occurs, Newco is obligated to pay all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants and one-half of all filing and other similar fees payable in connection with any filings or submissions under the HSR Act and one-half of any transfer, documentary, sales, use, stamp, registration, value added and other such taxes and fees (including any penalties and interest thereon) incurred in connection with the transfer of the Transferred Securities pursuant to the Acquisition Agreement and the other Transaction Documents, and the exchange contemplated pursuant to the contribution agreement between the Company and Newco, setting forth the terms and conditions upon which the Company will contribute substantially all of its assets to Newco, and Newco will assume all of the liabilities of the Company, (including any real property transfer tax and any other similar tax) (collectively, "Transaction Costs") incurred by the Company, Newco, Newco Sub, GP Holding and GP Holding I. If the closing of the transactions occurs, Newco also will assume and pay all Transaction Costs incurred by Archie Bennett, Jr., Monty Bennett, Remington Holdings GP and Remington in connection with the Acquisition Agreement and the transactions, plus all bonuses and other payments made to employees and agents of Remington in connection with the closing of the transactions, up to $2,750,000 in the aggregate. We expect that approximately $9.5 million will be incurred to complete the transactions (including an amount of $2,750,000 which we may need to reimburse Remington at the closing of the transactions), although additional unanticipated costs may be incurred in the integration of Remington into our business. As of January 25, 2016, we have incurred $5.2 million in nonrecurring costs in connection with the transactions.

The pro forma financial statements are presented for illustrative purposes only and may not be an indication of the Company's financial condition or results of operations following the transactions.

        The pro forma financial statements contained in this proxy statement are presented for illustrative purposes only and may not be an indication of the Company's financial condition or results of operations following the transactions for several reasons. The pro forma financial statements have been

31


Table of Contents

derived from the historical financial statements of the Company and Remington, and adjustments and assumptions have been made after giving effect to the transactions. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the pro forma financial statements do not reflect all costs that are expected to be incurred by the Company and Remington in connection with the transactions. As a result, the actual financial condition and results of operations of the Company following the transactions may not be consistent with, or evident from, these pro forma financial statements.

        The assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect the Company's financial condition or results of operations following the transactions. Any decline or potential decline in the Company's financial condition or results of operations may cause significant variations in its stock price. Please read "Financial Information—Unaudited Pro Forma Financial Statements of Ashford Inc. and Subsidiaries."

The transactions may not be accretive to our stockholders, which could have a material adverse effect on our business, financial condition, and results of operations.

        The transactions may not be accretive to our stockholders. While it is intended that the transactions be accretive to our performance metrics (including after taking into account the possible future exchange of the Newco preferred stock into the Company common stock), there can be no assurance that this will be the case, as, among other things, the expenses we assume as a result of the transactions may be higher than we anticipate and we may not achieve our anticipated cost savings from the transactions, or revenue from Remington's business may decrease. The failure of the transactions to be accretive to our stockholders could have a material adverse effect on our business, financial condition and results of operations.

The transactions were negotiated between the Special Committee, which comprises independent and disinterested members of our Board, and Monty Bennett, our chief executive officer and chairman of our Board, and Archie Bennett, Jr., the chairman emeritus of Ashford Trust, and the Bennetts may have different interests than the Company.

        The transactions were negotiated with Monty Bennett, our chief executive officer and chairman of our Board, and Archie Bennett, Jr., the chairman emeritus of Ashford Trust. J. Robison Hays, III, one of our directors and our chief strategy officer, reports to Monty Bennett, as do all of our other executive officers, and thus may be considered to be affiliated with the Bennetts. As a result, those officers may have different interests than the Company as a whole. These potential conflicts would not exist in the case of a transaction negotiated with unaffiliated third parties. Moreover, if the Remington Sellers breach any of the representations, warranties or covenants made by them in the Acquisition Agreement or the other Transaction Documents, we may choose not to enforce, or to enforce less vigorously, our rights because of our desire to maintain our ongoing relationship with the Bennetts.

Monty Bennett has interests in the transactions that are different from, and may potentially conflict with, the interests of us and our stockholders.

        Monty Bennett, our chief executive officer and chairman of our Board, has interests in the transactions that may be different from, or in addition to, the interests of our stockholders generally and that may create potential conflicts of interest, including:

32


Table of Contents

        In addition, following the transactions, without the approval of the Remington Sellers, the Company, Newco, and Newco Sub may not conduct the Company's business operations outside of Newco or Newco Sub, operate any business other than the property and project management business of Remington, transfer the membership interests of GP Holdings to any entity that is not wholly owned by Newco Sub, dissolve Newco Sub, or permit Newco Sub to incur indebtedness; and without approval of the Remington Sellers, Remington may not alter its property management operations, commence bankruptcy, borrow money, alter its accounting policies, or issue any additional general partnership or limited partnership interests.

        Furthermore, following the transactions, the Bennetts will continue to own 20% of the limited partnership interests in Remington and Monty Bennett will remain an executive officer of Remington. The respective roles of the Bennetts in Remington may create additional conflicts of interest in respect of the transactions.

The fairness opinion is subject to qualifications and its valuation of the business acquired may not represent the business's true worth or realizable value.

        The fairness opinion is subject to qualifications and its valuation of the business acquired may not represent the business's true worth or realizable value. The opinion delivered to the Special Committee by BMO Capital Markets ("BMO") on September 14, 2015, is based on and subject to certain assumptions, qualifications and limitations described in such opinion, and is based on economic and market conditions and other circumstances as they existed and could be evaluated by BMO on the date of such opinion. Changes in our or Remington's operations or prospects or changes in general market or economic conditions since the date of such opinion could, among other things, alter the relevance of this opinion upon which our Board relied in recommending our stockholders approve the transactions.

We may be unable to obtain the regulatory approvals required to complete the transactions.

        The consummation of the transactions is subject to various closing conditions, including the issuance of a private letter ruling by the IRS and the expiration or termination of the applicable waiting period under the HSR Act. If these conditions to closing of the Acquisition Agreement are not fulfilled, then the transactions cannot be consummated. Although we do not anticipate any concerns

33


Table of Contents

from any regulatory authority, such regulatory authorities may determine not to permit the transactions at all or may impose restrictions on the transactions that may harm the Company or Newco if the transactions are completed.

RISKS RELATED TO OUR OPERATIONS AFTER THE TRANSACTIONS

Certain actions of Newco, Newco Sub, and Remington are subject to approval rights of the Remington Sellers and certain of their affiliated individuals or entities.

        Following the transactions, until the Newco Sub Promissory Note is paid in full and, thereafter, so long as the Remington Sellers and certain affiliated individuals or entities retain any limited partnership interest in Remington, none of the Company, Newco, or Newco Sub may transfer the membership interests of GP Holdings to any entity that is not wholly owned by Newco Sub without the approval of the Remington Sellers and such affiliated individuals or entities. In addition, following the transactions, so long as the Remington Sellers and certain affiliated individuals or entities retain not less than 20% of the issued and outstanding shares of Newco's common stock, certain actions of the Company, Newco, and Newco Sub are subject to the approval of the Remington Sellers and such affiliated individuals or entities. For example, without such approval:

        In addition, following the transactions, without approval of the Bennetts and certain affiliated individuals or entities, Remington may not:

        These approval rights may impose certain operational restrictions on the management of the Company and its subsidiaries, and, given the conflicts of interest between the Company and the Bennetts in the transactions, the Company and its subsidiaries may not be able to take certain actions deemed appropriate by our management.

The representation of the Bennetts on our Board may increase if Newco fails to make certain dividend payments on the Newco Preferred Stock.

        For so long as the Bennetts and certain of their affiliates hold at least 20% of the issued and outstanding shares of Newco's common stock (on an as-converted basis), they are entitled to nominate one individual as a member of our Board, who is initially Monty Bennett. If Newco fails to make two consecutive dividend payments to the holders of the Newco Preferred Stock, then the Bennetts and certain of their affiliates will be entitled to nominate three individuals as members of our Board and the size of the Board will be increased by two directors to accommodate these nominations. The

34


Table of Contents

Bennetts and certain of their affiliates, therefore, would have increased control over our operations and management.

We may not manage the transactions effectively in such a manner that we do not realize the anticipated benefits of the transactions.

        We may not manage the transactions effectively. The transactions could be a time-consuming and costly process. The combined company may encounter potential difficulties, including, among other things:

        For all these reasons, you should be aware that it is possible that the transactions could result in the distraction of management, the disruption of the ongoing businesses or inconsistencies in the each business's operations, services, standards, controls, procedures and policies. Therefore, the failure to plan and manage the transactions effectively could have a material adverse effect on our business, financial condition and results of operations, and we may not realize the anticipated cost-savings benefits.

The Company may, in limited circumstances, provide certain capital to Ashford Prime and Ashford Trust in connection with their asset management services.

        The Company has entered into agreements with Ashford Prime and Ashford Trust to provide, in limited circumstances, certain amounts of capital in connection with the acquisition or construction of hospitality facilities by Ashford Prime and Ashford Trust. In exchange for this capital, the Company receives asset management agreements with Ashford Prime and Ashford Trust covering such facilities. Following the transactions, the Company will receive substantially all of its cash from distributions, if any, made by Newco on the Newco common stock. Distributions made by Newco on the Newco common stock are payable after dividends on the Newco Preferred Stock are paid. Distributions made by Newco on the Newco common stock will be dependent upon, among other things, the ability to Remington to generate cash flow sufficient to allow such distributions.

        While the agreements with Ashford Prime and Ashford Trust are generally accretive to the Company, the agreements may divert capital that would otherwise be available for other necessary capital expenditures or dividends to stockholders, causing our financial condition, results of operation, cash flow and trading price of our common stock to be adversely affected.

We will become exposed to risks to which we have not historically been exposed, including liabilities of, and business risks inherent to, Remington's business.

        The transactions will expose us to risks to which we have not historically been exposed. As a result of the transactions, we will acquire liabilities of Remington and be subject to ongoing liabilities and business risks inherent to the business of Remington. Also, we could be subject to additional liabilities

35


Table of Contents

as a result of the approximately 7,900 employees who are currently employed by Remington and could subject us to additional potential liabilities that employers commonly face, such as workers' disability and compensation claims, potential labor disputes and other employee-related liabilities and grievances.

        Addressing these liabilities also could distract management, disrupt our ongoing business or result in inconsistencies in our operations, services, standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with our lenders, joint venture partners, vendors and employees or to achieve all or any of the anticipated benefits of the transactions.

        The acquisition of Remington, including its liabilities, and the incurrence by us of ongoing liabilities and business risks inherent to Remington's business could have a material adverse effect on our business, financial condition, results of operations and ability to effectively operate our business.

Because the management agreements of Remington are subject to termination in certain circumstances, any such termination could have a material adverse effect on our business, results of operations, and financial condition.

        The management agreements under which Remington provides services to hotels are subject to customary termination provisions. Any termination of a management agreement could have a material adverse effect on our business, results of operations and financial condition. Poor performance of Remington's business could cause a decline in our revenue, income and cash flow. In the event that Remington's business was to perform poorly, our revenue, income and cash flow could decline. Accordingly, poor performance may deter future investment in the Company.

The market price of our common stock may decline as a result of the transactions.

        The market price of our common stock may decline as a result of the transactions if we do not achieve the perceived benefits of the transactions as rapidly or to the extent anticipated by financial or industry analysts, or the effect of the transactions on our financial results is not consistent with the expectations of financial or industry analysts. The transactions are expected to be accretive to our performance metrics, including after taking into account the possible future exchange of the Newco preferred stock into the Company common stock. The extent and duration of any accretion will depend on several factors, including the amount of transaction-related expenses that are charged against our earnings. If expenses charged against earnings are higher than we expected, the amount of accretion in 2016 could be less than currently anticipated and the transactions may not turn out to be accretive (or may be less accretive than currently anticipated). In such event, the price of our common stock could decline.

        In addition, the risks associated with implementing our long-term business plan and strategy following the transactions may be different from the risks related to our existing business and trading price of our common stock to be adversely affected.

We depend on our key personnel with long-standing business relationships. The loss of such key personnel could threaten our ability to operate our business successfully.

        Our future success depends, to a significant extent, upon the continued services of our management team. In particular, the hotel industry and/or investment experience of Messrs. Monty J. Bennett, Douglas A. Kessler, David A. Brooks, Deric S. Eubanks, Jeremy J. Welter, Mark L. Nunneley and J. Robison Hays, III, and the extent and nature of the relationships they have developed with hotel franchisors, operators, and owners and hotel lending and other financial institutions are critically important to the success of our business. The loss of services of one or more members of our management or investment teams could harm our business and our prospects.

36


Table of Contents

OTHER RISK FACTORS

        Our businesses is and will continue to be subject to the risks described above. In addition, We are, and will continue to be, subject to the risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as updated by any subsequent Quarterly Reports on Form 10-Q, each of which is filed with the SEC and is incorporated by reference into this proxy statement. See the section titled "Other Matters—Information Incorporated by Reference" beginning on page 109 for the location of information incorporated by reference in this proxy statement.

37


Table of Contents


SPECIAL FACTORS

Background of the Transactions

        On December 15, 2014, the Company Board resolved to form an independent special committee of the Company Board to evaluate and negotiate the terms of any potential acquisition by Ashford of all or a controlling portion of the assets or equity interests of Remington. The Company Board action was in response to indications of interest submitted to the Company by the Bennetts regarding a potential combination of the businesses of the Company and Remington. The Company Board selected from among its independent directors Dinesh P. Chandiramani, Brian Wheeler and Gerald J. Reihsen III as members of the Special Committee, with Mr. Wheeler being appointed chairman, and the directors accepted such appointments. The Company Board was aware that Mr. Wheeler's wife owns a commercial printing company that is occasionally utilized by the Company, Ashford Trust and Ashford Prime for printing needs, for which 2014 total fees paid were $87,284, with a similar amount expected to be paid during 2015, and it determined that such relationship did not impair the independence of Mr. Wheeler.

        Following the selection of members of the Special Committee, the Special Committee determined to engage independent legal counsel and an independent financial advisor. The Special Committee interviewed representatives of multiple law firms and selected Norton Rose Fulbright US LLP ("NRF") to serve as legal counsel to the Special Committee and requested that NRF submit its terms of engagement.

        On January 20, 2015, the Special Committee met to conduct interviews with representatives of three prospective financial advisors, including BMO, and invited representatives of NRF to attend. Prior to the financial advisor interview process, NRF discussed with the Special Committee legal principles of related-party transactions under Delaware law, including a review of a memorandum prepared by Richards Layton & Finger P.A., Delaware counsel to the Company, and a review of the qualifications of the members of the Special Committee. Thereafter, each of the three financial advisory firms provided a presentation to the Special Committee regarding their respective proposals to be engaged as the Special Committee's financial advisor.

        On January 21, 2015, the Special Committee met, with representatives of NRF in attendance, to discuss the presentations provided to the Special Committee by the prospective financial advisors and determined to request that BMO submit their terms of engagement. The Special Committee also appointed Mr. Chandiramani as chairman of the Special Committee in place of Mr. Wheeler and reviewed a draft of the resolutions of the Company Board setting forth the authority and powers of the Special Committee as constituted on December 15, 2014, including delegable powers of the Company Board, a statement of purpose and scope of authority. The Special Committee prepared a list of requested revisions that would broaden the scope of its authority and powers for presentation to the full Company Board.

        On January 22, 2015, David A. Brooks, COO and General Counsel of the Company, and representatives of NRF discussed aspects of the proposed transaction, including the necessity of Ashford Trust receiving the Private Letter Ruling from the IRS as a condition to any transaction, and the draft of an engagement letter received from BMO regarding BMO's engagement as financial advisor to the Special Committee.

        Later that day, Mr. Brooks and representatives of NRF spoke with representatives of Ernst & Young LLP, tax advisor to the Company, regarding the requirements and terms needed in a request for the Private Letter Ruling.

        On January 27, 2015, the Special Committee met with representatives of NRF to review the proposed terms of the engagement letter previously provided to the Special Committee by NRF and the draft engagement letter provided by BMO. The Special Committee requested that NRF forward a

38


Table of Contents

draft of the BMO engagement letter reflecting the Special Committee's revisions to Mr. Brooks for his comments. Following the receipt of Mr. Brooks' comments, the Special Committee directed NRF to provide the revised draft of the engagement letter to BMO.

        On January 30, 2015, the Special Committee and NRF executed a formal agreement setting forth the terms of NRF's engagement as legal counsel to the Special Committee.

        On February 2, 2015, Robert W. Baird & Co. ("Baird"), financial advisor to the Bennetts, submitted a formal proposal to the Special Committee regarding a potential acquisition of the partnership interests of Remington by the Company (the "Initial Remington Proposal"). The Initial Remington Proposal included the following terms:

        Later that day, the Special Committee met with representatives of NRF. The participants discussed the proposed terms of the engagement of BMO and the Special Committee determined to engage BMO as financial advisor to the Special Committee on such terms. The Special Committee also discussed the Initial Remington Proposal and determined to request that BMO commence its financial analysis of Remington and the Initial Remington Proposal.

        On February 3, 2015, the Special Committee formally engaged BMO as financial advisor to the Special Committee pursuant to an engagement letter.

        On February 4, 2015, the Special Committee met with representatives of NRF and BMO. The participants continued their discussion of the Initial Remington Proposal. The Special Committee directed BMO to schedule a meeting between BMO and Baird to review and discuss the Initial Remington Proposal.

        On February 9, 2015, the Special Committee met with representatives of NRF to review a memorandum prepared by NRF regarding revisions proposed by NRF to the draft resolutions of the Company Board empowering the Special Committee. The members of the Special Committee decided to deliberate further regarding such proposed revisions in advance of the full meeting of the Company Board scheduled for late February.

        On February 11 and 12, 2015, BMO and NRF conducted on-site financial and legal due diligence at the offices of Remington, including discussions with Mr. Monty Bennett, Sheryl Ransome, Remington's SVP of Accounting, and Rob Haiman, Remington's Senior Vice President—Chief Legal Officer.

        On February 18, 2015, the Special Committee met with representatives of NRF and BMO. The participants discussed strategic initiatives at affiliated Ashford entities and how the strategic initiatives could affect the business and financial prospects of the Company and Remington. Representatives of BMO then informed the Special Committee about their discussions with representatives of Baird regarding the terms of the pricing and valuation of Remington set forth in the Initial Remington Proposal, including Baird's statement that it expected the Special Committee to make a counter

39


Table of Contents

proposal. The Special Committee then discussed precedents regarding special committee compensation at other publicly traded companies. The Special Committee then instructed NRF to send Mr. Brooks the information reviewed regarding such compensation precedents, the comments to the Company Board resolutions setting forth the authority and powers of the Special Committee and the results of the preliminary financial analysis provided to the Special Committee by BMO.

        On February 19, 2015, NRF sent Mr. Brooks all of the information and documents as requested by the Special Committee the previous day.

        On February 20, 2015, Mr. Wheeler raised with Mr. Monty Bennett the Special Committee's desire that as a condition to consummating any transaction, a majority of the voting power of the Company's stockholders, other than the Bennetts and their affiliates, should approve the transaction (the "Unaffiliated Stockholder Approval").

        On February 27, 2015, the Special Committee met with representatives of NRF. The participants proposed revisions to the Company Board's resolutions setting forth the authority and powers of the Special Committee, including specifically authorizing the Special Committee to pursue other transactions as alternatives to the proposed Remington transaction. The Special Committee then discussed the Initial Remington Proposal and the terms of any counter proposal. The Special Committee determined to review the preliminary valuation analysis of Remington being prepared by BMO before responding to Remington's proposal. Following this discussion, the Special Committee requested that NRF provide the NRF memorandum provided to the Special Committee on February 9 to Mr. Brooks and discuss the extent of the Special Committee's authority and powers with Mr. Brooks. NRF proposed that the Special Committee retain Delaware counsel to assist on matters of Delaware law.

        On March 2, 2015, representatives of NRF met with Mr. Brooks to discuss the authority and powers of the Special Committee. They discussed the Special Committee's view that the Special Committee should have the power to pursue alternative transactions. They also discussed the need to set the Special Committee's compensation promptly, and organizational matters regarding the Special Committee. Finally, they discussed the retention of Morris, Nichols, Arsht & Tunnell LLP ("Morris Nichols") as legal counsel to advise the Special Committee on matters of Delaware law.

        On March 3, 2015, representatives of NRF again discussed with Mr. Brooks the request for making explicit the Special Committee's powers to solicit and receive alternative proposals in the proposed Board resolutions setting forth the authority and powers of the Special Committee.

        Later, on the same day, the Company Board adopted resolutions authorizing and empowering the Special Committee to exercise all lawfully delegable powers of the Company Board in accordance with a statement of purpose and authority that included, among other items, the power and authority to solicit, negotiate and evaluate any alternative to the potential transaction with Remington and to engage independent counsel and financial advisors.

        On March 11, 2015, the Special Committee held a meeting with representatives of NRF and BMO. The participants reviewed and discussed presentation materials prepared by BMO regarding Remington and the Initial Remington Proposal with representatives of NRF and BMO, and what the Special Committee's response would be, including any counter proposal to the Initial Remington Proposal.

        On March 13, 2015, the Special Committee reconvened the meeting and the participants continued their discussion.

        On March 18, 2015, BMO, at the instruction of the Special Committee, delivered to Baird a non-binding preliminary term sheet setting forth the terms of the Special Committee's counter-offer for the acquisition of all of the ownership interests of Remington by the Company, which offer reflected an implied value for Remington of $310 million.

40


Table of Contents

        On March 30, 2015, representatives of NRF spoke with representatives of Baker Botts LLP ("Baker Botts"), legal counsel to the Bennetts, regarding a potential transaction and the status of legal due diligence review of Remington.

        On March 31, 2015, Mr. Reihsen spoke with Mr. Monty Bennett regarding the terms of the counter-offer for the proposed transaction.

        On April 1, 2015, representatives of NRF and Baker Botts discussed the Company's IRS consultation regarding the Private Letter Ruling request.

        On April 2, 2015, the Special Committee, Mr. Monty Bennett, Mr. Brooks and representatives of NRF, Baker Botts, BMO and Baird met to discuss the Initial Remington Proposal and the Special Committee's counter-offer, including the structure of the proposed transaction. Mr. Monty Bennett made a presentation supporting a $500 million valuation for Remington and a summary of potential Ashford Trust transactions that would positively impact the valuation of Remington. The Special Committee and BMO requested additional financial information of Remington for review to determine whether to revise any of the assumptions and components in BMO's valuation analysis and financial projections for Remington. Mr. Monty Bennett informed the Special Committee that he and his father, Mr. Archie Bennett, Jr., would only consider a transaction that satisfied the following key requirements:

        On April 10, 2015, the Special Committee, Mr. Monty Bennett, Mr. Haiman and representatives of NRF and Baker Botts discussed the Unaffiliated Stockholder Approval. Mr. Monty Bennett explained that by a resolution of the board of directors of Ashford Trust, the directors of Ashford Trust that had been deemed "independent" under applicable stock exchange rules would determine how to vote the shares of the Company's common stock held by Ashford Trust. Because the decision on how Ashford Trust would vote its shares of the Company's common stock was to be determined by these directors, Mr. Monty Bennett suggested that Ashford Trust be deemed a stockholder not affiliated with the Bennetts for the purposes of the Unaffiliated Stockholder Approval. The participants also discussed that a transaction would require Ashford Trust to divest a significant portion of its ownership interest in Ashford to an ownership position of no more than 10% of the outstanding shares of the Company's common stock in order for Ashford Trust to satisfy certain REIT qualification tests under the Code. Mr. Monty Bennett stated that to accomplish this, it was likely that Ashford Trust would either sell a material portion of its stock in the Company to Ashford Prime or distribute a material portion of its stock in the Company to Ashford Trust's stockholders. Mr. Monty Bennett further discussed the potential for establishing special committees at both Ashford Trust and Ashford Prime to enable both companies to vote their Company shares as stockholders unaffiliated with the Bennetts for the purposes of the Unaffiliated Stockholder Approval.

        On April 14, 2015, the Special Committee (other than Mr. Chandiramani), met with representatives of NRF. The participants discussed the valuation analysis regarding Remington provided to the Special Committee by Baird. Following such discussion, the Special Committee instructed BMO to hold discussions with Remington's management to gather information to enable the Special Committee to further evaluate the projections included in Baird's valuation materials.

41


Table of Contents

        On April 21, 2015, representatives of NRF discussed with Mr. Monty Bennett, Mr. Haiman and Baker Botts the background of, and the Bennetts' relationships with, the directors of Ashford Trust and Ashford Prime that had been deemed "independent" under applicable stock exchange rules. The purpose of the discussion was to explore establishing special committees of the board of directors at Ashford Trust and Ashford Prime that would be given the power to vote the shares of the Company's stock held by each such entity with respect to any transaction between the Company and Remington. Mr. Monty Bennett identified directors he believed were disinterested for the purposes of the proposed transactions and should be considered to be members of the proposed respective special committees.

        On April 23, 2015, the Special Committee and BMO held a series of meetings, both among themselves and with Remington's management, regarding BMO's financial analysis of Remington, including the need to collect additional information regarding Remington's business prospects in order to model Remington's financial projections and to further evaluate the value of Remington.

        On April 28, 2015, the Special Committee and representatives of NRF and BMO discussed BMO's financial analysis of Remington, including an overview of financial projections prepared by Remington based on assumptions that Ashford management believed were reasonable and that reflected Ashford management's best available estimate of acquisitions by Ashford Trust and Ashford Prime at such time. BMO's further analysis, taking into account the additional information provided by Remington, supported the Special Committee making an increased offer to the Bennetts that reflected an implied value for Remington in the range of approximately $400 to $420 million.

        On April, 29, 2015, the Special Committee communicated to Mr. Monty Bennett that the Special Committee would entertain negotiations for the acquisition of 80% of the limited partnership interests in Remington and the general partnership interests in Remington by the Company on a tax free basis (other than with respect to a limited amount of cash or notes to be received) for consideration that reflected an implied value for Remington of $408 million.

        On May 1, 2015, the Special Committee met with representatives of NRF. The participants discussed strategies for structuring a transaction to combine Remington's and the Company's businesses in a manner that would be acceptable to the Company and also meet the key requirements of the Bennetts. The participants further discussed the inclusion of Ashford Trust and Ashford Prime as stockholders unaffiliated with the Bennetts for purposes of the Unaffiliated Stockholder Approval.

        On May 4, 2015, Mr. Wheeler and representatives of BMO discussed indications from Baird regarding the implied value of Remington that would be set forth in a counter-offer to be submitted by Remington to the Special Committee.

        On May 6, 2015, Remington submitted a term sheet to the Special Committee setting forth the structure and terms of a proposed transaction whereby the Company would acquire an 80% limited partnership interest in Remington and 100% of the general partnership interests in Remington in exchange for consideration of approximately $342 million, which reflected an implied value of $428 million for Remington. The proposed structure utilized the creation of Newco as a newly formed subsidiary of the Company and Newco Sub as a wholly owned subsidiary of Newco. The consideration proposed was a $10 million promissory note paid over four years; $250 million in convertible preferred stock, paying dividends at a rate of 8.0% per annum, to be issued by Newco; and $80 million in common stock to be issued by Newco. The proposal also contemplated the Company contributing substantially all of its business to Newco and Newco would, in turn, contribute the acquired Remington limited partnership interests to Newco Sub, which would then acquire the general partnership interest in Remington directly. The proposed structure was intended by Remington to largely achieve the objectives of the Company and the Bennetts (including the requirements of the Bennetts described by Mr. Monty Bennett on April 2) and to comply with the terms of the Private Letter Ruling request.

42


Table of Contents

        Later that day, the Special Committee met with representatives of NRF and BMO. The participants discussed the terms and structure of the counter-offer submitted by Remington, including the form and amount of consideration and preliminary financial analysis implied by the counter-offer. The participants then proposed a list of issues to be discussed with Remington and its advisors regarding the proposal.

        On May 8, 2015, the Special Committee, Mr. Monty Bennett and representatives of BMO, NRF and Baker Botts discussed the term sheet submitted by Remington on May 6. The parties discussed the Bennetts' key requirements to structure a transaction that would continue the annual cash flow they have been receiving from Remington, allow them to maintain some level of control over the business of Remington and have the transaction consideration be tax free to them. The parties then discussed the legal structure of the proposed transaction, and the form and amount of the proposed consideration to be paid to the Bennetts and Remington Holdings GP.

        On May 11, 2015, representatives of BMO and NRF met with representatives of Baird and Baker Botts to solicit additional information regarding the structure and form of consideration set forth in the term sheet submitted by Remington on May 6.

        Later that same day, the Special Committee met with representatives of NRF and BMO. The participants discussed the counter-offer term sheet submitted by Remington on May 6, including the proposed structuring of the transaction. Issues raised included the transferring of all of the Company's business to a subsidiary that would not be wholly-owned by the Company, and the implications of tax and securities laws, including the Investment Company Act of 1940, as amended. The participants then discussed revising the term sheet to reflect a transaction proposal by the Special Committee, which proposal would include the elimination of debt-like features to the preferred stock and a valuation consistent with the Special Committee's prior valuation. Finally, the participants discussed issues related to considering Ashford Trust and Ashford Prime as being unaffiliated with the Bennetts for purposes of voting on the proposed transaction.

        On May 12, 2015, representatives of NRF and Baker Botts discussed issues regarding the structuring of the transaction and the terms of the preferred stock to be issued by Newco as part of the proposed transaction consideration.

        On May 13, 2015, Remington submitted a term sheet to the Special Committee setting forth the structure and terms discussed between NRF and Baker Botts on the previous day, which reflected the revisions discussed between the Special Committee, NRF and BMO on May 11.

        On May 14, 2015, Mr. Reihsen and representatives of NRF and Morris Nichols discussed legal standards of review and other legal principles applying Delaware law, and the implications if Ashford Trust and Ashford Prime were treated as stockholders unaffiliated with the Bennetts for the purposes of the Unaffiliated Stockholder Approval.

        On May 18, 2015, the Special Committee met with representatives of NRF and BMO. BMO provided a financial presentation to the Special Committee regarding the structure and form of consideration of the proposed transaction with Remington. The participants then discussed structuring issues, including the amount of consideration and tax and Investment Company Act implications.

        On May 20, 2015, the Special Committee met with representatives of NRF and BMO. BMO provided a financial presentation to the Special Committee regarding the structure of the proposed transaction with Remington and the form and amount of consideration to be offered. The presentation included the dilutive effect of the preferred and common shares proposed to be issued by Newco on the Company's outstanding common stock held by stockholders other than the Bennetts and their affiliates. NRF then discussed legal standards of review and other legal principles applying Delaware law, as well as the implications if Ashford Trust and Ashford Prime were treated as stockholders not affiliated with the Bennetts with respect to the Unaffiliated Stockholder Approval. The Special

43


Table of Contents

Committee determined to provide a revised term sheet to Remington setting forth the Special Committee's transaction proposal, which was for an 80% limited partnership interest in Remington and 100% of the general partnership interests in Remington for approximately $334 million in consideration, reflecting an implied value for Remington of approximately $418 million. The terms included preferred stock as part of the consideration in the amount of $160 million with a dividend of 6.5% per annum, but did not include the Unaffiliated Stockholder Approval as a condition to the consummation of the transactions. The Special Committee also instructed NRF to begin drafting the principal transaction documents that set forth the Special Committee's proposal.

        On May 26, 2015, NRF sent working drafts of an acquisition agreement and investor rights agreement to the Special Committee for their review and comment.

        On May 27, 2015, the Special Committee met with representatives of NRF and BMO. BMO updated the Special Committee on their conversations with Baird regarding the proposed transaction terms, including the desire of the Bennetts and Remington Holdings GP to receive a minimum amount of annual cash flow from the preferred stock and promissory note they would receive in the proposed transaction. BMO then summarized for the Special Committee the results of its financial analysis of Remington and discussions with Remington's management regarding management's financial projections. The participants then discussed the NRF working drafts of the acquisition agreement and investor rights agreement.

        On June 6, 2015, the Special Committee met with representatives of NRF and BMO. BMO reviewed financial considerations regarding the proposed transaction with Remington. BMO described the estimated annual cash flow that would be generated by the form and terms of the consideration proposed by the Special Committee. Mr. Reihsen and Mr. Wheeler then informed the participants about separate conversations with the Bennetts regarding the Special Committee's proposed transaction consideration. Following that discussion, the Special Committee resolved to submit to the Bennetts and their advisors the Special Committee's current proposal as set forth in the initial draft transaction documents prepared by NRF; to engage Riveron Consulting LLC ("Riveron Consulting") to perform accounting due diligence on Remington; and to amend the terms of NRF's engagement to include drafting and negotiating documentation regarding the proposed transaction.

        On June 10, 2015, NRF sent the Special Committee's term sheet setting forth its proposal and initial drafts of the acquisition agreement, investor rights agreement and preferred stock certificate of designation to Baker Botts and the Bennetts for their review. The documents reflected aggregate consideration in the amount of $334 million for an 80% limited partnership interest in Remington and 100% of the general partnership interests in Remington, which would be paid in the form of a $10 million promissory note, $200 million in Newco preferred stock with a 7.25% dividend per annum, and $124 million in Newco nonvoting common stock. As consideration for the contribution of all of its assets to Newco, the Company would receive Newco voting common stock equal in number to the shares of Company common stock issued and outstanding. The Bennetts would have control rights with respect to certain aspects of Newco, Newco Sub and Remington by virtue of the rights inherent in the preferred stock to be issued to them, the 20% limited partnership interest in Remington to be retained by them, as well as contractual rights set forth in the investor rights agreement. Terms included (i) the requirement that Newco become a public company within three years after closing; (ii) non-compete and non-solicit covenants binding on the Bennetts; (iii) a fiduciary out termination right for the Company; (iv) the voting power of the Bennetts at the Company would be limited to pre-transaction levels; (v) closing conditions including the approval of the transactions by a majority of the voting power of the Company's stockholders; and (vi) certifications by Mr. Monty Bennett, in his capacity as the Chief Executive Officer of the Company, that the representations and warranties made by the Company would be true and correct as of the execution date of the transaction documents and also as of the date the transactions were consummated. Per the instructions of the Special Committee, the draft transaction documents did not require the Unaffiliated Stockholder Approval.

44


Table of Contents

        On June 18, 2015, the Special Committee met with representatives of NRF and BMO. BMO reviewed with the Special Committee its financial analysis with respect to the proposed transaction with Remington. BMO also provided the Special Committee a comparison of the aggregate consideration to be paid to the Bennetts and Remington Holdings GP, and the components thereof, set forth in the previous proposals generated both by the Special Committee and the Bennetts, including the estimated annual amount of cash flow that would be paid to the Bennetts and Remington Holdings GP based upon an analysis of aggregate cash flows estimated to be generated by the Company following the consummation of the transactions provided by Baird on June 15, 2015. The Special Committee also considered additional information on the Ashford Prime platform, for which the Company and Remington provide management services, and the potential impact on the Company's and Remington's businesses. The Special Committee requested that BMO and management further update the financial analysis and preliminary valuation of Remington for its consideration.

        On June 19, 2015, Baker Botts provided a revised draft of the acquisition agreement to NRF. The revised draft included, among other revisions, substantially reduced representations and warranties to be made by the Bennetts and expanded representations and warranties to be made by the Company.

        On June 22, 2015, representatives of NRF met with Mr. Wheeler to review a list of issues identified by NRF in the draft transaction documents, which Mr. Wheeler intended to discuss with Mr. Monty Bennett. The issues included the following:

        Later that day, Baker Botts provided revised drafts of the preferred stock certificate of designation and investor rights agreement to NRF. The revised drafts included, among other revisions, a put right in favor of the Bennetts and their permitted transferees for the Newco equity and retained 20% limited

45


Table of Contents

partnership interests in Remington that would be triggered upon a change of control of the Company, including a substantial change in the composition of the Company Board.

        On June 24, 2015, representatives of NRF spoke with representatives of Baker Botts and Mr. Haiman regarding the terms set forth in the draft transaction documents. The discussions included:

46


Table of Contents

        On July 10, 2015, the Special Committee met with representatives of NRF and BMO. The Special Committee received an update from Riveron Consulting, financial due diligence advisor to the Special Committee, on the accounting due diligence on Remington performed by them. Mr. Wheeler then provided a summary of the status of ongoing discussions between himself and Mr. Monty Bennett with respect to the terms and structure of the proposed transaction with Remington.

        On July 13, 2015, representatives of NRF met with representatives of Baker Botts and Mr. Haiman regarding outstanding issues arising from the most recent draft transaction documents. The parties discussed put and call mechanics. Mr. Haiman described for the parties agreements, arrangements and understandings raised during the due diligence review of Remington, including leased office space, the Marietta, Georgia managed location being operated through a limited partnership and Ashford Investment Management, LLC, an investment advisor registered with the SEC, which manages investments on a discretionary basis for certain managed accounts and private investment funds, and which is partially owned by Mr. Monty Bennett.

        On July 16, 2015, NRF provided a revised draft of the acquisition agreement to Baker Botts, based upon the discussions with Baker Botts and Mr. Haiman and comments provided by the Special Committee. Among other changes to the previous Baker Botts draft, the revised draft included a termination fee payable by the Company of 1% of the proposed transaction value, substantially increased the breadth of the representations and warranties made by the Bennetts and reduced the breadth of the representations and warranties made by the Company. In addition, the revised draft eliminated the indemnity provisions for breaches of the agreement, thereby not requiring contractual indemnity as the sole and exclusive remedy and allowing the parties to pursue all remedies available under applicable law. The revised draft did, however, maintain dollar limitations on the amount of damages recoverable for breaches of representations and warranties with both a deductible and cap.

        On July 19, 2015, NRF provided a revised draft of the investor rights agreement to Baker Botts, which had been revised based upon the discussions with Baker Botts and Mr. Haiman and comments provided by the Special Committee.

        On July 21, 2015, NRF provided a revised draft of the preferred stock certificate of designation to Baker Botts, which had been revised based upon the discussions with Baker Botts and Mr. Haiman and comments provided by the Special Committee.

        On July 22, 2015, representatives of NRF met with representatives of Baker Botts and Mr. Haiman to further discuss open items in the draft transaction documents, as well as notes prepared by Mr. Monty Bennett summarizing his understanding of agreements and open items resulting from discussions between himself and Mr. Wheeler. Discussions included the scope of the non-compete that would be binding on the Bennetts and the duration of transfer restrictions that would be binding on the Newco equity issued to the Bennetts. In addition, Mr. Haiman provided additional information regarding items raised in due diligence on Remington, including existing business agreements and arrangements between Remington and the Company.

        On July 25, 2015, Baker Botts provided to NRF revised drafts of the acquisition agreement, investor rights agreement and certificate of designation for the Newco preferred stock based upon discussions with NRF and comments provided by the Bennetts. Among other changes, the revised draft of the investor rights agreement provided the Bennetts with more lenient equity transfer restrictions, but included the concept of a right of first refusal in favor of the Company with respect to the 20% limited partnership interest in Remington retained by the Bennetts.

47


Table of Contents

        On July 28, 2015, representatives of NRF and Baker Botts discussed open items of the terms set forth in the draft transaction documents related to taxes.

        On July 29, 2015, representatives of NRF and Baker Botts continued discussions on open items of the terms of the transaction set forth in the draft documents.

        On July 30, 2015, the Special Committee met with NRF. NRF provided a summary of the unresolved items based on recent discussions with Baker Botts, including the $100 per share valuation of the Company's common stock implied by the transaction consideration, put and call provisions applicable to the Newco equity to be issued to the Bennetts, the fiduciary out termination right for the Company, equity transfer restrictions binding on the Bennetts, and voting restrictions regarding the Company's common stock to be imposed upon the Bennetts. The participants then discussed the progress and status of on-going negotiations.

        Later that same day, Mr. Wheeler and representatives of NRF discussed with Baker Botts, Mr. Haiman and Mr. Monty Bennett the draft transaction documents. The discussions included:

48


Table of Contents

        Later that same day, NRF provided revised drafts of the acquisition agreement, investor rights agreement and certificate of designation to Baker Botts, which had been revised based upon the discussions among the parties earlier that day.

        On August 1, 2015, Baker Botts provided revised drafts of the acquisition agreement and preferred stock certificate of designation to NRF, which had been revised based upon Baker Botts' consultation with the Bennetts.

        Later that same day, representatives of NRF and Baker Botts and Mr. Haiman discussed open items and comments to the acquisition agreement provided by Baker Botts.

        On August 2, 2015, Baker Botts provided revised drafts of the acquisition agreement and the investor rights agreement to NRF, which had been revised based upon the parties' discussion on August 1 and Baker Botts' subsequent consultation with the Bennetts. Among other revisions, the revised draft of the acquisition agreement included a termination fee payable by the Company of 3% of the proposed transaction value, and introduced a fiduciary out termination right in favor of the Bennetts, designed to mirror the Company's fiduciary out termination right, and an equivalent termination fee that would be payable by the Company to the Bennetts of 3% of the proposed transaction value.

        On August 3, 2015, NRF provided a revised draft of the investor rights agreement to Baker Botts based upon NRF's consultation with the Special Committee.

        On August 4, 2015, NRF provided revised drafts of the acquisition agreement, investor rights agreement and preferred stock certificate of designation to Baker Botts. Among other revisions, the drafts eliminated the fiduciary out termination right and related termination fee in favor of the Bennetts that was introduced in the draft received from Baker Botts on August 2.

        That same day, Mr. Brooks informed the Special Committee that Ashford Prime had entered into an agreement to acquire, on August 5, 2015, 174,983 shares of the Company's common stock in a block trade from an unaffiliated third party, equivalent to approximately 8.8% of the Company's common stock then outstanding, at a purchase price equal to $95.00 per share.

        On August 5, 2015, Baker Botts provided a revised draft of the acquisition agreement to NRF. Among other changes, the revised draft qualified the representations and warranties made by the Bennetts to eliminate liabilities incurred by Remington in its capacity as an agent conducting management services.

        Later that same day, Mr. Wheeler, representatives of NRF, Mr. Monty Bennett, Mr. Haiman and representatives of Baker Botts discussed the open items, progress and status of the draft transaction documents circulated over the past few days.

        On August 6, 2015, Baker Botts provided NRF with an initial draft of Remington's disclosure schedules to the representations and warranties set forth in the acquisition agreement.

        Later that same day, representatives of NRF and Baker Botts discussed tax matters arising from the provisions in the draft transaction documents, with a focus on the tax free treatment of the transaction consideration for the Bennetts.

        Later that same day, Mr. Wheeler, representatives of NRF, Mr. Haiman and representatives of Baker Botts discussed the revised drafts of the transaction documents circulated over the past few days.

        That evening Mr. Haiman provided revisions to the draft representations and warranties proposed to be made by the Bennetts in the acquisition agreement. The draft revisions narrowed the limitations of the Bennetts' representations and warranties regarding Remington's liability as an agent in the performance of management services.

49


Table of Contents

        On August 7, 2015, NRF provided Baker Botts with drafts of the acquisition agreement and investor rights agreement per the parties' discussion on August 6, and an initial draft of the proposed Remington limited partnership agreement.

        On August 9, 2015, Baker Botts provided a revised draft of the acquisition agreement and Remington limited partnership agreement to NRF, based upon consultation with the Bennetts. Among other revisions, the drafts included, as a condition to the Bennetts' obligations to consummate the transactions, their receipt of a satisfactory opinion of their tax counsel that (i) the exchange of certain specified securities of Remington for Newco common stock and Newco preferred stock in the transaction will qualify as a tax-free exchange under the Code, (ii) the Newco preferred stock will not be treated as nonqualified preferred stock (within the meaning of the Code), and (iii) the Bennetts will not recognize any taxable gain or income as a result of such exchange.

        On August 13, 2015, Baker Botts provided to NRF drafts of the acquisition agreement, investor rights agreement, preferred stock certificate of designation, Remington limited partnership agreement and Remington's disclosure schedules to the acquisition agreement. Baker Botts informed NRF the drafts constituted the best and final offer of the Bennetts and were not subject to negotiation. Among other revisions, the drafts retained the conditions to the Bennetts' obligations to consummate the transactions set forth in the August 9 drafts, including a fiduciary out termination fee in favor of the Remington Holders of 2% of the proposed transaction value, plus out-of-pocket costs and expenses actually incurred by the Remington Holders in connection with the negotiation of the proposed transaction.

        On August 19, 2015, the Special Committee met with representatives of NRF and BMO. The participants discussed the terms of the drafts provided by Baker Botts that constituted the best and final offer of the Bennetts. The Special Committee then provided NRF with a list of terms to which the Special Committee did not intend to agree, and directed NRF to prepare a summary of such terms for the Special Committee's use in approaching Mr. Monty Bennett to engage in further discussions.

        On August 21, 2015, NRF provided the Special Committee with the requested summary, which Mr. Wheeler then provided to Mr. Monty Bennett.

        On August 25, 2015, the Special Committee met with NRF. The participants discussed the summary of terms previously prepared by NRF.

        Prior to a planned evening meeting of the Special Committee and Mr. Monty Bennett, Baker Botts provided NRF with revised drafts of the acquisition agreement, investor rights agreement, preferred stock certificate of designation and Remington limited partnership agreement, which reflected the Bennetts' proposed responses to the NRF summary provided by Mr. Wheeler to Mr. Monty Bennett on August 21. Baker Botts informed NRF that Mr. Monty Bennett intended to provide the revised drafts to the members of the Special Committee during the meeting scheduled for that evening.

        That evening all members of the Special Committee met with Mr. Monty Bennett and Mr. Haiman to discuss the summary of terms prepared by NRF and the Bennetts response. Discussions included:

50


Table of Contents

        On August 26, 2015, Mr. Reihsen and representatives of NRF compared the drafts of the transaction documents distributed by Baker Botts on August 25 and the agreements between the Special Committee and Mr. Monty Bennett the previous night.

        On August 28, 2015, NRF provided the Special Committee with a summary comparison of the Special Committee's position with respect to the terms discussed with Mr. Monty Bennett and Mr. Haiman at the meeting on August 25 and the applicable provisions of such terms set forth in the revised transaction documents provided by Baker Botts on August 25.

        Later that same day, Mr. Reihsen informed Mr. Monty Bennett that NRF would distribute revised drafts of the transaction documents to reflect the Special Committee's position with respect to such terms. NRF subsequently distributed revised drafts of the acquisition agreement, Remington limited partnership agreement, certificate of designation, investor rights agreement, and Newco's certificate of incorporation. Mr. Monty Bennett subsequently responded that the drafts provided by Baker Botts on August 25 were the Bennetts' best and final offer and the drafts revised by NRF would not be reviewed.

        On August 31, 2015, representatives of NRF asked if they could explain the August 28 revisions to the proposed drafts to representatives of Baker Botts and Mr. Haiman. Mr. Haiman and Baker Botts informed NRF that they did not have authority to engage in negotiations or to comment on the changes, but they did agree to participate in NRF's review of the drafts.

        On September 1, 2015, representatives of NRF, Baker Botts and Mr. Haiman discussed the changes proposed by NRF in the August 28 draft transaction documents. Mr. Haiman informed the participants that he and Baker Botts had been granted authority by the Bennetts to engage in discussions of the open terms. Mr. Haiman provided detail of the Bennetts' view that the Newco nonvoting common stock should convert to Newco voting common stock upon the occurrence of an initial public offering by Newco, which was required to occur within three years pursuant to the investor rights agreement.

        Later that day, Baker Botts provided NRF with revised drafts of the transaction documents. Following receipt of the revised drafts, representatives of NRF, Baker Botts and Mr. Haiman discussed the revised drafts.

        On September 2, 2015, Baker Botts provided NRF with revised drafts of the transaction documents. Later that day, representatives of NRF, Baker Botts and Mr. Haiman discussed the revised drafts.

        On September 3, 2015, Baker Botts provided NRF with revised drafts of the investor rights agreement and Remington limited partnership agreement based upon the discussion held the previous day.

        On September 4, 2015, the Special Committee discussed with representatives of NRF the revisions proposed by Baker Botts over the previous three days and the open terms reflected therein. Later that day, NRF prepared and distributed a summary of the open terms to the Special Committee.

51


Table of Contents

        On September 8, 2015, Baker Botts provided NRF with revised drafts of the transaction documents.

        Later that day, NRF and Mr. Wheeler discussed the open terms reflected in the drafts of the transaction documents and the Special Committee's position with respect thereto. The focus of the discussion was the conversion of Newco nonvoting common stock to Newco voting common stock and the extent and duration of voting restrictions imposed upon the Bennetts at Newco.

        Later that day, representatives of NRF and Baker Botts discussed the extent and duration of the voting restrictions imposed upon the Bennetts at Newco. Baker Botts proposed a voting limitation of 25% at such time as a shareholder rights plan was adopted that would ensure that no other stockholder of Newco could hold voting power of Newco in excess of 25%.

        Subsequently, representatives of NRF, Mr. Haiman and Mr. Monty Bennett and Mr. Wheeler discussed the extent and duration of the voting restrictions imposed upon the Bennetts with respect to the voting common stock of Newco, including the proposal described by Baker Botts.

        On September 9, 2015, Baker Botts provided NRF with revisions to the transaction documents previously distributed by NRF reflecting the Bennetts' proposed responses to all open terms.

        Later that day, representatives of NRF, BMO and Baker Botts, the Special Committee, Mr. Haiman, and Mr. Monty Bennett discussed the proposed revisions previously distributed by Baker Botts. Following discussion and debate, all of the proposed revisions were accepted by the Special Committee, subject to minor revisions to be made by NRF. Following the minor revisions made by NRF, the parties agreed that the draft transaction documents were in acceptable form to present to the Special Committee for their deliberation of whether to submit the transactions and the transaction documents to the Company Board for its consideration.

        On September 11, 2015, the following documents were distributed to the Special Committee for their review and consideration: a complete set of drafts of the transaction documents, the Riveron Consulting financial due diligence report, a memorandum prepared by the Company regarding the anticipated accounting treatment of the transactions, BMO's fairness presentation, a draft press release prepared by the Company announcing the transactions, a draft conference call script prepared by the Company for Company management announcing the transactions, a draft investor presentation prepared by the Company's management regarding the transactions, and draft talking points prepared by the Company for Company management regarding the transactions. Later that day, Mr. Brooks distributed the complete set of drafts of the transaction documents to the Company Board, including the Special Committee.

        On September 14, 2015, the Special Committee held a meeting with representatives of NRF and BMO in attendance. At the request of the Special Committee, BMO rendered an oral opinion to the Special Committee, which was subsequently confirmed in a written opinion dated as of the same date, to the effect that as of September 14, 2015, and based upon and subject to the assumptions made, matters considered and limitations and qualifications upon the review undertaken by BMO, the consideration to be paid by the Company in the proposed transaction was fair, from a financial point of view, to the Company. After discussion, the Special Committee then unanimously determined that the transaction and the proposed transaction documents were advisable, fair to, and in the best interests of the Company and its stockholders, approved and adopted the transaction documents and the transactions and recommended that: (i) the Company Board approve and adopt the transaction documents and the transactions; and (ii) the Company's stockholders, to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT, approve and adopt the transaction documents and the transactions.

        Later that day, Mr. Brooks distributed the following documents to the Company Board, including the Special Committee: a draft press release prepared by the Company announcing the transactions, a

52


Table of Contents

draft conference call script prepared by the Company announcing the transactions, a draft investor presentation prepared by the Company's management regarding the transactions, and a draft Form 8-K regarding the transactions.

        On September 17, 2015, a meeting of the Company Board was convened. Mr. Monty Bennett and Mr. J. Robison Hays, III excused themselves after the meeting had been called to order and did not participate in the subsequent discussions. The members of the Company Board had previously been provided with a summary of the terms of the transaction documents and drafts of proposed resolutions for adoption by the Company Board. The Company Board reviewed the documents provided for their review. Representatives of BMO were also in attendance at the meeting and described BMO's financial analysis of the transaction. After discussion, the Company Board, unanimously, with Mr. Monty Bennett and Mr. Hays recusing themselves: (i) approved and adopted the favorable recommendation of the Special Committee in respect of the transactions and the transaction documents; (ii) approved the form, terms and provisions of the transaction documents; and (iii) determined to recommend that the stockholders of the Company vote to approve the transactions to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT.

        Later that same day, the parties executed the acquisition agreement.

        On September 18, 2015, the Company issued a press release and filed a Form 8-K announcing the execution of the acquisition agreement and the transactions.


Reasons for the Transactions; Recommendation of the Special Committee; Recommendation of the Board of Directors

Recommendation of the Special Committee

        The Special Committee, acting with the advice and assistance of its independent legal and financial advisors, evaluated and negotiated the transactions and the Transaction Documents and unanimously determined that the Transaction Documents and the transactions are advisable, fair to, and in the best interests of the Company and its stockholders, approved and adopted the Transaction Documents and the transactions and recommended that (i) the Company Board approve and adopt the Transaction Documents and the transactions, and (ii) the Company's stockholders, to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT, approve and adopt the Transaction Documents and the transactions.

Reasons for the Transactions

        The Special Committee found that the special circumstances related to the Company, Remington and Monty Bennett's involvement with each entity gave rise to significant complexity that required detailed analysis of the proposed transactions over a nine month period. The Special Committee held more than 20 meetings to discuss the proposed transactions with Remington and the Bennetts, as the proposals were negotiated and revised from time to time. On more than ten occasions the Special Committee discussed the price that was proposed and other substantive issues raised by the proposed transactions.

        In the course of reaching its determination and recommendation, the members of the Special Committee considered the following factors and potential benefits of the transactions, each of which the Special Committee believed supported its decision (not necessarily in order of relative importance):

53


Table of Contents

54


Table of Contents

        The Special Committee also considered a variety of risks and potentially negative factors concerning the Transaction Documents and the transactions, including, but not limited to, the following (not necessarily in order of relative importance):

55


Table of Contents

56


Table of Contents

        The Special Committee also considered a number of factors relating to the procedural safeguards involved in the negotiation of the Transaction Documents and the transactions, including those discussed below (not necessarily in order of relative importance), each of which it believed supported its determination and recommendation and provided assurance of the fairness of the transactions to the stockholders of the Company unaffiliated with the Bennetts:

57


Table of Contents

        The above discussion of the information and factors considered by the Special Committee is not intended to be exhaustive, but indicates the material matters considered. In reaching its determination and recommendation, the Special Committee did not quantify, rank or assign any relative or specific weight to any of the foregoing factors, and individual members of the Special Committee may have considered various factors differently. The Special Committee did not undertake to make any specific determination as to whether any specific factor, or any particular aspect of any factor, supported or did not support its ultimate recommendation. Moreover, in considering the information and factors described above, individual members of the Special Committee may have given differing weights to differing factors. The Special Committee based its unanimous recommendation on the totality of the information presented.

Recommendation of the Board of Directors

        The board of directors consists of seven directors. On September 17, 2015, based in part on the unanimous recommendation of the Special Committee, as well as on the basis of the other factors described above, the Company Board unanimously (with Monty Bennett and J. Robison Hays, III recusing themselves due to Monty Bennett's interest in the transactions and Mr. Hays' status as an executive officer of the Company who reports to Monty Bennett), (i) approved and adopted the favorable recommendation of the Special Committee in respect of the transactions and the Transaction Documents; (ii) approved the form, terms and provisions of the Transaction Documents; and (iii) determined to recommend that the stockholders of the Company vote to approve the transactions to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT.

        In reaching these determinations, the Company Board (with Monty Bennett and J. Robison Hays, III recusing themselves) considered a number of factors, including, but not limited to, the following material factors (not necessarily in order of relative importance):

58


Table of Contents

        The foregoing discussion of factors considered by the Company Board is not intended to be exhaustive, but it does include the material factors considered in recommending that the Company's stockholders vote their shares of common stock in favor of approval of the proposals set forth in this proxy statement. The Company Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations. Moreover, each member of the Company Board applied his own personal business judgment to the process and may have given different weight to different factors. The Company Board did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Company Board based its recommendation on the totality of the information presented.

        Accordingly, the Company Board (with Monty Bennett and J. Robison Hays, III recusing themselves) unanimously recommends that stockholders vote "FOR" the approval of the Contribution and "FOR" the approval of the Share Issuances.


Description of Fairness Opinion of BMO Capital Markets

        The Special Committee retained BMO Capital Markets to act as its financial advisor in connection with the transactions, and if requested by the Special Committee, to render an opinion, as investment bankers, as to the fairness as of the date of such opinion, from a financial point of view, to the Company of the aggregate consideration to be paid by the Company in the transactions.

        On September 14, 2015, at the request of the Special Committee, BMO Capital Markets rendered an oral opinion to the Special Committee, which was subsequently confirmed in a written opinion as of the same date (the "Opinion"), to the effect that as of such date, and based upon and subject to the assumptions made, matters considered and limitations and qualifications upon the review undertaken by BMO Capital Markets, the aggregate consideration to be paid by the Company in the transactions was fair, from a financial point of view, to the Company.

        In selecting BMO Capital Markets, Special Committee considered, among other things, the fact that BMO Capital Markets is a reputable investment banking firm with substantial experience advising companies in the real estate sector and in providing strategic advisory services in general. BMO Capital Markets, as part of its investment banking business, is continuously engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings,

59


Table of Contents

secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes.

        The full text of the Opinion is attached hereto as Annex G and is incorporated into this document by reference in its entirety. The summary of the Opinion set forth herein is qualified in its entirety by reference to the full text of the Opinion. Stockholders are urged to read the Opinion carefully and in its entirety for a discussion of, among other things, the scope of review undertaken and the assumptions made, matters considered and limitations and qualifications upon the review undertaken by BMO Capital Markets in connection with such Opinion.

        In arriving at its opinion, BMO Capital Markets reviewed, among other things:

        In addition, BMO Capital Markets:

60


Table of Contents

        In rendering its opinion, BMO Capital Markets assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to it by the Company or their representatives or advisors, Remington or their representatives or advisors, or obtained by it from other sources. BMO Capital Markets did not independently verify (and has not assumed any obligation to verify) any such information, undertake an independent valuation or appraisal of the assets or liabilities (contingent or otherwise) of the Company or Remington, nor was BMO Capital Markets furnished with any such valuation or appraisal. BMO Capital Markets did not evaluate the solvency or fair value of the Company or Remington under any state or federal laws relating to bankruptcy, insolvency or similar matters. BMO Capital Markets also assumed that all material governmental, regulatory, or other approvals and consents required in connection with the consummation of the transactions will be obtained and that in connection with obtaining any necessary governmental, regulatory, or other approvals and consents, no restrictions, terms, or conditions will be imposed that would be material to its analysis. BMO Capital Markets also assumed that the transactions will be consummated in accordance with the terms of the Acquisition Agreement, without any waiver, modification or amendment of any terms, condition, or agreement that would be material to its analysis; that the representations and warranties of each party contained in the Acquisition Agreement would be true and correct; that each party would perform all of the covenants and agreements required to be performed by it under the Acquisition Agreement, and that all conditions to the consummation of the transactions would be satisfied without waiver or modification. With respect to financial projections for the Company and Remington (including, without limitation, the Projection Model), BMO Capital Markets was advised by the Company, and BMO Capital Markets assumed, without independent investigation, that they have been reasonably prepared and reflect the best currently available estimates and good faith judgment of the Company of the expected future competitive, operating and regulatory environments and related financial performance of the Company and Remington. BMO Capital Markets expresses no opinion with respect to such projections, including the assumptions on which they are based. Furthermore, BMO Capital Markets has not assumed any obligation to conduct, and has not conducted, any physical inspection of the properties or facilities of the Company or Remington. The projections and estimates supplied to and utilized by BMO Capital Markets are summarized below under "—Projected Financial Information."

        The Opinion is necessarily based upon financial, economic, market and other conditions and circumstances as they existed and could be evaluated, and the information made available to BMO Capital Markets, as of the date of the Opinion. BMO Capital Markets disclaims any undertakings or

61


Table of Contents

obligations to advise any person of any change in any fact or matter affecting the Opinion which may come or be brought to BMO Capital Markets' attention after the date of the Opinion.

        The Opinion does not constitute a recommendation as to any action the Special Committee or the Company Board of Directors of Ashford should take in connection with the transactions contemplated by the Draft Acquisition Agreement or any aspect thereof and is not a recommendation to any director of Ashford or stockholder on how such person should vote with respect to the transactions or related transactions and proposals. The Opinion relates solely to the fairness, from a financial point of view, to the Company as of the date of the Opinion, of the aggregate consideration to be paid in the transactions. BMO Capital Markets expresses no opinion as to the relative merits of the transactions and any other transactions or business strategies discussed by the Special Committee as alternatives to the transactions or the decision of the Special Committee to recommend the transactions, nor does BMO Capital Markets express any opinion on the structure, terms or effect of any other aspect of the transactions contemplated by the Draft Acquisition Agreement. The Opinion does not in any manner address the prices at which the Company's common stock or other securities will trade following the announcement or consummation of the transactions. BMO Capital Markets are not experts in, and the Opinion does not address, any of the legal, tax or accounting aspects of the transactions, including, without limitation, whether or not the transactions contemplated by the Draft Acquisition Agreement constitute a change of control under any contract or agreement to which the Company or any of its subsidiaries is a party.

        The summary set forth below does not purport to be a complete description of the analyses performed by BMO Capital Markets, but describes, in summary form, the material elements of the presentation that BMO Capital Markets made to the Special Committee on September 14, 2015, in connection with BMO Capital Markets' Opinion. In accordance with customary investment banking practice, BMO Capital Markets employed generally accepted valuation methods and financial analyses in reaching its Opinion. The following is a summary of the material financial analyses performed by BMO Capital Markets in arriving at its Opinion. These summaries of financial analyses alone do not constitute a complete description of the financial analyses BMO Capital Markets employed in reaching its conclusions.

        None of the analyses performed by BMO Capital Markets were assigned a greater significance by BMO Capital Markets than any other, nor does the order of analyses described represent relative importance or weight given to those analyses by BMO Capital Markets. The summary text describing each financial analysis does not constitute a complete description of BMO Capital Markets' financial analyses, including the methodologies and assumptions underlying the analyses, and if viewed in isolation could create a misleading or incomplete view of the financial analyses performed by BMO Capital Markets. The summary text set forth below does not represent and should not be viewed by anyone as constituting conclusions reached by BMO Capital Markets with respect to any of the analyses performed by it in connection with its Opinion. Rather, BMO Capital Markets made its determination as to the fairness to the Company of the aggregate consideration to be paid by the Company in the transactions, from a financial point of view, on the basis of its experience and professional judgment after considering the results of all of the analyses performed.

        Except as otherwise noted, the information utilized by BMO Capital Markets in its analyses, to the extent that it is based on market data, is based on market data as it existed on or before September 14, 2015 and is not necessarily indicative of current market conditions. The analyses described below do not purport to be indicative of actual future results, or to reflect the prices at which any securities may trade in the public markets, which may vary depending upon various factors, including changes in interest rates, dividend rates, market conditions, economic conditions, and other factors that influence the price of securities.

62


Table of Contents

        In conducting its analysis, BMO Capital Markets used three primary methodologies to review the valuation of each of Remington and the Company on a stand-alone basis, to assess the fairness, from a financial point of view, of the aggregate consideration to be paid by the Company in the transactions. Specifically, BMO Capital Markets conducted selected comparable public companies analyses, selected precedent transactions analyses and discounted cash flow analyses. No individual methodology was given a specific weight, nor can any methodology be viewed individually. Additionally, no company or transaction used in any analysis as a comparison is identical to Remington, the Company, or the transactions, and they all differ in material ways. Accordingly, an analysis of the results described below is not mathematical; rather it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading value of the selected companies or transactions to which they are being compared. BMO Capital Markets used these analyses to determine the impact of various operating metrics on the implied enterprise value of Remington and the implied value per share of the Company. Each of these analyses yielded a range of implied values, and therefore, such implied value ranges developed from these analyses were viewed by BMO Capital Markets collectively and not individually.

Valuation of Remington

        Selected Public Companies Analysis.    BMO Capital Markets reviewed, analyzed, and compared certain financial information relating to Remington to corresponding publicly available financial information and market multiples for the following 12 publicly traded hotel management companies:

        BMO Capital Markets reviewed, among other things, the range of enterprise values of the selected publicly traded hotel management companies (calculated as equity value, using the closing stock prices on September 4, 2015, plus debt and the book value of preferred stock and minority interests, minus cash and equivalents and the book value of investments in unconsolidated affiliates), as a multiple of December 31 ("calendar year" or "CY"), 2015 estimated EBITDA and December 31, 2016 estimated EBITDA, as provided by Thomson Reuters Institutional Brokers' Estimate System ("Thomson I/B/E/S estimates").

63


Table of Contents

        The following table sets forth, for the periods indicated, the 3rd quartile, mean, median, and 1st quartile enterprise values as a multiple of EBITDA for the selected publicly traded hotel management companies identified above:

 
  Enterprise Value as a
Multiple of Calendar Year
 
 
  2015E EBITDA   2016E EBITDA  

3rd Quartile

    14.9x     13.4x  

Mean

    13.1x     11.7x  

Median

    12.9x     11.2x  

1st Quartile

    11.6x     10.1x  

        The following table sets forth, for the periods indicated, the range of enterprise value as a multiple of EBITDA utilized by BMO Capital Markets in performing its analysis, which were derived from the 1st and 3rd quartile values of the selected publicly traded hotel management companies identified above, and the range of the enterprise values for Remington implied by this analysis:

Enterprise Value to:
  Relevant
Range of
EBITDA
Multiples
  Implied Range
of Remington
Enterprise
Values
 
 
   
  (US$ mm)
 

CY2015E Remington EBITDA(1)

  11.6x - 14.9x   $ 373   $ 477  

CY2016E Remington EBITDA(1)

  10.1x - 13.4x   $ 422   $ 562  

(1)
As provided in the Projection Model. See "—Projected Financial Information."

        BMO Capital Markets compared the results of this analysis to the $414.6 million enterprise value of Remington implied by the aggregate consideration set forth in the Transaction Documents for an 80% limited partnership interest in Remington from the Remington Sellers and 100% of the general partnership interests in Remington from Remington Holdings GP.

        BMO Capital Markets selected the companies used in this analysis on the basis of its experience and knowledge of companies in the industry and various factors, including the size of the company and the similarity of the lines of business to Remington's lines of business, as well as the business models, service offerings, operating margin profiles and end-market exposure of such companies. As noted above, no company used as a comparison is identical to Remington.

64


Table of Contents

        Selected Precedent Transactions Analysis.    BMO Capital Markets reviewed and analyzed certain publicly available information for the following 10 acquisitions of hotel management companies which disclosed valuation metrics:

Date
  Target   Acquiror

12/16/2014

  Kimpton Hotel & Restaurant Group, LLC   Intercontinental Hotels Group plc

03/13/2012

  Great Wolf Resorts, Inc.   Apollo Global Management, LLC

01/22/2010

  Lodgian, Inc.   Lone Star Funds

12/18/2009

  Interstate Hotel & Resorts Inc.   Shanghai Jin Jiang International Hotels (Group) Company Limited / Thayer Lodging Group

07/05/2007

  Hilton Worldwide, Inc.   Blackstone Real Estate Advisors / The Blackstone Group

04/23/2007

  Red Roof Inns Inc.   Citi Global Special Situations Group / Westbridge Hospitality Fund LP

01/29/2006

  Fairmont Hotels & Resorts, Inc.   Colony Capital LLC / Kingdom Hotel Investments

11/09/2005

  La Quinta Corporation   Blackstone Real Estate Advisors

10/21/2004

  Boca Resorts, Inc.   Blackstone Real Estate Advisors

08/18/2004

  Prime Hospitality Corp.   Blackstone Real Estate Advisors

        BMO Capital Markets selected the precedent transactions based upon its experience and knowledge of companies in the hotel management space. Although none of the precedent transactions are directly comparable to the transactions, nor are any of the target companies directly comparable to Remington, BMO Capital Markets selected transactions involving target companies with similar characteristics to the characteristics identified above in the comparable company analysis.

        The following table sets forth the 3rd quartile, mean, median, and 1st quartile enterprise values as a multiple of EBITDA for the selected acquisitions identified above:

 
  Enterprise Value as a
Multiple of
Last Twelve Months
("LTM") EBITDA
 

3rd Quartile

    15.5x  

Mean

    13.5x  

Median

    12.3x  

1st Quartile

    11.0x  

        The following table sets forth, for the period indicated, the range of EBITDA multiples utilized by BMO Capital Markets in performing its analysis, which were derived from the 1st and 3rd quartile values of the selected acquisitions identified above, and the range of the enterprise values for Remington implied by this analysis:

Enterprise Value to:
  Relevant
Range of
EBITDA
Multiples
  Implied Range
of Remington
Enterprise
Values
 
 
   
  (US$ mm)
 

CY2015E Remington EBITDA(1)

  11.0x - 15.5x   $ 353   $ 498  

(1)
As provided in the Projection Model. See "—Projected Financial Information."

        BMO Capital Markets compared the results of this analysis to the $414.6 million enterprise value of Remington implied by the aggregate consideration set forth in the Transaction Documents for an

65


Table of Contents

80% limited partnership interest in Remington from the Remington Sellers and 100% of the general partnership interests in Remington from Remington Holdings GP.

        Discounted Cash Flow Analysis.    BMO Capital Markets utilized the financial projections and estimates regarding Remington in the Projection Model as prepared by Remington management, but utilizing growth assumptions for Ashford Trust and Ashford Prime that the Company management provided and believed were reasonable, to perform a discounted cash flow analysis of Remington. The projections and estimates supplied to and utilized by BMO Capital Markets are summarized below under "—Projected Financial Information." In conducting this analysis, BMO Capital Markets assumed that Remington would perform in accordance with these projections and estimates. BMO Capital Markets performed an analysis of the present value of the unlevered free cash flows that Remington would generate as projected by Remington management based on assumptions that the Company management believed were reasonable for the fiscal years 2016 through fiscal year 2019. BMO Capital Markets utilized illustrative terminal values in the year 2019 based on a perpetuity growth rate range of 2.8% to 3.8% (which was selected by BMO Capital Markets based upon historical average annual U.S. hotel sector revenue per available room, or RevPAR, growth of 3.3%) on projected fiscal year 2019 unlevered free cash flow. BMO Capital Markets discounted the cash flows projected for the specified period using discount rates ranging from 9.7% to 12.3%, reflecting estimates of Remington's weighted average cost of capital. Using a discount rate of 9.7% to 12.3% and a perpetuity growth rate of 2.8% to 3.8%, this analysis resulted in implied enterprise values for Remington ranging from $447 million to $705 million. BMO Capital Markets compared the results of this analysis to the $414.6 million enterprise value of Remington implied by the aggregate consideration set forth in the Transaction Documents for an 80% limited partnership interest in Remington from the Remington Sellers and 100% of the general partnership interests in Remington from Remington Holdings GP.

Valuation of the Company

        Selected Public Companies Analysis.    BMO Capital Markets reviewed, analyzed, and compared certain financial information relating to the Company to corresponding publicly available financial information and market multiples for the following 11 publicly traded asset management companies:

        BMO Capital Markets reviewed, among other things, the range of enterprise values of the selected publicly traded asset management companies (calculated as equity value, using the closing stock prices on September 4, 2015, plus debt and the book value of preferred stock and minority interests, minus cash and equivalents and the book value of investments in unconsolidated affiliates), as a multiple of

66


Table of Contents

December 31, 2015 LTM estimated EBITDA and December 31, 2016 LTM estimated EBITDA, as provided by Thomson I/B/E/S estimates.

        The following table sets forth, for the periods indicated, the 3rd quartile, mean, median, and 1st quartile enterprise values as a multiple of EBITDA for the selected publicly traded asset management companies identified above:

 
  Enterprise Value as a
Multiple of Calendar Year
 
 
  2015E EBITDA   2016E EBITDA  

3rd Quartile

    8.9x     8.4x  

Mean

    8.0x     7.0x  

Median

    8.3x     7.3x  

1st Quartile

    6.7x     5.6x  

        The following table sets forth, for the periods indicated, the range of enterprise value as a multiple of EBITDA utilized by BMO Capital Markets in performing its analysis, which were based on the 1st and 3rd quartile values of the selected publicly traded asset management companies identified above, and the range of equity values per share for the Company implied by this analysis:

Enterprise Value to:
  Relevant
Range of
EBITDA
Multiples
  Implied Range of
Ashford
Equity Values
per Share
 
 
   
  (US$)
 

CY2015E Company EBITDA(1)

  6.7x - 8.9x   $ 65.69   $ 83.58  

CY2016E Company EBITDA(1)

  5.6x - 8.4x   $ 77.10   $ 109.80  

(1)
As provided in the Projection Model. See "—Projected Financial Information."

        BMO Capital Markets selected the companies used in this analysis on the basis of its experience and knowledge of companies in the industry and various factors, including the size of the company and the similarity of the lines of business to the Company's lines of business, as well as the business models, service offerings, operating margin profiles and end-market exposure of such companies. As noted above, no company used as a comparison is identical to the Company.

        Selected Precedent Transactions Analysis.    BMO Capital Markets reviewed and analyzed certain publicly available information for the following 13 recent acquisitions of asset management companies which disclosed valuation metrics:

Date
  Target   Acquiror

06/15/2015

  Bentall Kennedy (Canada) Limited Partnership   Sun Life Investment Management Inc.

06/19/2014

  Numeric Investors LLC   Man Group plc

04/14/2014

  Nuveen Investments, Inc.   TIAA-CREF Asset Management Inc.

01/07/2014

  Chartwell Investment Partners, Inc.   TriState Capital Holdings, Inc.

08/15/2013

  W.P. Stewart & Co., Ltd.   AllianceBernstein L.P.

03/27/2013

  Altegris Holdings II, Inc.   Aquiline Capital Partners LLC / Genstar Capital Management, LLC

02/14/2013

  Artio Global Investors Inc.   Aberdeen Asset Management PLC

12/06/2012

  Epoch Investment Partners, Inc.   The Toronto-Dominion Bank

02/15/2011

  Clarion Partners, LLC   Lightyear Capital LLC

12/06/2010

  Claren Road Asset Management, LLC   The Carlyle Group

12/02/2010

  Landmark Partners, Inc.   Religare Global Asset Management Inc.

11/22/2010

  DundeeWealth Inc.   The Bank of Nova Scotia

02/24/2010

  Crystal River Capital Inc.   Brookfield Asset Management Inc.

67


Table of Contents

        BMO Capital Markets selected the precedent transactions based upon its experience and knowledge of companies in the asset management space. Although none of the precedent transactions are directly comparable to the transactions, nor are any of the target companies directly comparable to the Company, BMO Capital Markets selected transactions involving target companies with similar characteristics to the characteristics identified above in the comparable company analysis.

        The following table sets forth the 3rd quartile, mean, median, and 1st quartile enterprise values as a multiple of EBITDA for the selected acquisitions identified above:

 
  Enterprise Value
as a Multiple
of LTM EBITDA
 

3rd Quartile

    12.7x  

Mean

    12.4x  

Median

    10.6x  

1st Quartile

    10.0x  

        The following table sets forth, for the period indicated, the range of estimated calendar year 2015 EBITDA multiples utilized by BMO Capital Markets in performing its analysis, which were derived from the 1st and 3rd quartile values of the selected acquisitions identified above, and the range of equity values per share for the Company implied by this analysis:

Enterprise Value to:
  Relevant Range
of EBITDA
Multiples
  Implied Range of
Ashford Equity
Values per Share
 
 
   
   
  (US$)
 

CY2015E Company EBITDA(1)

    10.0x     12.7x   $ 92.95   $ 115.46  

(1)
As provided in the Projection Model. See "—Projected Financial Information."

        Discounted Cash Flow Analysis.    BMO Capital Markets utilized the financial projections and estimates regarding the Company in the Projection Model as prepared by the Company management, to perform a discounted cash flow analysis of the Company. The projections and estimates supplied to and utilized by BMO Capital Markets are summarized below under "—Projected Financial Information." In conducting this analysis, BMO Capital Markets assumed that the Company would perform in accordance with these projections and estimates. BMO Capital Markets performed an analysis of the present value of the unlevered free cash flows that the Company's management projected it would generate for the fiscal years 2016 through fiscal year 2019. BMO Capital Markets utilized illustrative terminal values in the year 2019 based on a perpetuity growth rate range of 8.9% to 9.9% (which was selected based upon historical indexed annualized U.S. hotel REIT sector total capitalization growth of 9.3%) on projected fiscal year 2019 unlevered free cash flow. BMO Capital Markets discounted the cash flows projected for the specified period using discount rates ranging from 15.6% to 18.4%, reflecting estimates of the Company's weighted average cost of capital. Using a discount rate of 15.6% to 18.4% and a perpetuity growth rate of 8.9% to 9.9%, this analysis resulted in implied values per share for the Company ranging from $80.09 to $127.34.

        In addition, BMO Capital Markets analyzed the relative standalone contribution of the Company and Remington to various pro forma income statement items. To perform this analysis, BMO Capital Markets used estimated 2015 and 2016 revenue, EBITDA, and net income (before preferred dividend) for the Company and Remington as provided in the Projection Model. The results of BMO Capital Markets' analysis are set forth in the following table, which also compares the results of BMO Capital

68


Table of Contents

Markets' analysis with the implied pro forma fully diluted ownership percentages of the Company and Remington respective stockholders in Newco:

 
  The Company
as a % of
Total(2)
  Remington
as a % of
Total(3)
 

Newco Pro Forma Fully Diluted Ownership(1)

    43.8 %   56.2 %

Revenue

   
 
   
 
 

2015E

    52.6 %   47.4 %

2016E

    51.6 %   48.4 %

EBITDA

   
 
   
 
 

2015E

    41.7 %   58.3 %

2016E

    44.1 %   55.9 %

Net Income (before Preferred Dividend)

   
 
   
 
 

2015E

    37.8 %   62.2 %

2016E

    36.1 %   63.9 %

(1)
Reflects 2.206 million Company diluted shares outstanding as of 30-Jun-15, 0.917 million Newco common shares issued as consideration at closing, and 1.917 million Newco common shares issued upon conversion of $230 million of Newco preferred stock.

(2)
Company Revenue, EBITDA, and Net Income (before Preferred Dividend) shown excluding contribution from Ashford Investment Management and Ashford Hospitality Select, Inc. not attributable to the Company.

(3)
Remington Revenue, EBITDA, and Net Income (before Preferred Dividend) shown at 80% share of standalone total.

Conclusion

        Based upon the foregoing analyses and the assumptions and limitations set forth in full in the text of BMO Capital Markets' Opinion, BMO Capital Markets was of the opinion that, as of the date of the Opinion, and subject to and based on the assumptions made, matters considered, and limitations and qualifications upon the review undertaken by BMO Capital Markets, the aggregate consideration to be paid by the Company in the transactions was fair, from a financial point of view, to the Company.

Miscellaneous

        Pursuant to the terms of the engagement letter between BMO Capital Markets and the Special Committee of the Board of Directors of Ashford Inc., the Company agreed to pay to BMO Capital Markets, upon the closing of the Transaction, a fee equal to $2.25 million in consideration of financial advisory services rendered in connection with the transactions, $1.0 million of which was payable upon BMO Capital Markets' delivery of its Opinion. In addition, the Company agreed to reimburse BMO Capital Markets up to a limit of $100,000 for its reasonable out-of-pocket expenses, including attorneys' fees and disbursements, and to indemnify BMO Capital Markets and related persons against various liabilities, including certain liabilities under the federal securities laws.

        BMO Capital Markets, as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. BMO Capital Markets or its affiliates may provide investment and corporate banking services to the Company and Remington and their respective affiliates in the future, for which BMO Capital Markets or its affiliates may receive

69


Table of Contents

customary fees. BMO Capital Markets provides a full range of financial advisory and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold securities, including, without limitation, derivative securities, of the Company or its affiliates for its own account and for the accounts of customers.

        In the two years prior to the date of the Opinion, BMO Capital Markets has not provided or received compensation from the Company, Remington or its affiliates (other than as a financial advisor to the Special Committee) in connection with the provision of any financial advisory or financing services.


Projected Financial Information

        We are including in this proxy statement unaudited projected financial information, which includes unaudited projected financial information that was made available to the Special Committee and BMO Capital Markets, the Special Committee's financial advisor, in connection with the Special Committee's evaluation of the transactions. The unaudited projected financial information of Remington was provided by Remington management based on assumptions that the Company management believed were reasonable and that reflected the Company management's best available estimate of acquisitions by Ashford Trust and Ashford Prime at such time. The unaudited financial information of the Company was prepared by the Company's management. The inclusion of this unaudited projected financial information should not be regarded as an indication that any of the Company, the Special Committee, Remington, the Remington Sellers, their respective financial advisors, or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results, and this unaudited projected financial information should not be relied upon as such.

        The unaudited projected financial information is not being included in this proxy statement to influence your decision whether to vote for or against the Contribution or the Share Issuance, but is being included because this unaudited projected financial information was provided to the Special Committee in connection with its evaluation of the transactions and BMO Capital Markets in connection with its fairness opinion.

        In addition, the unaudited projected financial information was, in general, prepared solely for internal use and is subjective in many respects. As a result, the projected results may not be realized and the actual results may be significantly higher or lower than estimated. Since the unaudited projected financial information covers multiple years, that information by its nature becomes less predictive with each successive year. The unaudited projected financial information also was based on numerous variables and assumptions. Such assumptions are inherently uncertain and may be beyond the control of the Company. Important factors that may affect actual results and cause these financial forecasts to not be achieved include, but are not limited to, risks and uncertainties relating to the Company's and Remington's businesses (including their ability to achieve strategic goals, objectives, and targets over the applicable periods), industry performance and competition, general business and economic conditions, and other factors described under the captions "Risk Factors—Risk Factors Relating to the Transactions" and "Forward-Looking Statements". You are encouraged to review the risks and uncertainties described under these captions in this proxy statement and the risks described in the periodic reports filed by the Company with the SEC, which reports can be found as described under the caption "Where You Can Find Additional Information." The unaudited projected financial information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of projected financial information. In addition, the unaudited projected financial information requires significant estimates and assumptions that make it inherently less comparable to the similarly titled GAAP measures in the Company's historical GAAP financial statements. The Company's independent registered public accounting firm has not compiled, examined, or performed any procedures with respect to the

70


Table of Contents

unaudited prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on the information or its achievability.

        The table below presents a projected income statement summary, Total EBITDA and Unlevered Free Cash Flow of Remington on a stand-alone basis for the fiscal years ending December 31, 2015 through December 31, 2019:

 
  FY Ending December 31,   CAGR  
(US$ millions)
  2015E   2016E   2017E   2018E   2019E   '15 - '19  

INCOME STATEMENT SUMMARY

                                     

Total Revenue

  $ 56.0   $ 72.8   $ 90.1   $ 105.7   $ 124.5     22.1 %

Total EBITDA

  $ 32.1   $ 41.9   $ 51.8   $ 60.7   $ 71.6     22.2 %

EBITDA Margin

    57.4 %   57.5 %   57.5 %   57.5 %   57.5 %      

Unlevered Free Cash Flow

  $ 20.4   $ 26.6   $ 33.0   $ 38.9   $ 45.9     n.m.  

        The table below presents a projected income statement summary, Total EBITDA and Unlevered Free Cash Flow of the Company on a stand-alone basis for the fiscal years ending December 31, 2015 through December 31, 2019:

 
  FY Ending December 31,   CAGR  
(US$ millions)
  2015E   2016E   2017E   2018E   2019E   '15 - '19  

INCOME STATEMENT SUMMARY(1)

                                     

Total Revenue

  $ 49.8   $ 62.0   $ 76.3   $ 94.3   $ 113.6     22.9 %

Total EBITDA

  $ 18.4   $ 26.5   $ 35.8   $ 47.8   $ 60.3     34.5 %

EBITDA Margin

    37.0 %   42.7 %   46.9 %   50.6 %   53.0 %      

Unlevered Free Cash Flow

  $ (12.6 )(2) $ (3.3 ) $ 1.8   $ 11.3   $ 21.2     n.m.  

(1)
The Company's Income Statement excludes Ashford Investment Management, Inc. and Ashford Hospitality Select, Inc. contributions not attributable to the Company.

(2)
The Company's 2015E unlevered free cash flow excludes net non-recurring cash flows of $2.3 million related to a one-time capital investment and working capital distribution.

        The assumptions management made in preparing the above unaudited projected financial information may not reflect actual future conditions. The estimates and assumptions underlying the unaudited projected financial information involve judgments with respect to, among other things, future economic, competitive, regulatory, and financial market conditions and future business decisions which may not be realized and that are inherently subject to significant business, economic, competitive, and regulatory uncertainties and contingencies, including, among others, risks and uncertainties described under "Risk Factors—Risk Factors Relating to the Transactions" and "Forward-Looking Statements" and the risks described in the periodic reports filed by the Company with the SEC, which reports can be found as described under the caption "Other Matters—Where You Can Find Additional Information,", all of which are difficult to predict and many of which are beyond the control of the Company. The underlying assumptions and projected results may not be realized, and actual results differ whether or not transaction is completed.

        Additionally, although presented with numerical specificity, the above unaudited projected financial information with respect to the Company and Remington reflects numerous assumptions and estimates as to future events made by the Company's management that the Company's management believes were reasonably prepared.

        You are cautioned not to place undue reliance on the unaudited projected financial information set forth above. No representation is made by the Company or any other person to any of the Company's stockholders regarding the ultimate performance of the Company or Remington compared

71


Table of Contents

to the information included in the above unaudited projected financial information. The inclusion of unaudited projected financial information in this proxy statement should not be regarded as an indication that this information will be necessarily predictive of actual future events, and this information should not be relied on as such.

        The unaudited projected financial information does not take into account any circumstances or events occurring after the date they were prepared, and, except as may be required in order to comply with applicable securities laws, none of the Company, the Special Committee, or any of their respective representatives intend to update, or otherwise revise, the unaudited projected financial information, or the specific portions presented, to reflect circumstances existing after the date when they were made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error. In addition, the unaudited projected financial information does not reflect the impact of the transactions, nor does it take into account the effect of any failure of the transactions to occur.


Interests of the Company's Directors and Executive Officers in the Transactions;
Potential Conflicts of Interest

        In considering the recommendations of the Company Board, you should be aware that certain of the Company's executive officers and directors have interests in the transactions that are different from, or are in addition to, the interests of the Company's stockholders generally, including those described below. These interests may create potential conflicts of interest. The members of the Special Committee and the Company Board were aware of these interest, and considered them, when they approved the Transaction Documents and recommended that stockholders vote to approve the transactions. For additional information on relationships among the parties, see the section entitled "Information about Ashford Inc.—Certain Relationships and Related Person Transactions."

Ownership Interests of Monty Bennett in the Company and Remington

        As of January 22, 2016, Monty Bennett, our chief executive officer and chairman of the Company Board, owned, in the aggregate, 221,172 shares of our common stock (excluding (i) 95,000 shares of common stock issuable upon the exercise of options; (ii) 1,054.82 units of Ashford Hospitality Advisors LLC, our operating subsidiary, which units are redeemable for cash or, at the option of the Company, convertible into shares of our common stock on and after November 12, 2015; and (iii) 195,579 shares of common stock reserved for issuance pursuant to the Company's deferred compensation plan), which represented approximately 11.0% of the equity interest in the Company. Monty Bennett is also a 50% beneficial owner and the chief executive officer of Remington.

Monty Bennett's Interests in the Transactions

        Monty Bennett has interests in the transactions that may be different from, or in addition to, the interests of our stockholders generally and that may create potential conflicts of interest, including:

72


Table of Contents

        In addition, following the transactions, without the approval of the Remington Sellers, the Company, Newco, and Newco Sub may not conduct the Company's business operations outside of Newco or Newco Sub, operate any business other than the property and project management business of Remington, transfer the membership interests of GP Holdings to any entity that is not wholly owned by Newco Sub, dissolve Newco Sub, or permit Newco Sub to incur indebtedness; and without approval of the Remington Sellers, Remington may not alter its property management operations, commence bankruptcy, borrow money, alter its accounting policies, or issue any additional general partnership or limited partnership interests.

        Furthermore, following the transactions, the Bennetts will continue to own 20% of the limited partnership interests in Remington and Monty Bennett will remain an executive officer of Remington.

Our Executive Officers' Duties to Monty Bennett

        All of our executive officers report to Monty Bennett and may be considered to be affiliated with the Bennetts. As a result, those officers may have different interests than the Company as a whole. These potential conflicts would not exist in the case of a transaction negotiated with unaffiliated third parties. Moreover, if the Remington Sellers breach any of the representations, warranties or covenants made by them in the Acquisition Agreement or the other Transaction Documents, we may choose not to enforce, or to enforce less vigorously, our rights because of our desire to maintain our ongoing relationship with the Bennetts.

Compensation of the Special Committee

        The Special Committee consists of three independent and disinterested members of the Company Board: Brian Wheeler, Dinesh P. Chandiramani and Gerald J. Reihsen, III. The Company Board, acting pursuant to a written consent dated March 3, 2015, determined to compensate the members of the Special Committee for their service in the form of an annual retainer of $50,000.

        In recommending and approving the above compensation structure, the Special Committee and the Board considered, among other things, the Company's existing committee compensation structure, as well as precedent compensation structures for special committees formed for purposes comparable to those for which the Special Committee was formed. The Company Board considered, among other things, the nature and scope of the proposed transactions, the complexities added to the transactions by the involvement of the Bennetts, the time commitment expected to be required of the Special Committee members and the publicly reported compensation of the special committees of the boards of other companies.


Intent to Vote

        To the Company's knowledge, each of the Company's executive officers and directors intends to vote all shares of the Company's common stock he or she beneficially owns in favor of the

73


Table of Contents

Contribution proposal and the Share Issuance Proposal. The Company's directors and executive officers (including Monty Bennett) have the power to vote 326,996 shares of the Company's common stock as of January 22, 2016, representing 16.3% of the Company's outstanding common stock. The Remington Sellers have also informed the Company that they intend to vote in favor of the proposals, and together with the shares held by the Company's officers and directors (including Monty Bennett), this represents the power to vote 412,156 shares, representing 20.5% of the outstanding common stock.

        Ashford Trust and Ashford Prime own 29.8% and 9.7% of our common stock, respectively, and have informed us that each of their respective boards of directors have delegated the decision as to how to vote on the transactions to special committees composed of independent directors, pursuant to previously-adopted policies that delegate exclusive power to vote the Company shares solely to the independent directors of such boards. These committees have each engaged independent financial advisors and legal counsel to assist them, and as of the date hereof, neither has informed the Company as to how Ashford Trust or Ashford Prime intend to vote.

        The Company's unaffiliated stockholders (excluding the Company's directors and executive officers, Archie Bennett, Jr., Ashford Trust and Ashford Prime) collectively have the power to vote 805,370 shares of the Company's common stock as of January 22, 2016, representing 40.1% of the Company's outstanding common stock.


Estimated Fees and Expenses of the Transactions

        Regardless of whether the closing of the transactions occurs, Newco is obligated to pay all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants and one-half of all filing and other similar fees payable in connection with any filings or submissions under the HSR Act and one-half of any transfer, documentary, sales, use, stamp, registration, value added and other such taxes and fees (including any penalties and interest thereon) incurred in connection with the transfer of the Transferred Securities.

        In the event the closing of the transactions occurs, Newco will also pay up to an aggregate of $2,750,000 for (a) transaction expenses incurred by Remington and the Remington Holders, and (b) bonus and other payments made to employees and agents of Remington and its subsidiaries in connection with the closing.

        The estimated fees and expenses incurred or expected to be incurred in connection with the transactions are as follows:

Description
  Amount  

Company financial advisory fees and expenses

  $ 2,800,000  

Company legal fees and expenses

  $ 3,061,198  

Company accountants and expenses

  $ 407,117  

Remington financial advisory fees and expenses

  $ 1,712,600  

Remington legal fees and expenses

  $ 967,400  

Remington accountants and expenses

  $ 7,500  

Special Committee fees

  $ 150,000  

Special Committee consultant expenses

  $ 118,785  

Proxy solicitation expenses

  $ 20,000  

Proxy printing and mailing costs

  $ 80,000  

HSR filing fees

  $ 125,000  

IRS fees

  $ 36,400  

Total

  $ 9,486,000  

74


Table of Contents


No Appraisal Rights

        Under Delaware law, our stockholders are not entitled to appraisal rights in connection with the transactions.


Anticipated Accounting Treatment of the Transactions

        The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America, which is referred to as GAAP. If the transactions are consummated, the contribution of substantially all of our assets and business operations to Newco (including the contribution of Ashford LLC to Newco) in exchange for voting common stock of Newco is expected to be accounted for as a common control transaction, and the Company's acquisition of an 80% limited partnership interest in Remington from the Remington Sellers and 100% of the general partnership interests in Remington from Remington Holdings GP through Newco and direct and indirect subsidiaries of Newco in exchange for securities of Newco and a promissory note issued by Newco Sub is expected to be accounted for as a business combination, in conformity with GAAP. Newco will be treated as the acquirer in the business combination for accounting purposes.


Regulatory Approvals

        Hart-Scott-Rodino Antitrust Improvements Act of 1976.    As a condition to the consummation of the transactions contemplated by the Acquisition Agreement, the HSR Act requires parties to observe the HSR Act's notification and waiting period. The HSR Act provides for an initial 30-day waiting period, subject to possible extensions, following the necessary filings by the parties to the transactions. The Company filed a notification and report form for the transactions with the Federal Trade Commission and the Antitrust Division and received notification of early termination of the waiting period as of December 8, 2015.

        Internal Revenue Service.    As a condition to the consummation of the transactions contemplated by the Acquisition Agreement, the IRS must issue a Private Letter Ruling that Remington will not fail to qualify as an "eligible independent contractor" within the meaning of Section 856(d)(9)(A) of the Code, with respect to specified clients as a result of certain circumstances specified in the Acquisition Agreement. On July 31, 2015, a request for the Private Letter Ruling was filed with the IRS.


Stockholder Litigation Related to the Transactions

        On December 11, 2015, a purported stockholder class action and derivative complaint challenging the transactions was filed in the Court of Chancery of the State of Delaware and styled Campbell v. Bennett et al., Case No. 11796. The complaint names as defendants each of the members of the Company's board of directors, Archie Bennett, Jr., Mark A. Sharkey, MJB Investments GP, LLC and Remington Holdings GP, as well as the Company as a nominal defendant. The complaint alleges that the members of the Company Board breached their fiduciary duties to the Company stockholders in connection with the transactions and that Monty Bennett, Archie Bennett, Jr., Mark A. Sharkey, MJB Investments GP, LLC and Remington Holdings GP aided and abetted the purported breaches of fiduciary duty. In support of these claims, the complaint alleges, among other things, that the Company Board engaged in an unfair process with Remington and the Bennetts and as a result the Company overpaid for the 80% limited partnership and 100% general partnership interests in Remington. The complaint also alleges that this proxy statement contains certain materially false and/or misleading statements. The action seeks injunctive relief, including enjoining the special meeting of stockholders and any vote on the Contribution or the Stock Issuances or rescinding the transactions if they are consummated, or in the alternative an award of damages, as well as unspecified attorneys' and other fees and costs, in addition to any other relief the court may deem proper.

        The outcome of this matter cannot be predicted with any certainty. A preliminary injunction could delay or jeopardize the consummation of the transactions, and an adverse judgment granting permanent injunctive relief could indefinitely prohibit consummation of the transactions. The defendants have not yet responded to the complaint but intend to defend the claims raised in this lawsuit.

75


Table of Contents


THE TRANSACTION DOCUMENTS

Acquisition Agreement

        The following is a summary of the material terms of the Acquisition Agreement. This summary does not purport to describe all the terms of the Acquisition Agreement and is qualified in its entirety by reference to the full text of the Acquisition Agreement, which is attached as Annex C. We encourage you to read the Acquisition Agreement carefully and in its entirety because it, and not the summary set forth in this proxy statement, is one of the legal document that governs the transactions.

General

        Under the terms of the Acquisition Agreement, the Company, through Newco, will acquire, directly and indirectly, the Transferred Securities. As part of the transactions, Newco will contribute all of its interests in the 80% LP Interest to Newco Sub in exchange for shares of common stock of Newco Sub, resulting in Newco Sub holding the 80% LP Interest and the Bennetts retaining a 20% limited partnership interest. Newco Sub will remain wholly owned by Newco.

Consideration

        In consideration for the Transferred Securities, the respective holders thereof will receive aggregate consideration of $331,650,000 (based on the values agreed by the parties to the Acquisition Agreement as set forth below) as follows: (i) 916,500 shares of nonvoting common stock of Newco with a value agreed by the parties to the Acquisition Agreement of $100 per share, (ii) 9,200,000 shares of Newco Preferred Stock with a value agreed by the parties to the Acquisition Agreement of $25 per share, and (iii) solely in exchange for the general partnership interests in Remington, a $10,000,000 non-negotiable, interest-free promissory note issued by Newco Sub, which will be payable in 16 consecutive and equal quarterly installments.

Closing

        Subject to the terms and condition of the Acquisition Agreement, the closing of the transactions will take place at the offices of Norton Rose Fulbright US LLP in Dallas, Texas, at 10:00 a.m. local time on a date no later than two weeks after the satisfaction or waiver of the conditions set forth in the Acquisition Agreement (other than conditions which, by their nature, are to be satisfied on such date), or at such other time or on such other date or at such other place as the parties to the Acquisition Agreement may mutually agree upon in writing.

Representations and Warranties

        In the Acquisition Agreement, each of the Remington Holders has made customary representations and warranties to the Company relating to, among other things:

76


Table of Contents

        Additionally, the Company made representations and warranties to the Remington Holders relating to the following matters:

77


Table of Contents

        Also, Newco made representations and warranties to the Company and the Remington Holders relating to the following matters:

        Generally, the representations and warranties survive for 18 months after the consummation of the transactions; however, specified fundamental representations of the parties to the Acquisition Agreement (addressing organization and authority of the parties, capitalization, brokers and financial advisors, and certain related-party transactions) survive indefinitely, the Remington Holders' representations and warranties with respect to environmental and employee benefit matters survive for the respective statute of limitations plus three months, and the parties' representations and warranties with respect to tax related matters survive for the statute of limitations plus six months.

Covenants

General

        Prior to the closing of the transactions, Remington and its subsidiaries will continue to operate in the ordinary course of business consistent with past practice and will use reasonable best efforts to maintain and preserve their organization, businesses, goodwill, and business relationships. As such, Remington and its subsidiaries will, among other things, preserve and maintain all of their permits; continue all of their insurance policies, perform all of their obligations under all contracts relating to or affecting their revenues, properties, assets, business, or prospects; and comply in all material respects with all applicable laws, unless, in each case, the Company agrees otherwise.

        Furthermore, prior to the closing of the transactions, the Company and Remington and their respective subsidiaries will use reasonable best efforts to promptly take all actions, and to do and to assist and cooperate with each other in doing all things reasonably necessary or advisable to consummate the transactions, including obtaining from any governmental authorities and any third parties any actions, clearances, waivers, consents, approvals, permits, or orders required in connection with the performance of the Acquisition Agreement and the consummation of the transactions and making all necessary or advisable registrations, filings, notifications, or submissions with respect to the Acquisition Agreement and the transactions required under any applicable law.

"No-Shop" Restrictions and "Fiduciary Out"

        Prior to the closing of the transactions, none of Remington and its subsidiaries or the Remington Holders will, and they will not authorize or permit any of their affiliates or any their representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate, or continue inquiries regarding a "Remington Holder Acquisition Proposal" (as defined below); (ii) enter into discussions or negotiations with, or provide any information to, any person or entity concerning a possible Remington Holder Acquisition Proposal; (iii) enter into any agreements, arrangements, or understandings (whether or not binding) regarding a Remington Holder Acquisition Proposal; or (iv) otherwise knowingly facilitate any effort or attempt to make a Remington Holder Acquisition Proposal. In the event that Remington and its subsidiaries or the Remington Holders receive any inquiry or request for information regarding a Remington Holder Acquisition Proposal, they will promptly (and in any event within two business days after the receipt of such inquiry or request) inform the Company and provide the Company with reasonably detailed information regarding the Remington Holder Acquisition Proposal.

        A "Remington Holder Acquisition Proposal" is any inquiry, proposal, or offer from any person or entity (other than the Company or any of tis controlled affiliates) concerning (a) a merger,

78


Table of Contents

consolidation, liquidation, recapitalization, share exchange, or other business combination involving Remington or its subsidiaries representing 10% or more of the assets of Remington and its subsidiaries; (b) a sale, lease, exchange, mortgage, transfer, or other disposition, whether in a single transaction or series of related transactions, of 10% or more of the assets of Remington and its subsidiaries; (c) a purchase or sale of shares of capital stock or other securities, whether in a single transaction or series of related transactions, representing any of the voting power of the capital stock of Remington and its subsidiaries or the general partner of Remington; or (d) any other transaction having a similar effect to those described in the above clauses.

        Similarly, the Company will not, and the Company will not permit Newco, Newco Sub, or any of our other affiliates or representatives, including the Special Committee, to, directly or indirectly, (i) encourage, solicit, initiate, facilitate, or continue inquiries regarding a "Company Acquisition Proposal" (as defined below); (ii) enter into discussions or negotiations with, or provide any information to, any person or entity concerning a possible Company Acquisition Proposal; (iii) enter into any agreements, arrangements, or understandings (whether or not binding) regarding a Company Acquisition Proposal; or (iv) otherwise knowingly facilitate any effort or attempt to make a Company Acquisition Proposal. Prior to the Company's stockholders voting on the transactions, however, if we receive an unsolicited bona fide written Company Acquisition Proposal, (A) the Company Board and the Special Committee may participate in discussions regarding such Company Acquisition Proposal to clarify the terms of such Company Acquisition Proposal and (B) if the Company Board determines (1) that such Company Acquisition Proposal constitutes or could reasonably be expected to lead to a "Company Superior Proposal" (as defined below) and (2) after consultation with outside legal counsel, that the failure to take the actions set forth in clauses (x) and (y) below with respect to such Company Acquisition Proposal would be inconsistent with their fiduciary duties, then we may, in response to such Company Acquisition Proposal, (x) provide non-public information of the Company to the person or entity that has made such Company Acquisition Proposal and (y) participate in discussions and negotiations regarding such Company Acquisition Proposal. In the event that we receive any inquiry or request for information that could reasonably be expected to result in a Company Acquisition Proposal, we will promptly (and in any event, within 48 hours after the receipt of such inquiry or request) notify the Remington Holders and provide them with reasonably detailed information regarding the Company Acquisition Proposal.

        A "Company Acquisition Proposal" is any proposal or offer relating to (a) a merger, consolidation, share exchange, or business combination involving the Company or any of our subsidiaries representing 10% or more of the assets of the Company and our subsidiaries; (b) a sale, lease, exchange, mortgage, transfer, or other disposition, whether in a single transaction or series of related transactions, of 10% or more of the assets of the Company and our subsidiaries; (c) a purchase or sale of shares of capital stock or other securities, in a single transaction or series of related transactions, representing 10% or more of the voting power of the capital stock of the Company, including by way of a tender offer or exchange offer; or (d) any other transaction having a similar effect to those described above in this paragraph.

        A "Company Superior Proposal" is an unsolicited bona fide Company Acquisition Proposal (except that references to "10%" in the definition of such term will be deemed to be references to "50%") made in writing that the Special Committee determines, after receipt of advice from the Special Committee's financial advisor and legal counsel, (a) is reasonably likely to be consummated in accordance with its terms, taking into account all legal, financial, and regulatory aspects of the proposal and the person or entity making the proposal, and (b) if consummated, would result in a transaction more favorable to the stockholders of the Company (excluding the Remington Holders and their affiliates, and including Ashford Trust and Ashford Prime) from a financial point of view than the transactions.

79


Table of Contents

        In addition to the notices described above, prior to the closing of the transactions, Remington or the Remington Holders will notify the Company of the following: (a) any fact, circumstance, event, or action which (i) has had, or could reasonably be expected to have, a "Target Material Adverse Effect" (as defined below); (ii) has resulted in, or could reasonably be expected to result in, any representation or warranty made by any Remington or the Remington Holders under the Acquisition Agreement not being true and correct; or (iii) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions to closing of the transactions to be satisfied; (b) any communication from any person or entity alleging that the consent of such person or entity is or may be required in connection with the transactions; (c) any communication from any governmental authority in connection with the transactions; and (d) any legal actions commenced or threatened would have been required to be disclosed under the Acquisition Agreement or relate to the to the consummation of the transactions.

        A "Target Material Adverse Effect" is any event, occurrence, fact, condition, or change that is, or could reasonably be expected to become, materially adverse to (a) the business, results of operations, condition (financial or otherwise), or assets of any of Remington and its subsidiaries, taken as a whole; or (b) the ability of the Remington Holders to consummate the transactions on a timely basis; provided, however, that Target Material Adverse Effect does not include any event, occurrence, fact, condition, or change arising out of or attributable to: (i) general economic or political conditions, (ii) conditions generally affecting the industries in which Remington operates; (iii) any changes in financial or securities markets in general; (iv) acts of war, armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by the Acquisition Agreement, except for required consents or governmental approvals; (vi) any changes in applicable laws or accounting rules; (vii) any action taken or omission by any person or entity controlled by the Company; (viii) the public announcement, pendency, or completion of the transactions; or (ix) resulting from acts of god, such as hurricanes, tornadoes, floods, earthquakes, or other natural disasters; provided further, however, that any event, occurrence, fact, condition, or change referred to in clauses (i) through (iv), (vi), and (ix) immediately above will be taken into account in determining whether a Target Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate effect on the Target compared to other participants in the industries in which the Target conducts its businesses.

        The Company has agreed to take all action necessary in accordance with the DGCL and the rules of the NYSE MKT and our organizational documents to establish a record date for, give notice of, and convene and hold a meeting of our stockholders for the purpose of voting upon the approval of the transactions. Subject to our ability to change our recommendation in certain situations, we have agreed to recommend that you vote in favor of the transactions. The Company Board or the Special Committee may, at any time prior to our stockholders considering the transactions at the special meeting, after consultation with outside legal counsel, determine in good faith that it cannot recommend that you vote in favor of the transactions, if such recommendation would be inconsistent with its fiduciary duties, in response to a Company Superior Proposal, so long as (i) the Company has provided the Remington Holders prior notice that we intend to change our recommendation to our stockholders to vote in favor of the transactions and are prepared to enter into a contract with respect to a Company Superior Proposal, including reasonably detailed information regarding the terms of such Company Superior Proposal; and (ii) the Company provides the Remington Holders the opportunity, and negotiates in good faith, to adjust the terms and conditions of the Acquisition Agreement and related documents so that there is no longer a basis for such proposal to constitute a Company Superior Proposal. In addition, the Company Board or the Special Committee may, at any time prior to our stockholders considering the transactions at the special meeting, after consultation with outside legal counsel, determine in good faith that it cannot recommend that you vote in favor of the transactions, if such recommendation would be inconsistent with its fiduciary duties, in response to a "Company Intervening Event," so long as (i) the Company has provided the Remington Holders prior notice that we intend to change our recommendation to our stockholders to vote in favor of the

80


Table of Contents

transactions, and (ii) the Company provides the Remington Holders the opportunity, and negotiates in good faith, to adjust the terms and conditions of the Acquisition Agreement and related documents so that there is no longer a basis for such withdrawal, modification, or amendment.

        A "Company Intervening Event" is an event, change, development, effect, occurrence. or state of facts, in each case (a) that is material to the transactions, (b) that arises or occurs after the date of the Acquisition Agreement and that becomes known to the Special Committee before the vote of the stockholders considering the transactions at the special meeting, and (c) that, prior to the date of the Acquisition Agreement, was not known to or reasonably foreseeable by the Special Committee; provided, that in no event will the receipt, existence of, or terms of a Company Acquisition Proposal or any inquiry relating to a Company Acquisition Proposal or any consequence thereof constitute a Company Intervening Event.

Closing Conditions

        The obligations of each of the parties to the Acquisition Agreement to consummate the transactions is subject to the fulfillment of certain closing conditions, including:

        The Bennett's obligation to consummate the transactions is also conditioned on:

        A material adverse effect with respect to the Company, or a "Company Material Adverse Effect," means any event, occurrence, fact, condition, or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise), or assets of the Company and its subsidiaries; or (b) the ability of the Company to consummate the transactions on a timely basis; provided, however, that "Company Material Adverse Effect" will not include any event, occurrence, fact, condition, or change arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Company operates; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or

81


Table of Contents

worsening thereof; (v) any action required or permitted by the Acquisition Agreement, subject to certain exceptions; (vi) any changes in applicable laws or accounting rules; (vii) any action taken or omission by Ashford Trust or Ashford Prime, or by any person or entity controlled by the Remington Holders; (viii) the public announcement, pendency, or completion of the transactions or the Transaction Documents; or (ix) resulting from acts of god, such as natural disasters; provided further, however, that any event, occurrence, fact, condition, or change referred to in clauses (i) through (iv), (vi) and (ix) immediately above will be taken into account in determining whether a Company Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate effect on the Company compared to other participants in the industries in which the Company conducts its businesses.

        The Company's obligation to consummate the transactions is also conditioned on:

        A material adverse effect with respect to Remington, or a "Target Material Adverse Effect," means any event, occurrence, fact, condition, or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise), or assets of any of Remington and its subsidiaries, taken as a whole, or (b) the ability of the Remington Holders to consummate the transactions on a timely basis; provided, however, that "Target Material Adverse Effect" will not include any event, occurrence, fact, condition, or change arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which Remington operates; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by the Acquisition Agreement, subject to certain exceptions; (vi) any changes in applicable laws or accounting rules; (vii) any action taken or omission by any person or entity controlled by the Company; (viii) the public announcement, pendency, or completion of the transactions or the Transaction Documents; or (ix) resulting from acts of god, such as natural disasters; provided further, however, that any event, occurrence, fact, condition, or change referred to in clauses (i) through (iv), (vi), and (ix) immediately above will be taken into account in determining whether a Target Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate effect on Remington compared to other participants in the industries in which Remington conducts its businesses.

Liability

        Except for breaches of fundamental representations and warranties and certain related matters, neither the Company nor the Remington Holders will be liable for breaches of representations and warranties until the aggregate amount of all damages suffered by the indemnified parties exceeds $5,000,000, in which event the breaching party is liable from the first dollar. Except for breaches of fundamental representations and warranties and certain tax-related matters, the aggregate liability for damages for each of the Company and the Remington Holders is $50,160,000. The aggregate liability for damages for each of the Company and the Remington Holders is $331,650,000 for all breaches of representations and warranties by such party. Notwithstanding the foregoing, the parties have the right to seek damages and equitable relief for fraud without any limitation, and an action for breach of the representations and warranties is not the exclusive remedy for any party.

82


Table of Contents

        The Remington Holders will satisfy indemnification obligations in shares of Newco common stock valued at $100 per share, and, to the extent that shares of Newco common stock are insufficient, in Newco Preferred Stock valued at its liquidation value of $25 per share.

Termination

        The Acquisition Agreement may be terminated and the transactions abandoned at any time prior to the closing of the transactions:

        If we terminate the Acquisition Agreement for a Company Superior Proposal or a Company Intervening Event, the Company will be required to pay the Remington Holders a termination fee of $6,688,000 plus the costs and expenses incurred by the Remington Holders in connection with the transactions.

        Neither the Company nor the Remington Holders, however, will have a right to terminate the Acquisition Agreement, assert a claim that any condition to closing the transactions has not been fulfilled, or claim any damage or seek any other available remedy for any breach of any representation, warranty, or covenant if the non-breaching party or certain of its affiliates or representatives had knowledge of any facts or circumstances that constitute or give rise to such breach or would proximately or directly cause any such condition not to be fulfilled or substantially caused or intentionally permitted such breach (excluding actions of Monty Bennett with respect to any such breach by the Company).

Expenses

        Regardless of whether the closing of the transactions occurs, Newco is obligated to pay all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants and one-half of all filing and other similar fees payable in connection with any filings or submissions under the HSR Act and one-half of any transfer, documentary, sales, use, stamp, registration, value added and other such taxes and fees (including any penalties and interest thereon) incurred in connection with the transfer of the Transferred Securities pursuant to the Acquisition Agreement and the other Transaction Documents, and the exchange contemplated pursuant to the contribution agreement between the Company and Newco, setting forth the terms and conditions upon which the Company will contribute substantially all of its assets to Newco, and Newco will assume all of the liabilities of the

83


Table of Contents

Company, (including any real property transfer tax and any other similar tax) incurred by the Company, Newco, Newco Sub, GP Holding and GP Holding I.

        In the event the closing of the transactions occurs, Newco will also pay up to an aggregate of $2,750,000 for (a) transaction expenses incurred by Remington and the Remington Holders, and (b) bonus and other payments made to employees and agents of Remington and its subsidiaries in connection with the closing.

Amendment; Waiver

        Subject to applicable law, the Acquisition Agreement may be amended or modified or any term thereof waived by action taken by the Company and the Remington Holders, provided that the prior written approval of the Special Committee is required to approve any amendment, modification, supplement, or waiver of any provisions of the Acquisition Agreement by or on behalf of the Company.

Governing Law; Waiver of Jury Trial

        The Acquisition Agreement will be governed by Delaware law. Each party to the Acquisition Agreement has irrevocably and unconditionally waived its right to trial by jury.

Specific Performance

        The Acquisition Agreement provides that the parties thereto will be entitled to seek specific performance to enforce the Acquisition Agreement against a non-performing party, in addition to any other remedy to which they are entitled at law or in equity.


Certificate of Designation of Newco Preferred Stock

        The following is a summary of the material terms of the Certificate of Designation. This summary does not purport to describe all the terms of the Certificate of Designation and is qualified in its entirety by reference to the full text of the Certificate of Designation, which is attached as Annex D. We encourage you to read the Certificate of Designation carefully and in its entirety because it, and not the summary set forth in this proxy statement, is one of the legal document that governs the transactions.

        The designation, rights, preferences, powers, restrictions, and limitations of the Newco Preferred Stock will be established by Newco filing the Certificate of Designation as of the closing of the transactions.

Terms of Newco Preferred Stock

        The Certificate of Designation will provide that each share of Newco Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets upon liquidation of Newco, (a) prior to Newco's common stock and any class or series of Newco capital stock subsequently created, unless otherwise agreed by 66.67% of the holders of Newco Preferred Stock; (b) on parity with any class or series of Newco capital stock subsequently created and agreed by 66.67% of the holders of Newco Preferred Stock; and (c) junior to any series of Newco Preferred Stock subsequently created and agreed by 66.67% of the holders of Newco Preferred Stock.

        The Certificate of Designation also will provide that each share of Newco Preferred Stock will:

84


Table of Contents

        The Certificate of Designation also will provide for customary anti-dilution protections upon, among other things, a dividend, subdivision, or combination of common stock of Newco or a reorganization, reclassification, or merger of Newco; provided, however, that all preemptive rights of the holders of Newco Preferred Stock are set forth in the Investor Rights Agreement.

        Newco also, at all times, will reserve and keep available out of its authorized but unissued shares of capital stock such number of non-voting common stock issuable upon conversion of all outstanding Newco Preferred Stock, taking into account any applicable anti-dilution adjustments.

        In connection with any liquidation, dissolution, or winding up of Newco (in each case, whether voluntary or involuntary), Newco will provide each holder of Newco Preferred Stock written notice of such proposed action and its material terms within ten days of the Newco board of directors approving such an action, or not later than 20 days prior to any Newco stockholders' meeting to approve such an action, or within 20 days of the commencement of any involuntary proceeding, whichever is earlier. Newco will not consummate any voluntary liquidation, dissolution, or winding up before the expiration of 30 days after the mailing of such initial notice or ten days after the mailing of any subsequent written notice, whichever is later; provided that all holders of Newco Preferred Stock may consent to shorten such period.

Board Designation Rights

        In the event Newco fails to pay a dividend at the rate of 6.625% per annum for two consecutive quarterly periods, then, until such arrearage is paid in cash in full, (i) the dividend rate on the Newco Preferred Stock will increase to 10% per annum; (ii) no dividends may be declared and paid, and no other distributions or redemptions may be made, on the Newco common stock; and (iii) the Newco board of directors and the Company Board will be increased by two seats and the holders of Newco Preferred Stock will be entitled to designate two individuals to fill such newly created seats.

Restrictive Covenants

        The Certificate of Designation will provide that, so long as any shares of Newco Preferred Stock are outstanding, Newco is prohibited from taking certain actions without the consent of a 66.67% of the holders of Newco Preferred Stock, including:

85


Table of Contents

        The Certificate of Designation also will provide that any right of the holders of Newco Preferred Stock may be waived as to all shares of the Newco Preferred Stock upon the consent of 66.67% of the holders of Newco Preferred Stock, unless a higher percentage is required by applicable law.


Investor Rights Agreement

        The following is a summary of the material provisions of the Investor Rights Agreement, a copy of which is attached to this proxy statement as Annex E, and which we incorporate by reference into this proxy statement. This summary may not contain all of the information about the Investor Rights Agreement that is important to you and is qualified in its entirety by reference to the full text of such agreement. We encourage you to read carefully the Investor Rights Agreement in its entirety, as the rights and obligations of the parties thereto are governed by the express terms of the Investor Rights Agreement and not by this summary or any other information contained in this proxy statement.

        At the closing of the transactions, the parties will enter into an investor rights agreement (the "Investor Rights Agreement") that will provide for, among other items, governing rights, operating agreements, noncompetes, transfer restrictions, put and call rights and obligations of the parties with respect to the Company and its subsidiaries, including Remington.

Board Designation Rights

        The Investor Rights Agreement will provide that for so long as Archie Bennett, Jr., Monty Bennett and MJB Investments (together with each person that succeeds to the interests as an immediate family member or controlled entity transferee, "Holder Group Investors") beneficially own no less than 20% of the issued and outstanding shares of common stock of Newco (taking into account the Newco Preferred Stock on an as-converted basis), those Holder Group Investors holding in the aggregate a majority of the total number of shares of common stock of Newco (taking into account the Newco Preferred Stock on an as-converted basis) held by all Holder Group Investors (a "Majority in Interest") will be entitled to nominate one individual for election as a member of the Company Board (the "Seller Nominee") and, until a Majority in Interest of the Holder Group Investors otherwise determine, Monty Bennett will serve as the Seller Nominee. The Investor Rights Agreement requires the Company, with respect to the Seller Nominee, (i) to assure that the size of the Company Board will accommodate the Seller Nominee, (ii) at each annual meeting of stockholders of the Company, to cause the slate of nominees standing for election, and recommended by the Company Board, at each such meeting to include the Seller Nominee, (iii) to nominate and reflect in the proxy statement on Schedule 14A for each annual meeting the nomination of the Seller Nominee for election as a director of the Company at each such meeting and (iv) to the extent permitted under applicable law and stock exchange rules, cause all proxies for which a vote is not specified to be voted for the Seller Nominee. In the event Newco fails to pay a dividend at the rate of 6.625% per annum on the Newco Preferred Stock for two consecutive quarterly periods (a "Preferred Stock Breach"), the Company Board will be increased by two seats and a Majority in Interest of the Holder Group Investors will be entitled to designate two individuals to fill such newly created seats.

        The Investor Rights Agreement further will provide that the board of directors of Newco will, at all times, be made up of the same individuals serving on the Company Board, including the Seller Nominee. In the event of a Preferred Stock Breach, both the Company Board and the Newco board of directors will be increased by two seats and the individuals filling such newly created seats will be the same. In addition, for so long as the Holder Group Investors hold any of the 20% limited partnership

86


Table of Contents

interest in Remington retained by the Bennetts (the "Retained Interest"): (i) a Majority in Interest of the Holder Group Investors will be entitled to nominate one individual for election as a member of the board of directors of Newco Sub; and (ii) the independent directors of Newco will be entitled to nominate two individuals for election as members of the board of directors of Newco Sub. Until a Majority in Interest of the Holder Group Investors otherwise determine, Monty Bennett will serve as the Holder Group Investors' nominee.

        If Monty Bennett ceases to be a director of the Company, for any reason other than the Holder Group Investors ceasing to own more than 20% of the issued and outstanding shares of common stock of Newco (taking into account the Newco Preferred Stock on an as-converted basis), a Majority in Interest of the Holder Group Investors may propose to the Company a replacement nominee for election as a director of the Company, in which event such individual will be appointed to fill the vacancy created as a result of Monty Bennett ceasing to be a director of the Company. Similarly, if Monty Bennett ceases to be a director of Newco, for any reason other than the Holder Group Investors ceasing to own more than 20% of the issued and outstanding shares of common stock of Newco (taking into account the Newco Preferred Stock on an as-converted basis), a Majority in Interest of the Holder Group Investors may propose to Newco a replacement nominee for election as a director of Newco, in which event such individual will be appointed to fill the vacancy created as a result of Monty Bennett ceasing to be a director of Newco. The right in the foregoing sentence with respect to the board of Newco will terminate, however, upon the consummation of the filing a registration statement providing for either or both of an initial public offering of the voting common stock of Newco or the registration and resale of all of the registrable securities of Newco, as discussed in greater detail below under "—Registration Rights."

        If Monty Bennett ceases to be a director of Newco Sub, for any reason other than the Holder Group Investors ceasing to own any of the Retained Interest, a Majority in Interest of the Holder Group Investors may propose to Newco Sub a replacement nominee for election as a director of Newco, in which event such individual will be appointed to fill the vacancy created as a result of Monty Bennett ceasing to be a director of Newco Sub.

Operating Provisions

        The Investor Rights Agreement will provide that (i) until the Newco Sub Promissory Note is paid in full, without the prior written consent of a Majority in Interest of the Holder Group Investors, and (ii) from the time the Newco Sub Promissory Note is paid in full, for so long as the Holder Group Investors beneficially own any of the Retained Interest (as defined below), without the prior written consent of a Majority in Interest of the Holder Group Investors, the Company, Newco and Newco Sub will not transfer the membership interests of GP Holdings or permit GP Holdings to transfer its general partnership interest in Remington to any entity that is not wholly owned, directly or indirectly, by Newco Sub, or in any way cause or permit GP Holdings (or any wholly owned transferee) to be treated as other than an entity disregarded from Newco Sub for federal income tax purposes.

        Additionally, for so long as the Holder Group Investors beneficially own no less than 20% of the issued and outstanding shares of the common stock of Newco (taking into account Newco Preferred Stock on an as-converted basis), the Company, Newco and Newco Sub are prohibited, without the prior written consent of a Majority in Interest of the Holder Group Investors, from, among other actions:

87


Table of Contents

        The Limited Partnership Agreement of Remington, which will be entered into at the closing of the transactions (the "Limited Partnership Agreement"), will provide for additional approval rights in favor of the LP Transferors, including, without limitation, limiting Remington's ability to incur indebtedness, issue additional interests, and amend the Limited Partnership Agreement.

        The Company and Newco will also agree in the Investor Rights Agreement that Newco will not take, and the Company will not cause or permit Newco to take, any corporate action that, if taken by the Company, would require the approval of the stockholders of the Company under the DGCL or the rules and regulations of any stock exchange on which the voting securities of the Company are then listed, unless such corporate action has been approved by the stockholders of the Company by the same vote as would be required if the Company were taking such corporate action.

        The Investor Rights Agreement also will provide that, except for issuances contemplated by the Transaction Documents entered into under the Acquisition Agreement, neither the Company, Newco nor Newco Sub will issue any equity securities, rights to acquire equity securities of the Company, Newco or Newco Sub or debt convertible into equity securities of the Company, Newco or Newco Sub ("New Securities") unless the Company, Newco or Newco Sub, as the case may be, gives each Holder Group Investor notice of its respective intention to issue New Securities and the right to acquire such Holder Group Investor's pro rata share of the New Securities.

        The Investor Rights Agreement will provide that Archie Bennett, Jr. will have the following rights and privileges for the duration of the Investor Rights Agreement:

Incentive Fees

        Pursuant to the terms and conditions of hotel management agreements to which Remington is a party, Remington receives annual incentive management fees based on the preceding year's hotel operations subject to such hotel management agreements. The incentive fees are calculated and paid in the first quarter of each calendar year.

        The Investor Rights Agreement will provide that for the calendar year in which the closing occurs, the net amount of the aggregate incentive fees less the aggregate amount of officer and executive employee bonuses paid by Remington will be prorated as of the date of the closing based upon the actual number of days elapsed from January 1 through the date of the closing. Under the terms of the Investor Rights Agreement and the Limited Partnership Agreement, the net prorated amounts will be paid by Remington to the Bennetts in cash with respect to the period of time prior to the date of the closing.

Registration Rights

        The Investor Rights Agreement will provide that, as soon as practicable after the second anniversary of the closing of the transactions, Newco, at its expense, will use its best efforts to prepare

88


Table of Contents

and file with the SEC a registration statement providing for either, or both, of an initial public offering of the voting common stock of Newco or the registration and resale of all of the registrable securities of Newco, and to cause the corresponding registration statement to become effective no later than the third anniversary of the closing of the transactions. In connection with any underwritten public offering, in the event the underwriters determine that less than all of the registrable securities of Newco can be included in such offering, then the registrable securities of Newco that are included in such offering will be apportioned pro rata among the selling holders of Newco's registrable securities based on the aggregate number of registrable securities of Newco requested to be registered by all such selling holders or in other proportions as mutually agreed by all of the selling holders, provided that at least 50% of the registrable securities of Newco will be included in such offering. In addition, Newco is subject to customary indemnification requirements whereby Newco will indemnify and hold harmless each holder of Newco's registrable securities, as well as the partners, members, officers, directors, managers, equity holders, legal counsel and accountants thereof against losses, claims, damages, or liabilities or actions that arise out of violations of federal and state securities laws by Newco. The right to cause Newco to file a registration statement is not assignable or transferable other than in connection with a transfer permitted under the terms of the Investor Rights Agreement, provided that Newco is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee with respect to which such registration rights are being assigned and such transferee by joinder becomes a party to the Investor Rights Agreement.

        In addition, Newco's certificate of incorporation provides that any shares of the non-voting common stock of Newco will automatically convert into an equivalent number of shares of voting common stock of Newco upon the consummation of an initial public offering of the voting common stock of Newco.

Transfer Restrictions

        The Investor Rights Agreement will provide that for three years after the closing of the transactions, each of Monty Bennett, Archie Bennett, Jr., MJB Investments, Mark Sharkey and their permitted transferees (collectively, the "Covered Investors") are prohibited from transferring common stock of Newco or Newco Preferred Stock, except to family members and in connection with estate planning, unless the transfer has been approved by an independent committee of the Company Board.

        Covered Investors are also prohibited from transferring the Retained Interest except to family members or to a charitable foundation, unless approved by an independent committee of the Company Board. In the event the Covered Investors desire to transfer the Retained Interest in any other respect, the Investor Rights Agreement will provide that the Company has a right of first refusal to purchase the Retained Interest on the same terms as the proposed transfer to any such third party. The Company also has the option to pay the purchase price, upon exercising its right of first refusal, over a three year period pursuant to a promissory note issued by the Company bearing interest at the then-prevailing LIBOR interest rate plus 350 basis points. In the event that the Company fails to exercise its right of first refusal to purchase the Retained Interest, the transfer to a third party will be permitted. In each case, assignment of any economic interest (separate from any voting interest) is permitted.

        Any transferee from a Covered Investor must, as a condition to such transfer, become a party to the Investor Rights Agreement by joinder and agree to be bound by all of the terms and conditions set forth therein as a Covered Investor.

Put and Call Options

Preferred Call Option

        Pursuant to the Investor Rights Agreement, after the fifth anniversary of the closing of the transactions, Newco will have the option to purchase all or any portion of the Newco Preferred Stock

89


Table of Contents

in $25,000,000 increments on a pro rata basis among all Covered Investors (the "Preferred Call Option") at a price per share equal to the sum of (i) not more than $25.125, plus (ii) all accrued but unpaid dividends. The purchase price is payable only in cash. The notice of exercise of the Preferred Call Option does not limit or restrict any Covered Investor's right to convert the Newco Preferred Stock into shares of Newco common stock prior to the closing of the Preferred Call Option.

Remington Call Option

        In addition, after the tenth anniversary of the closing of the transactions, Newco Sub will have an option to require the Covered Investors to sell to Newco Sub the Retained Interest (the "Remington Call Option"). In the event that the Remington Call Option is exercised, the price to be paid will be an amount equal to 110% of the Retained Interests Purchase Price (defined below), and the price will be payable at each Covered Investor's individual election in any combination of:

        The "Retained Interests Purchase Price" is an amount equal to the product of (a) the Multiple (defined below), multiplied by (b) Remington's adjusted earnings before interest, taxes, depreciation and amortization for the prior 12-month rolling period, multiplied by (c) the percentage ownership interest of Remington on a fully diluted basis represented by the Retained Interests. "Multiple" means a factor not less than 10.25 and not greater than 16.25 that will be determined by agreement between the Company and the Covered Investors or, if no agreement is reached, by successive appraisal and arbitration procedures.

Change of Control Put Option

        The Investor Rights Agreements also will provide each Covered Investor with the option, exercisable on one occasion, to sell to the Company all of the Retained Interests, Newco common stock (unless an initial public offering of Newco has occurred) and the Newco Preferred Stock then owned by such Covered Investor (the "Change of Control Put Option"), during a ten business day period following the consummation of a Change of Control (as defined below). In the event that a Covered Investor exercises the Change of Control Put Option, the price to be paid to such exercising Covered Investor will be:

90


Table of Contents

        The $120 conversion price used with respect to the Newco Preferred Stock is subject to adjustment in the event of stock dividends on Newco common stock or any subdivision or combination of Newco common stock.

        A "Change of Control" means any of the following, in each case that was not consented to, voted for or otherwise supported by Monty Bennett: (a) any person (other than Archie Bennett, Jr., Monty Bennett, MJB Investments, their controlled affiliates, trusts or estates in which any of them has a substantial interest or as to which any of them serves as trustee or a similar capacity, any immediate family member of Archie Bennett, Jr. or Monty Bennett or any group of which they are a member) acquires beneficial ownership of securities of the Company or Newco that, together with the securities of the Company or Newco previously beneficially owned by the first such person, constitutes more than 50% of the total voting power of the Company's or Newco's outstanding securities, or (b) the sale, lease, transfer or other disposition (other than as collateral) of all or a majority of the Company's or Newco's (taken as a whole) assets or income or revenue generating capacity, other than to any direct or indirect majority-owned and controlled affiliate of the Company.

        As discussed above, the formulas used to calculate the number of shares of the Company's common stock that could be issued to the Remington Sellers in the future are subject to a number of factors that may be adjusted or cannot be calculated until the time of issuance. The Company has made the following assumptions regarding certain of the factors involved in the calculations in order to estimate a maximum number of approximately 4,156,000 shares of the Company's common stock that could be issued to the Remington Sellers if all of the events occurred at some point in the future. These assumptions include (i) the "Multiple" being the maximum 16.25 (the highest in the 10.25 to 16.25 range), (ii) the volume-weighted average price of the Company common stock being less than $100 ($44.23 was such price on January 22, 2016), (iii) Remington's adjusted earnings before interest, taxes, depreciation and amortization for the prior 12-month rolling period being $28.7 million (which was the approximate amount for the prior 12-months ended September 30, 2015), (iv) no adjustment to

91


Table of Contents

the conversion price of $120, (v) no adjustment to the $25.125 price factor and (vi) the Change of Control Put Option being exercised prior to the first anniversary of the closing of the transactions.

Noncompetition and Non-Solicitation Agreements

        Subject to the exclusions described below, the Investor Rights Agreement will provide that for a period of the later of (i) three years following the closing of the transactions, or (ii) three years following the date Monty Bennett is not the principal executive officer of the Company (the "Restricted Period"), each of Archie Bennett, Jr., Monty Bennett, and MJB Investments will not, directly or indirectly:

        In addition to, among other exclusions, exclusions related to service with entities related to the Company and passive investments in publicly traded securities on unaffiliated entities, each of Archie Bennett, Jr., Monty Bennett, and MJB Investments may freely pursue any opportunity to acquire ownership, directly or indirectly, in any interest in real property in the lodging industry if such person has presented such opportunity to the Company Board and the Company (based on a determination by a majority of its independent directors) declines to pursue or participate in such opportunity, provided such person and its controlled affiliates (other than the Company, Remington, and their subsidiaries) do not engage in the Restricted Business for such real property.

        The Investor Rights Agreement also will provide that, during the Restricted Period, none of Archie Bennett, Jr., Monty Bennett, or MJB Investments will, or permit any of their controlled affiliates to, hire or solicit the executive officers of Remington and its subsidiaries and any independent contractors or consultants spending a majority of their respective time on the Restricted Business (collectively, the "Service Providers"), except pursuant to a general solicitation that is not directed specifically to such Service Providers. Archie Bennett, Jr., Monty Bennett, and MJB Investments, either directly or through any of their controlled affiliates, may hire any Service Providers (i) whose employment has been terminated by Remington, Newco, Newco Sub or the Company, (ii) after 180 days, whose employment has been terminated by the Service Provider or (iii) who will work on a shared basis with Remington and its subsidiaries.

Voting Limitations at the Company and Newco

The Company

        On matters submitted to a vote of the Company's stockholders, the Covered Investors have the right to vote as they determine, except if, prior to the fourth anniversary of the closing of the transactions, the combined voting power of the Reference Shares (as defined below) of the Company exceeds 25% (plus the combined voting power of any Company common stock purchased after the closing of the transactions in an arm's length transaction from a person other than the Company or a Company subsidiary, including through open market purchases, privately negotiated transactions or any distributions by either Ashford Trust or Ashford Prime to its respective stockholders pro rata) of the combined voting power of all of the outstanding voting securities of the Company entitled to vote, then Reference Shares of the Company representing voting power equal to such excess will be deemed to be "Company Cleansed Shares." The Covered Investors will vote Company shares with voting power equal to the voting power of the Company Cleansed Shares in the same proportion as the Company's stockholders vote their shares with respect to such matters, inclusive of the Reference Shares of the Company voted by the Covered Investors.

92


Table of Contents

Newco

        On matters submitted to a vote of Newco stockholders, the Covered Investors have the right to vote as they determine, except if at any time the combined voting power of the Reference Shares of Newco exceeds 25% (plus the combined voting power of any Newco common stock purchased after the closing of the transactions in an arm's length transaction from a person other than Newco or a Newco subsidiary, including through open market purchases or privately negotiated transactions) of the combined voting power of all of the outstanding voting securities of Newco entitled to vote, then Reference Shares of Newco representing voting power equal to such excess will be deemed to be "Newco Cleansed Shares." The Covered Investors will vote Newco shares with voting power equal to the voting power of the Newco Cleansed Shares in the same proportion as Newco stockholders vote their shares with respect to such matters, inclusive of the Reference Shares of Newco voted by the Covered Investors.

        These voting restrictions may be waived by two-thirds majority vote or consent of the independent directors of the Company or Newco, as applicable, that have no personal interest in the matter to be voted upon.

        "Reference Shares" means all voting securities of the Company or Newco, as applicable, that are (a) beneficially owned by any Covered Investor; (b) beneficially owned by any member of a group of which any Covered Investor is a member; or (c) subject to or referenced in any derivative or synthetic interest that (i) conveys any voting right in the common stock of the Company or Newco, as applicable, or (ii) is required to be, or is capable of being, settled through delivery of common stock of the Company or Newco, as applicable, in either case, that is held or beneficially owned by any Covered Investor or any controlled affiliate or any Covered Investor.

Termination

        The Investor Rights Agreement terminates by its terms on the earliest of (i) the written agreement of the Company and a majority in interest of the Covered Investors, (ii) the fifth anniversary of the closing of the transactions, and (iii) the date on which the Covered Investors no longer own any Retained Interests, Newco common stock or Newco Preferred Stock; provided operational covenants, the noncompetition agreement, board designation rights, voting limitations and restrictions on Newco dividends will last for the time periods provided by their terms and the call options, put options and the Private Letter Ruling compliance covenant will last indefinitely.

        A Covered Investor will automatically cease to be bound by the Investor Rights Agreement at such time as such Covered Investor no longer owns any Retained Interests, any Newco common stock or Newco Preferred Stock.


Limited Partnership Agreement

        The following is a summary of the material provisions of the Amended and Restated Limited Partnership Agreement of Remington, a copy of which is attached to this proxy statement as Annex F, and which we incorporate by reference into this proxy statement. This summary may not contain all of the information about the Amended and Restated Limited Partnership Agreement that is important to you and is qualified in its entirety by reference to the full text of such agreement. We encourage you to read carefully the Amended and Restated Limited Partnership Agreement in its entirety, as the rights and obligations of the parties thereto are governed by the express terms of the Amended and Restated Limited Partnership Agreement and not by this summary or any other information contained in this proxy statement.

        At the closing of the transactions, the parties will enter into an Amended and Restated Limited Partnership of Remington (the "Limited Partnership Agreement") that will provide for, among other items, the governance of Remington following the closing of the transactions and additional approval rights in favor of Archie Bennett, Jr. and Monty Bennett (the "LP Transferors"), including, without

93


Table of Contents

limitation, limiting Remington's ability to incur indebtedness, issue additional interests, and amend the Limited Partnership Agreement.

Distributions and Working Capital Reserve

        Under the terms of the Limited Partnership Agreement, within twenty days end of each calendar month, GP Holdings, the general partner of Remington, is required to distribute to the partners pro rata in proportion to their respective percentage interests, an amount equal to the total amount of current assets of the Partnership less the total amount of current liabilities of the Partnership and less an amount of reserved net working capital equal to $4,000,000. Newco Sub will hold an 80% limited partnership interest in Remington and Archie Bennett, Jr. and Monty Bennett (directly or indirectly through MJB Investments) will each hold a 10% limited partnership interest in Remington as of the closing of the transactions.

Operation and Management

        Under the terms of the Limited Partnership Agreement, GP Holdings, as the general partner of Remington, has full control over the business and affairs of Remington, subject to certain limitations and consent rights held by the limited partners set forth in the Limited Partnership Agreement and described below. Among other general powers and duties, GP Holdings is authorized to:

94


Table of Contents

        The Limited Partnership Agreement will provide that, as applicable, without the prior consent of a majority in interest of Monty Bennett, Archie Bennett, Jr., their controlled affiliates and their family members or charitable foundations to whom they may transfer limited partnership interests in Remington (collectively, the "Bennett Limited Partners"), in the event a transfer that results in the Bennett Limited Partners beneficially owning in the aggregate less than 5% of the limited partnership interests of Remington (a "Disposition Transaction") has not occurred, and without the prior consent of a majority in interest of the Bennett Limited Partners and each person that is not a Bennett Limited Partner that succeeds to the limited partnership interest of a Bennett Limited Partner (the "Bennett Transferee Limited Partners"), GP Holdings cannot:

        The Limited Partnership Agreement also requires that, prior to the occurrence of a Disposition Transaction, GP Holdings annually prepare a capital budget for Remington relating to the prospective operations of the Partnership, such budget to include sources of income, expenses and expenditures, including capital expenditures and similar items, and as soon as practicable but in no event later than 30 days prior to the implementation of such budget, provide the Bennett Limited Partners a draft of such budget for their review and comment. GP Holdings is required to reasonably consider any comments provided by the Bennett Limited Partners with respect to such budget.

        In addition, under the terms of the Limited Partnership Agreement, Remington will continue to provide certain back office services to Archie Bennett, Jr. and Monty Bennett, in their personal capacity, for administrative, legal, tax, accounting and financial services at no charge for a period of 10 years from the date of the closing.

Transfer Restrictions

        The Limited Partnership Agreement prohibits the sale, assignment or transfer of GP Holding's interest as the general partner of Remington without the consent, as applicable, a majority in interest of the Bennett Limited Partners in the event a Disposition Transaction has not occurred, and a majority in Interest of the Bennett Transferee Limited Partners.

        The Limited Partnership Agreement also prohibits the transfer of any limited partner's interest in Remington except to the extent permitted under the Investor Rights Agreement. See the section titled "The Transaction Documents—Investor Rights Agreement—Transfer Restrictions."

95


Table of Contents

Indemnification

        The Limited Partnership Agreement requires that Remington, to the fullest extent permitted by law, indemnify and hold harmless GP Holdings, each limited partner and each of the current and former employees and officers of Remington, GP Holdings and each limited partner (the "Covered Persons") from and against any and all claims, liabilities, damages, losses, costs and expenses (including amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses of investigating or defending against any claim or alleged claim) of any nature whatsoever, known or unknown, liquidated or unliquidated, that are incurred by any Covered Person and arise out of or in connection with the affairs of Remington or the performance of GP Holdings' responsibilities as general partner, unless it is determined by any court, governmental body of competent jurisdiction or arbitrator or arbitration panel in a final, non-appealable judgment or award, or admitted by such Covered Person in a settlement of any lawsuit, that such Covered Person's conduct constituted fraud, gross negligence or willful malfeasance by such Covered Person. The Limited Partnership Agreement also requires Remington to advance the expenses of a Covered Person indemnified by Remington.

Amendments

        Subject to the exceptions set forth in the Limited Partnership Agreement and described below, the provisions of the Limited Partnership Agreement may be waived, terminated, amended, restated, supplemented or otherwise modified only by the written consent of a majority in interest of the Bennett Limited Partners, in the event a Disposition Transaction has not occurred, and a majority in interest of the Bennett Transferee Limited Partners.

        The provisions of the Limited Partnership Agreement may be waived, terminated, amended, restated, supplemented or otherwise modified by GP Holdings without the consent of any limited partner in the following situations:

Dissolution and Termination

        The Limited Partnership Agreement will provide that Remington will be dissolved upon the first to occur of the following events:

96


Table of Contents


Letter Agreements

        As part of the transactions, on September 17, 2015, the Company entered into a letter agreement with each of Ashford Trust and Ashford Prime (the "Letter Agreements"), clarifying that for purposes of determining the "Termination Fee" under the respective Advisory Agreement entered by the Company with each of Ashford Trust and Ashford Prime and certain other parties, "Net Earnings" and "Adjusted EBITDA" shall not include the Company's Adjusted EBITDA arising under certain Hotel Master Management Agreements entered with Remington Lodging and certain other parties attributable to Management Fees, Project Management Fees and Market Service Fees (all as defined in the Hotel Master Management Agreements) earned by Remington and/or its subsidiaries and consolidated with the Company.

97


Table of Contents


PROPOSAL 1: THE CONTRIBUTION

The Proposal

        The stockholders of the Company are being asked to approve the Contribution. For a detailed discussion about the Contribution, see the section of this proxy statement titled "Special Factors—Background of the Transactions." Copies of the Acquisition Agreement, the Certificate of Designation, the Investor Rights Agreement and the Limited Partnership Agreement are attached to this proxy statement as Annexes.


Company Board Recommendation and Required Vote

        As discussed in the section of this proxy statement titled "Special Factors—Background of the Transactions", the Company Board formed the Special Committee consisting of three independent and disinterested directors to evaluate and negotiate the transactions and the Transaction Documents, to consider and evaluate alternatives for the Company, and to alleviate any potential conflicts of interest. The Special Committee unanimously approved and adopted the Transaction Documents and the transactions and recommended that (i) the Company Board approve and adopt the Transaction Documents and the transactions, and (ii) our stockholders, to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT, approve and adopt the Transaction Documents and the transactions.

        The Company Board subsequently unanimously (with Monty Bennett and J. Robison Hays, III recusing themselves due to due to Monty Bennett's interest in the transactions and Mr. Hays' status as an executive officer of the Company who reports to Monty Bennett), (i) approved and adopted the favorable recommendation of the special committee in respect of the transactions and the Transaction Documents; (ii) approved the form, terms and provisions of the Transaction Documents; and (iii) determined to recommend that the stockholders of the Company vote to approve the transactions to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT.

        Approval of this Proposal 1 requires the affirmative "FOR" vote of a majority of the shares of our outstanding common stock entitled to vote at the special meeting. You may vote "FOR," "AGAINST" or "ABSTAIN" from voting. Abstentions and broker non-votes, if any, will have the same effect as a vote "AGAINST" this Proposal 1. If you provide your proxy or broker instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the Board.

THE COMPANY BOARD, WITH MONTY BENNETT AND J. ROBISON HAYS, III RECUSING THEMSELVES, UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF COMPANY VOTE "FOR" THIS PROPOSAL 1.

98


Table of Contents


PROPOSAL 2: THE SHARE ISSUANCES

The Proposal

        The stockholders of the Company are being asked to approve the Share Issuances.

        The Share Issuances could occur in the future because the preferred stock and common stock issued to the Remington Sellers by Newco may, under specified circumstances described under "The Transaction Documents—Investor Rights Agreement—Put and Call Options," be exchanged for (i) shares of the Company's common stock or (ii) shares of the Company's preferred stock, which would be convertible into shares of the Company's common stock. In addition, the 20% Remington limited partnership interest retained by the Bennetts may in the future, under specified circumstances described under "The Transaction Documents—Investor Rights Agreement—Put and Call Options," be acquired by us in exchange for shares of the Company's common stock. The formulas used to calculate the number of shares of the Company's common stock that could be issued to the Remington Sellers in the future are subject to several factors that may be adjusted or cannot be calculated until the time of issuance. For a description of these events and calculations, see "The Transaction Documents—Investor Rights Agreement—Put and Call Options." A maximum number of approximately 4,156,000 shares of the Company's common stock could be issued to the Remington Sellers if certain events occurred at some point in the future, subject to specific assumptions described in the section entitled "The Transaction Documents—Investor Rights Agreement—Put and Call Options."

        In any of the foregoing events, the potential Share Issuances could exceed 20% of our outstanding common stock, and, under these circumstances, the rules and regulations of the NYSE MKT require that the potential issuances be approved by a majority of the total votes cast on such matter.


Company Board Recommendation and Required Vote

        As discussed in the section of this proxy statement titled "Special Factors—Background of the Transactions", the Company Board formed the Special Committee consisting of three independent and disinterested directors to evaluate and negotiate the transactions and the Transaction Documents, to consider and evaluate alternatives for the Company, and to alleviate any potential conflicts of interest. The Special Committee unanimously approved and adopted the Transaction Documents and the transactions and recommended that (i) the Company Board approve and adopt the Transaction Documents and the transactions, including the Share Issuances, and (ii) our stockholders, to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT, approve and adopt the Transaction Documents and the transactions, including the Share Issuances.

        The Company Board of directors subsequently unanimously (with Monty Bennett and J. Robison Hays, III recusing themselves due to due to Monty Bennett's interest in the transactions and Mr. Hays' status as an executive officer of the Company who reports to Monty Bennett), (i) approved and adopted the favorable recommendation of the Special Committee in respect of the transactions, including the Share Issuances, and the Transaction Documents; (ii) approved the form, terms and provisions of the Transaction Documents; and (iii) determined to recommend that the stockholders of the Company vote to approve the transactions, including the Share Issuances, to the extent required by applicable law or the terms of the Company's listing on the NYSE MKT.

        Approval of this Proposal 2 requires the affirmative "FOR" vote of a majority of the shares of our outstanding common stock present at the special meeting (in person or by proxy) and cast at the meeting. You may vote "FOR," "AGAINST" or "ABSTAIN" from voting. Abstentions, if any, will have the same effect as a vote "AGAINST" this Proposal 2. Broker non-votes will not be considered present and entitled to vote on, and accordingly will have no effect on the outcome of, this Proposal 2. If you

99


Table of Contents

provide your proxy or broker instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the Company Board.

THE COMPANY BOARD, WITH MONTY BENNETT AND J. ROBISON HAYS, III RECUSING THEMSELVES, UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF COMPANY VOTE "FOR" THIS PROPOSAL 2.

100


Table of Contents


PROPOSAL 3: ADJOURNMENT OR POSTPONEMENT OF SPECIAL MEETING

The Proposal

        The stockholders of the Company are being asked to approve a proposal that will give the Company the authority, if necessary or appropriate, to adjourn or postpone the special meeting for the purpose of soliciting additional proxies in favor of the proposals to approve the Contribution (Proposal 1) or the Share Issuances (Proposal 2) if there are not sufficient votes at the time of the special meeting to approve such proposals. If this adjournment proposal is approved, the special meeting could be adjourned by the Company Board. In addition, under Article I, Section 5 of the Company's bylaws, the chairman of a meeting has the authority to adjourn the meeting, whether or not a quorum is present.

        We not anticipate that we will adjourn or postpone the special meeting unless (i) necessary or appropriate to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the Contribution (Proposal 1) or the Share Issuances (Proposal 2), or (ii) counsel advises us that such adjournment or postponement is necessary under applicable law. Any signed proxies received by the Company in which no voting instructions are provided on such matter will be voted in favor of an adjournment or postponement in these circumstances. Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow the Company's stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting, as adjourned or postponed.


Company Board Recommendation and Required Vote

        Approval of this Proposal 3 requires the affirmative "FOR" vote of a majority of the votes cast at the special meeting. You may vote "FOR," "AGAINST" or "ABSTAIN" from voting. Abstentions and broker non-votes, if any, will not be considered as votes cast under the Company's bylaws, and accordingly will have no effect on the outcome of this Proposal 3. If you provide your proxy or broker instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the Company Board.

THE COMPANY BOARD, WITH MONTY BENNETT AND J. ROBISON HAYS, III RECUSING THEMSELVES, UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY VOTE "FOR" THIS PROPOSAL 3.

101


Table of Contents


FINANCIAL INFORMATION

Unaudited Pro Forma Financial Statements of Ashford Inc. and Subsidiaries

        Set forth on Annex A to this proxy statement are the unaudited pro forma financial statements and accompanying notes of Ashford Inc. and its subsidiaries as of and for the nine months ended September 30, 2015 and for the year ended December 31, 2014, which have been prepared by our management and are derived from (a) our audited financial statements as of and for the year ended December 31, 2014 included in our Annual Report on Form 10-K for the period then ended; (b) our unaudited financial statements as of and for the nine months ended September 30, 2015 included in our Quarterly Report on Form 10-Q for the period then ended; (c) the audited consolidated financial statements of Remington and its subsidiaries as of and for the year ended December 31, 2014 included in Annex B to this proxy statement; and (d) the unaudited consolidated financial statements of Remington and its subsidiaries as of and for the nine months ended September 30, 2015 included in Annex B to this proxy statement.


Consolidated Financial Statements of Remington and Subsidiaries

        Set forth on Annex B to this proxy statement are the audited consolidated financial statements of Remington and its subsidiaries for each of the three years ended December 31, 2014, 2013 and 2012 and the unaudited interim consolidated financial statements for the nine month period ended September 30, 2015.


Non-GAAP Financial Measures of Remington and Subsidiaries

        The following presentations of EBITDA and Adjusted EBITDA are a supplemental measure of performance that is not a measure of operating performance under GAAP. EBITDA is defined as net income (loss) before interest income, interest expense, income taxes, depreciation and amortization. We adjust EBITDA by subtracting or adding compensation expense related to deferred compensation plans, gain (loss) on distribution of restricted investments, gain (loss) on the sale of assets, dividend income and other income (expense). We believe that Adjusted EBITDA provides investors and management with a meaningful indicator of operating performance. Remington also uses Adjusted EBITDA, among other measures, to evaluate profitability and includes these measures in reviews to determine quarterly distributions to partners. The methodology for calculating EBITDA and Adjusted EBITDA may differ from the methodologies used by other companies, when calculating the same or similar supplemental financial measures and may not be comparable with these companies. Adjusted EBITDA should not be considered as an alternative to a) GAAP net income (loss) as an indication of our financial performance or b) GAAP cash flows from operating activities as a measure of our liquidity nor is such measure indicative of funds available to satisfy our cash needs. You are urged to carefully review the U.S. GAAP financial information of Remington set forth on Annex B to this proxy statement.

102


Table of Contents


REMINGTON HOLDINGS, L.P. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
(unaudited)

 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  Years Ended
December 31,
 
 
  2015   2014   2015   2014   2014   2013   2012  

Adjusted EBITDA

    6,412,768     6,765,931     18,387,566     18,190,813     29,166,251     26,648,539     21,710,727  

The reconciliation of the non-GAAP financial measure is set forth in the table below.


REMINGTON HOLDINGS, L.P. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
(unaudited)

 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  Years Ended
December 31,
 
 
  2015   2014   2015   2014   2014   2013   2012  

Net income

  $ 6,391,195   $ 6,449,297   $ 17,674,937   $ 16,548,627   $ 27,038,831   $ 26,147,799   $ 20,804,209  

Depreciation and amortization

    37,376     65,646     233,556     282,938     418,022     334,362     222,890  

Income tax expense

    54,354     63,477     217,923     262,983     201,110     155,934     122,890  

EBITDA

    6,482,925     6,578,420     18,126,416     17,094,548     27,657,963     26,638,095     21,149,989  

Compensation expense related to deferred compensation plan

    102,936     209,647     557,053     1,127,108     1,466,992     1,011,368     1,605,082  

(Gain) loss on distribution of restricted investment

            (87,810 )   32,521     170,961     (970,174 )   (1,000,758 )

(Gain) loss on sale of asset

                    (44,064 )   600      

Other (income) expense

    (964 )   (5 )   (3,165 )   (27 )   (132 )   268     143  

Dividend income

    (172,129 )   (22,131 )   (204,928 )   (63,337 )   (85,469 )   (31,618 )   (43,729 )

Adjusted EBITDA

  $ 6,412,768   $ 6,765,931   $ 18,387,566   $ 18,190,813   $ 29,166,251   $ 26,648,539   $ 21,710,727  

103


Table of Contents

INFORMATION ABOUT ASHFORD INC.

Security Ownership of Certain Beneficial Owners and Management

        The following table sets forth certain information regarding the ownership of our common stock as of January 22, 2016 by (i) each person who beneficially owns, directly or indirectly, more than 5% of our common stock, (ii) each of our directors, our chief executive officer and our two most highly compensated executive officers and (iii) all of our directors and executive officers as a group.

        In accordance with SEC rules, each listed person's beneficial ownership includes: (i) all shares the person actually owns beneficially or of record; (ii) all shares over which the person has or shares voting or dispositive control (such as in the capacity of a general partner of an investment fund); and (iii) all shares the person has the right to acquire within 60 days. Except as otherwise noted in the footnotes below, each person or entity identified below has sole voting and investment power with respect to such securities.

        As of January 22, 2016, we had an aggregate of 2,010,569 shares of common stock outstanding. Except as indicated in the footnotes to the table below, the business address of the stockholders listed below is the address of our principal executive office, 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254.

Name and Address of Beneficial Owner
  Number of
Shares
Beneficially
Owned(1)
  Percent of Class  

Monty J. Bennett

    221,172 (2)   11.0 %

David A. Brooks

    32,441     1.6 %

Dinesh P. Chandiramani

    1,423     *  

Darrell T. Hail

    1,423     *  

J. Robison Hays, III

    10,000     *  

John Mauldin

    2,211     *  

Gerald J. Reihsen, III

    1,423     *  

Brian Wheeler

    1,423     *  

Douglas A. Kessler

    29,924     1.5 %

Deric S. Eubanks

    3,366     *  

Mark L. Nunneley

    15,415     *  

Jeremy Welter

    6,775     *  

Ashford Hospitality Trust, Inc. 

    598,163     29.8 %

Ashford Hospitality Prime, Inc. 

    194,880     9.7 %

All executive officers and directors as a group (12 persons)

    326,996     16.3 %

*
Denotes less than 1.0%.

(1)
Ownership excludes any ownership of common units in Ashford LLC, our operating Company.

(2)
This number excludes the Company's obligation to issue common stock to Monty Bennett pursuant to the Company's deferred compensation plan. As of January 22, 2016, the Company has reserved an aggregate of 195,579 shares of common stock for issuance to Monty Bennett, which are issuable periodically over a five-year period that will begin in January 2018.

104


Table of Contents


Certain Relationships and Related Person Transactions

Advisory Relationship with Ashford Trust and Ashford Prime

        Ashford Trust created us to separate its asset management and advisory business from its hospitality investment business. In connection with our separation from Ashford Trust, Ashford LLC became our operating Company, and it continues to advise Ashford Prime pursuant to the existing advisory agreement between Ashford Prime and Ashford LLC. Ashford LLC also became the advisor to Ashford Trust. Pursuant to our advisory agreements with Ashford Trust and Ashford Prime, we (through our operating Company Ashford LLC) are responsible for implementing the investment strategies and decisions and the management of the day-to-day operations of Ashford Trust and Ashford Prime, in each case subject to the supervision and oversight of the respective board of directors of such entity. We may also perform similar services for new or existing platforms created by us, Ashford Trust or Ashford Prime.

        Our advisory agreements with Ashford Prime and Ashford Trust each have an initial 10-year term. Each advisory agreement is automatically renewed for successive five-year terms after its expiration unless terminated either by us or Ashford Trust or Ashford Prime, as applicable. We are entitled to receive from each of Ashford Trust and Ashford Prime an annual base fee calculated as 0.70% or less of the total market capitalization of such entities, subject to a minimum quarterly fee. We are also entitled to receive an incentive fee from each of Ashford Trust and Ashford Prime based on their respective out-performance, as measured by total annual stockholder return, as compared to such entity's respective peers. In the year ended December 31, 2014, we received base fees of $4.0 million and $8.7 million from Ashford Trust and Ashford Prime, respectively. We received no incentive fees in 2014.

        In addition, we are entitled to receive directly or be reimbursed, on a monthly basis, for all expenses paid or incurred by us or our affiliates on behalf of Ashford Trust or Ashford Prime or in connection with the services provided by us pursuant to the advisory agreements, which includes each of Ashford Trust's and Ashford Prime's pro rata share of our office overhead and administrative expenses incurred in providing our duties under the advisory agreements. For the year ended December 31, 2014, we received reimbursements of approximately $693,000 and $1.8 million from Ashford Trust and Ashford Prime, respectively.

        The board of directors of each of Ashford Trust and Ashford Prime also has the authority to make annual equity awards to us or directly to our employees, officers, consultants and non-employee directors, based on the achievement by Ashford Trust or Ashford Prime, as applicable, of certain financial and other hurdles established by the respective boards of directors. In 2014, Ashford Prime awarded equity grants of its common stock or LTIP units to our officers and employees valued at $2.1 million. In June 2015, Ashford Prime awarded performance stock units to our executive officers valued at $6.4 million. In March 2015, Ashford Trust awarded equity grants of its common stock or LTIP units to our executive officers and employees valued at $17.0 million.

        If we are requested to perform services outside the scope of an advisory agreement, Ashford Trust or Ashford Prime, as applicable, is obligated to separately pay for such additional services. No such fees for additional services were paid in 2014.

        We are also entitled to receive a termination fee from each of Ashford Trust and Ashford Prime under certain circumstances.

Relationship and Agreements between Ashford Inc. and Remington

        Immediately prior to the completion of the spin-off from Ashford Trust, we entered into a mutual exclusivity agreement with Remington, pursuant to which we agreed to utilize Remington to provide property management, project management and development services for all hotels, if any, that we may

105


Table of Contents

acquire as well as all hotels that future companies advised by us may acquire, to the extent that we have the right, or control the right, to direct such matters, unless our independent directors either (i) unanimously vote not to utilize Remington for such services or (ii) based on special circumstances or past performance, by a majority vote elect not to engage Remington because they have determined, in their reasonable business judgment, that it would be in our best interest not to engage Remington or that another manager or developer could perform the duties materially better. In exchange for our agreement to engage Remington for such services for all hotels, if any, that we may acquire as well as all hotels that future companies advised by us may acquire, Remington has agreed to grant to any such companies advised by us a right of first refusal to purchase any investments identified by Remington and any of its affiliates that meet the initial investment criteria of such entities, as identified in the advisory agreement between us and such entities, subject to any prior rights granted by Remington to other entities, including Ashford Trust, Ashford Prime and us. The services that Remington provides under the mutual exclusivity agreement to Ashford Trust, Ashford Prime and future companies advised by us includes (i) property management services, which consist of the day-to-day operations of hotels; (ii) project management services, which consist of planning, management and implementation of capital improvements and plans related to capital projects; and (iii) development services, which consist of building hotel properties or constructing hotel improvements. Currently, our business strategy does not include providing any of these types of services.

        Monty Bennett will potentially benefit, indirectly, from Remington's receipt of property management fees, project management fees and development fees by Remington from such future companies that we advise, as well as any such fees payable by us if we acquire or develop hotels in the future. Currently, our business strategy does not contemplate the acquisition or development of hotels.

Conflicts of Interest

        Each of our executive officers and two of our directors also serve as key employees and as officers of Ashford Trust and Ashford Prime, and will continue to do so. Furthermore, so long as we serve as an advisor to Ashford Prime, we will be allowed to designate two persons as candidates for election as director of Ashford Prime at any stockholder meeting at which directors are to be elected. Such nominees may be executive officers of us or Ashford Prime. Monty Bennett, is also the chief executive officer and chairman of the board of directors of Ashford Trust and Ashford Prime. Although we consulted with our third-party financial advisors when structuring the terms of our agreements with Ashford Trust and Ashford Prime, we did not conduct arm's-length negotiations with respect to the terms of such agreements. As a result, the principals of Ashford Trust may have had the ability to influence the type and level of benefits that they and our other affiliates will receive. Accordingly, our advisory agreements and other agreements with each of Ashford Trust and Ashford Prime, including fees and other amounts payable, may not be as favorable to us as if they had been negotiated on an arm's-length basis with unaffiliated third parties.

        Monty Bennett is an owner and the chief executive officer of Remington and is an owner, the chief executive officer and chairman of Ashford Trust and Ashford Prime. As a result, his duties to us as a director and officer may conflict with his duties to, and pecuniary interest in, Remington, Ashford Trust and Ashford Prime.

        Mr. Wheeler is a member of the Company Board, and serves as chairman of the Company's nominating/corporate governance committee and as a member of the Company's compensation committee. Mr. Wheeler's wife owns a commercial printing company that is occasionally utilized by the Company, Ashford Trust and Ashford Prime for printing needs, for which 2014 total fees paid were $87,284, with a similar amount expected to be paid during 2015. The Company Board determined that these transactions did not impair the independence of Mr. Wheeler.

106


Table of Contents

        Pursuant to our advisory agreements with each of Ashford Prime and Ashford Trust, each such entity acknowledges that our personnel will advise Ashford Trust and Ashford Prime and may also advise other businesses in the future and will not be required to present Ashford Trust or Ashford Prime with investment opportunities that we determine are outside of their respective initial investment guidelines and within the investment guidelines of another business we advise. To the extent we deem an investment opportunity suitable for recommendation, we must present Ashford Trust with any such investment opportunity that satisfies its initial investment guidelines and must present Ashford Prime with any such investment opportunity that satisfies Ashford Prime's initial investment guidelines, but in each case we will have discretion to determine which investment opportunities satisfy such entity's initial investment guidelines. If, however, either Ashford Trust or Ashford Prime materially changes its investment guidelines without our express consent, we will be required to use our best judgment to allocate investment opportunities to Ashford Trust, Ashford Prime and other entities we advise, taking into account such factors as we deem relevant, in our discretion, subject to any then-existing obligations we may have to such other entities. Any new individual investment opportunities that satisfy Ashford Prime's investment guidelines will be presented to its board of directors, who will have up to 10 business days to accept any such opportunity prior to it being available to Ashford Trust or another business advised by us. Likewise, any new individual investment opportunities that satisfy Ashford Trust's investment guidelines will be presented to its board of directors, who will have up to 10 business days to accept any such opportunity prior to it being available to Ashford Prime or another business advised by us. Portfolio investment opportunities (the acquisition of two or more properties in the same transaction) are treated differently. Some portfolio investment opportunities may include hotels that satisfy the investment objectives of both Ashford Trust and Ashford Prime or of another business we advise. If the portfolio cannot be equitably divided by asset type and acquired on the basis of such asset types in satisfaction of each such entity's investment guidelines, we will be required to allocate investment opportunities between Ashford Trust, Ashford Prime and any other businesses we advise in a fair and equitable manner, consistent with such entities' investment objectives. In making this determination, using substantial discretion, we will consider the investment strategy and guidelines of each entity with respect to acquisition of properties, portfolio concentrations, tax consequences, regulatory restrictions, liquidity requirements, financing and other factors we deem appropriate. We may utilize options, rights of first offer or other arrangements to subsequently reallocate assets. In making the allocation determination, we have no obligation to make any investment opportunity available to Ashford Trust or Ashford Prime.

        In addition, pursuant to our advisory agreements with each of Ashford Prime and Ashford Trust, we agreed to, from time to time, to make "key money investments" to facilitate the acquisition of properties by Ashford Prime and Ashford Trust if the independent board members of the Company and each of Ashford Prime or Ashford Trust, as applicable, have determined that without such an investment, the acquisition of such property would be uneconomic to Ashford Prime or Ashford Trust. Any such assets are referred to as "key money assets." Any key money investment will be in the form of, but not limited to, cash, notes, equity of the Company, the acquisition of furniture, fixture and equipment by the Company for use at the subject hotel, or other investment mutually agreed to by the Company and Ashford Prime or Ashford Trust, as applicable, at the time the Company makes such an investment. Upon such key money investment, the Company will be engaged as the asset manager for the related key money asset and will receive the key money asset management fees which are included in the base fees. The Company, Ashford Trust and Ashford Prime may also agree to additional incentive fees based on the performance of any key money asset.

        From time to time, as may be determined by our independent directors and the independent directors of Ashford Prime, Ashford Trust and any other Company subsequently advised by us, each such entity may provide financial accommodations, guaranties, back-stop guaranties, and other forms of financial assistance to the other entities on terms that the respective independent directors determine to be fair and reasonable.

107


Table of Contents


OTHER MATTERS

Stockholder Proposals

        For a stockholder proposal to be considered for inclusion in the company's proxy statement for the 2016 annual meeting of stockholders, our corporate secretary must receive the written proposal at our principal office no later than the close of business on December 19, 2015. Such proposals also must comply with SEC regulations Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals should be addressed to the attention of Investor Relations at 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254.

        As to any proposal that a stockholder intends to present to stockholders other than by inclusion in our proxy statement for the 2016 annual meeting of stockholders, the proxies named in management's proxy for that annual meeting of stockholders will be entitled to exercise their discretionary authority on that proposal unless we receive notice of the matter to be proposed no earlier than December 19, 2015 and no later than January 18, 2016. Even if the proper notice is received timely, the proxies named in management's proxy for that annual meeting of stockholders may nevertheless exercise their discretionary authority with respect to such matter by advising stockholders of such proposal and how they intend to exercise their discretion to vote on such matter, unless the stockholder making the proposal solicits proxies with respect to the proposal to the extent required by Rule 14a-4(c)(2) under the Exchange Act.

        All stockholder proposals must be in full compliance with our bylaws to be eligible for inclusion in our proxy or presentation to our stockholders.


Multiple Stockholders Sharing One Address

        The SEC rules allow for the delivery of a single copy of an annual report and proxy statement to two or more stockholders who share an address, unless we have received contrary instructions from one or more of the stockholders. We will deliver promptly upon written or oral request separate copies of our annual report and proxy statement to a stockholder at a shared address to which a single copy was delivered. Requests for additional copies of the proxy materials, and requests that in the future separate proxy materials be sent to stockholders who share an address, should be directed to Ashford Inc., Attention: Investor Relations, 14185 Dallas Parkway, Suite 1100, Dallas, Texas, 75254 or by calling (972) 490-9600. In addition, stockholders who share a single address but receive multiple copies of the proxy materials may request that in the future they receive a single copy by contacting us at the address and phone number set forth in the previous sentence. Depending upon the practices of your broker, bank or other nominee, you may need to contact them directly to continue duplicate mailings to your household. If you wish to revoke your consent to householding, you must contact your broker, bank or other nominee. If you hold shares of common stock in your own name as a holder of record, householding will not apply to your shares.

        If you wish to request extra copies, free of charge, of any annual report, proxy statement or information statement, please send your request to Ashford Inc., Attention: Investor Relations, 14185 Dallas Parkway, Suite 1100, Dallas, Texas, 75254 or call (972) 490-9600. You can also obtain copies from our web site at www.ashfordinc.com.


Where You Can Find Additional Information

        We file annual, quarterly and special reports, proxy statements and other information with the SEC at 100 F Street N.E., Washington, DC 20549-1090. You may read and copy any reports, statements or other information we file at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at (800) SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from commercial document retrieval

108


Table of Contents

services and on the website maintained by the SEC at www.sec.gov. We make available on our website at www.ashfordinc.com, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, press releases, charters for the committees of our board of directors, our Board of Directors Guidelines, our Code of Business Conduct and Ethics, our Financial Officer Code of Conduct and other Company information, including amendments to such documents as soon as reasonably practicable after such materials are electronically filed or furnished to the SEC or otherwise publicly released. Such information will also be furnished upon written request to Ashford Inc., Attention: Investor Relations, 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254 or by calling (972) 490-9600.


Information Incorporated by Reference

        The SEC allows us to "incorporate by reference" information into this proxy statement. That means we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this proxy statement, except to the extent that the information is superseded by information in this proxy statement.

        This proxy statement incorporates by reference the documents listed below that the Company has previously filed with the SEC.

        We are delivering to our stockholders with this proxy statement the aforementioned annual report and quarterly reports in accordance with Item 13(b)(2) of Schedule 14A. In addition, the Company incorporates by reference any future filings it makes with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than information furnished pursuant to Item 2.02 or Item 7.01 of a Current Report on Form 8-K) after the date of this proxy statement and prior to the date of the special meeting. Such documents are considered to be a part of this proxy statement, effective as of the date such documents are filed. In the event of conflicting information in these documents, the information in the latest filed document supersedes the former.

        You can obtain any of the documents listed above from the SEC, through the SEC's website at www.sec.gov or from the Company by written request to Ashford Inc., Attention: Investor Relations, 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254 or by calling (972) 490-9600. These documents are available from the Company without charge.

        You should rely only on the information contained in (or incorporated by reference into) this proxy statement to vote on each of the proposals submitted for stockholder vote. We have not authorized anyone to provide you with information that is different from what is contained in (or incorporated by reference into) this proxy statement. This proxy statement is dated [                  ], 2016. You should not assume that the information contained in this proxy statement is accurate as of any later date.

  By order of the board of directors,

14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254
[                  ], 2016

 

  


David A. Brooks
Secretary

109


Table of Contents


ANNEX A

ASHFORD INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL STATEMENTS

        The unaudited pro forma financial statements as of and for the nine months ended September 30, 2015 and for the year ended December 31, 2014 have been derived from the historical (i) financial statements of Ashford Inc. and subsidiaries and (ii) consolidated financial statements of Remington Holdings, LP and subsidiaries ("Remington").

        The pro forma adjustments give effect to the following transactions:

        The unaudited pro forma balance sheet as of September 30, 2015 is presented to reflect adjustments to Ashford Inc.'s balance sheet as if the transactions were completed on September 30, 2015. The unaudited statements of operations for the nine months ended September 30, 2015, and year ended December 31, 2014, are presented as if the transactions were completed on January 1, 2014.

        The following unaudited pro forma financial statements should be read in conjunction with the (i) Ashford Inc. and subsidiaries financial statements as of September 30, 2015, December 31, 2014 and 2013 and for the three and nine months ended September 30, 2015 and 2014 and the years ended December 31, 2014, 2013 and 2012, and the notes thereto included elsewhere in this document and (ii) Remington consolidated financial statements as of September 30, 2015, December 31, 2014 and 2013 and for the nine months ended September 30, 2015 and 2014 and for the years ended December 31, 2014, 2013 and 2012 included elsewhere in this document. We have based the unaudited pro forma adjustments on available information and assumptions that we believe are reasonable. The following unaudited pro forma financial statements are presented for informational purposes only and are not necessarily indicative of what our actual financial position would have been as of September 30, 2015 assuming the transactions had been completed on September 30, 2015 or what actual results of operations would have been for the nine months ended September 30, 2015 and the year ended December 31, 2014 assuming the transactions had been completed on January 1, 2014, nor are they indicative of future results of operations or financial condition and should not be viewed as indicative of future results of operations or financial condition.

A-1


Table of Contents


ASHFORD INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA BALANCE SHEET

As of September 30, 2015

(in thousands, except share amounts)

 
  Historical
Ashford Inc. (A)
  Historical
Remington (B)
  Adjustments    
  Pro Forma
Ashford Inc.
 

Assets

                             

Current assets:

                             

Cash and cash equivalents

  $ 25,321   $ 8,146   $   (D(i))   $ 33,181  

                (286 ) (I)        

Restricted cash

    6,547     5,758       (D(i))     12,305  

Restricted investment for deferred compensation

        2,674     (186 ) (D(ii))     2,488  

Investments in securities

    116,176                 116,176  

Prepaid expenses and other

    804     392       (D(i))     1,196  

Receivables

    216     20,816       (D(i))     21,032  

Due from Ashford Trust OP, net

    5,893                 5,893  

Due from Ashford Prime OP

    2,441                 2,441  

Deferred tax asset

    746         390   (E)     2,753  

                1,617   (G)        

Total current assets

    158,144     37,786     1,535         197,465  

Investments in unconsolidated entities

    2,456                 2,456  

Furniture, fixtures and equipment, net

    6,464     926       (D(iii))     7,390  

Deferred tax asset

    2,757         (2,757 ) (H)      

Intangible assets

            299,790   (E)     299,790  

Goodwill

            199,412   (E)     199,412  

Other assets

    4,000     524       (D(iv))     4,524  

Total assets

  $ 173,821   $ 39,236   $ 497,980       $ 711,037  

Liabilities and Equity

                             

Current liabilities:

                             

Accounts payable and accrued expenses

  $ 10,782   $ 24,097   $   (D(i))   $ 37,629  

                2,750   (F)        

Current portion of note payable

            2,085   (C(iii))     2,085  

Capital projects liability

        3,800       (D(i))     3,800  

Due to affiliates

    760     11       (D(i))     771  

Liabilities associated with investments in securities                

    13,418                 13,418  

Deferred compensation plan

    29     315       (D(v))     344  

Other liabilities

    6,547     665       (D(i))     7,212  

Total current liabilities

    31,536     28,888     4,835         65,259  

Note payable

            6,945   (C(iii))     6,945  

Accrued expenses

    212         6,104   (E)     6,316  

Deferred income

    344     609       (D(vi))     953  

Deferred tax liability, net

            88,556   (E)     79,909  

                (5,890 ) (G)        

                (2,757 ) (H)        

Liability for managed properties

        1,321       (D(vii))     1,321  

Deferred compensation plan

    13,352                 13,352  

Total liabilities

    45,444     30,818     97,793         174,055  

Commitments and contingencies

                             

Redeemable noncontrolling interests in Ashford LLC

    286         (286 ) (I)      

6.625% Ashford Advisors, Inc. cumulative convertible preferred stock, $25 liquidation value, 0 shares issued and outstanding at September 30, 2015, 9,200,000 shares issued and outstanding, as adjusted

            230,000   (C(ii))     230,000  

Noncontrolling interest attributable to Class B common stock of Ashford Advisors, Inc., 0 shares issued and outstanding at September 30, 2015, 916,500 shares issued and outstanding, as adjusted

            91,650   (C(i))     91,650  

Noncontrolling interest in Remington

            82,670   (J)     82,670  

Equity:

                             

Preferred stock, $0.01 par value, 50,000,000 shares authorized:

                     

Series A cumulative preferred stock, no shares issued and outstanding at September 30, 2015

                     

Common stock, $0.01 par value, 100,000,000 shares authorized, 2,010,808 shares issued and 2,010,104 shares outstanding at September 30, 2015

    20                 20  

Additional paid-in capital

    233,831     8,418     (8,418 ) (D(viii)     233,831  

Accumulated deficit

    (207,673 )       (2,750 ) (F)     (202,916 )

                7,507   (G)        

Treasury stock, at cost, 704 shares at September 30, 2015, 3,630 shares as adjusted

    (87 )       (186 ) (D(ii))     (273 )

Total stockholders' equity of the Company

    26,091     8,418     (3,847 )       30,662  

Noncontrolling interests in consolidated entities

    102,000                 102,000  

Total equity

    128,091     8,418     (3,847 )       132,662  

Total liabilities and equity

  $ 173,821   $ 39,236   $ 497,980       $ 711,037  

   

See Notes to Unaudited Pro Forma Financial Statements.

A-2


Table of Contents


ASHFORD INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

Nine Months Ended September 30, 2015

(in thousands, except share and per share amounts)

 
  Historical
Ashford Inc.
(AA)
  Historical
Remington
(BB)
  Adjustments    
  Pro Forma
Ashford Inc.
 

Revenues

                             

Advisory services

  $ 41,752   $   $       $ 41,752  

Property management fees

        21,286             21,286  

Project management fees

        11,905             11,905  

Cost reimbursements from managed properties

        184,740             184,740  

Other

    351                 351  

Total revenue

    42,103     217,931             260,034  

Expenses

                             

Salaries and benefits

    29,905         (300 ) (CC)     29,605  

Property management expenses           

        10,096             10,096  

Project management expenses

        5,681             5,681  

Other reimbursement costs

        (183 )           (183 )

Reimbursement costs from managed properties

        184,740             184,740  

Depreciation and amortization

    516         7,738   (DD)     8,254  

General and administrative

    15,179         (4,656 ) (EE)     10,523  

Total expenses

    45,600     200,334     2,782         248,716  

Operating income (loss)

    (3,497 )   17,597     (2,782 )       11,318  

Unrealized loss on investment in unconsolidated entity

    (3,020 )               (3,020 )

Interest expense

            (228 ) (FF)     (228 )

Interest income

    202                 202  

Dividend income

    532     205             579  

Unrealized loss on investments           

    (10,851 )               (10,851 )

Realized gain on investments

    1,070     88             1,158  

Other income (expense)

    (135 )   3             26  

Income (loss) before income taxes

    (15,699 )   17,893     (3,010 )       (816 )

Income tax expense

    (1,500 )   (218 )   (5,354 ) (GG)     (7,072 )

Net income (loss)

    (17,199 )   17,675     (8,364 )       (7,888 )

Loss from consolidated entities attributable to noncontrolling interests

    13,323                 13,323  

Net income attributable to noncontrolling interests in Remington

            (2,002 ) (HH)     (2,002 )

Net loss attributable to noncontrolling interests in Ashford Advisors, Inc. Class B common stock

            2,348   (II)     2,348  

Net (income) loss attributable to redeemable noncontrolling interests in Ashford LLC

    10         (10 ) (JJ)      

Net income (loss) attributable to the Company

    (3,866 )   17,675     (8,028 )       5,781  

Preferred dividends

            (11,428 ) (KK)     (11,428 )

Net income (loss) attributable to common stockholders

  $ (3,866 ) $ 17,675   $ (19,456 )     $ (5,647 )

Loss per share—basic:

                             

Net loss attributable to common stockholders

  $ (1.95 )             (LL)   $ (2.84 )

Weighted average common shares outstanding—basic

    1,986               (LL)     1,986  

Loss per share—diluted:

                             

Net loss attributable to common stockholders

  $ (4.70 )             (MM)   $ (5.51 )

Weighted average common shares outstanding—diluted

    2,198               (MM)     2,198  

   

See Notes to Unaudited Pro Forma Financial Statements.

A-3


Table of Contents


ASHFORD INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

Year Ended December 31, 2014

(in thousands, except share and per share amounts)

 
  Historical
Ashford Inc. (AA)
  Historical
Remington (BB)
  Adjustments    
  Pro Forma
Ashford Inc.
 

Revenue

                             

Advisory services

  $ 17,144   $   $       $ 17,144  

Property management fees

        30,704             30,704  

Project management fees

        17,181             17,181  

Cost reimbursements from managed properties

        207,189             207,189  

Other

    144                 144  

Total revenue

    17,288     255,074             272,362  

Expenses

                             

Salaries and benefits

    57,627         (340 ) (CC)     57,287  

Property management expenses

        13,215             13,215  

Project management expenses

        7,190             7,190  

Other reimbursement costs

        199             199  

Reimbursement costs from managed properties

        207,189             207,189  

Depreciation and amortization

    359         10,317   (DD)     10,676  

General and administrative

    5,600                 5,600  

Total expenses

    63,586     227,793     9,977         301,356  

Operating income (loss)

    (46,298 )   27,281     (9,977 )       (28,994 )

Interest expense

            (415 ) (FF)     (415 )

Dividend income

        86             86  

Realized loss on investments

        (171 )           (171 )

Other income

        44             44  

Income (loss) before income taxes

    (46,298 )   27,240     (10,392 )       (29,450 )

Income tax expense

    (783 )   (201 )   (401 ) (GG)     (1,385 )

Net income (loss)

    (47,081 )   27,039     (10,793 )       (30,835 )

Loss from consolidated entities attributable to noncontrolling interests

    647                 647  

Net income attributable to noncontrolling interests in Remington

            (3,329 ) (HH)     (3,329 )

Net loss attributable to noncontrolling interests in Ashford Advisors, Inc. Class B common stock

            14,327   (II)     14,327  

Net (income) loss attributable to redeemable noncontrolling interests in Ashford LLC

    24         (24 ) (JJ)      

Net income (loss) attributable to the Company

    (46,410 )   27,039     181         (19,190 )

Preferred dividends

            (15,238 ) (KK)     (15,238 )

Net income (loss) attributable to common stockholders

  $ (46,410 ) $ 27,039   $ (15,057 )     $ (34,428 )

Loss per share—basic:

                             

Net loss attributable to common stockholders

  $ (23.43 )             (NN)   $ (17.38 )

Weighted average common shares outstanding—basic

    1,981               (NN)     1,981  

Loss per share—diluted:

                             

Net loss attributable to common stockholders

  $ (23.43 )             (OO)   $ (17.38 )

Weighted average common shares outstanding—diluted

    1,981               (OO)     1,981  

   

See Notes to Unaudited Pro Forma Financial Statements.

A-4


Table of Contents


ASHFORD INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

1. Basis of Presentation

        Ashford Inc. is a Delaware corporation formed on April 2, 2014, that provides asset management and advisory services to Ashford Hospitality Trust, Inc. ("Ashford Trust") and Ashford Hospitality Prime, Inc. ("Ashford Prime"). Ashford Trust commenced operations in August 2003 and is focused on investing in the full service hotels in the upscale and upper-upscale segments in domestic and international markets that have revenue per available room ("RevPAR") generally less than twice the national average, and in all methods including direct real estate, equity, securities and debt. Ashford Prime invests primarily in luxury, upper-upscale and upscale hotels with RevPAR of at least twice the then-current U.S. national average in gateway and resort locations. Ashford Prime became a publicly traded entity in November 2013 upon the completion of its spin-off from Ashford Trust. Each of Ashford Trust and Ashford Prime is a real estate investment trust ("REIT") as defined in the Internal Revenue Code ("Code"), and the common stock of each of Ashford Trust and Ashford Prime is traded on the NYSE. The common stock of Ashford Inc. is listed on the NYSE MKT Exchange.

        Ashford Inc. was formed through a spin-off of Ashford Trust's asset management business in November 2014. The spin-off was completed by means of a distribution of common stock of Ashford Inc. and common units of Ashford Hospitality Advisors LLC ("Ashford LLC"), a Delaware limited liability company formed on April 5, 2013. Ashford LLC had no operations until November 19, 2013, the date of the Ashford Prime spin-off. As part of the Ashford Inc. spin-off from Ashford Trust, Ashford LLC became a subsidiary of Ashford Inc. on November 12, 2014. Ashford Inc. conducts its business and owns substantially all of its assets through Ashford LLC.

        The spin-off of Ashford Inc. was completed on November 12, 2014, with a pro rata taxable distribution of Ashford Inc.'s common stock to Ashford Trust stockholders of record as of November 11, 2014. The distribution was comprised of one share of Ashford Inc. common stock for every 87 shares of Ashford Trust common stock held by the Ashford Trust common stockholders. In addition, for each common unit of Ashford Trust OP, the holder received one common unit of Ashford LLC. Each holder of common units of Ashford LLC could exchange up to 99% of those units for shares of Ashford Inc. stock at the rate of one share of Ashford Inc. common stock for every 55 common units. Immediately following the completion of the exchange offer, Ashford LLC effected a reverse split of its common units such that each common unit was automatically converted into 1/55 of a common unit. The distribution was completed on October 7, 2014, and the exchange and reverse split were completed on November 12, 2014. Following the spin-off, Ashford Trust continues to hold approximately 598,000 shares of Ashford Inc. common stock for the benefit of its common stockholders, which represents an approximate 30% ownership interest in Ashford Inc. In connection with the spin-off, we entered into an advisory agreement with Ashford Trust.

        Ashford Inc. has filed a Schedule 14A with the Securities and Exchange Commission with respect to a stockholder vote in order to obtain approval to complete the acquisition of Remington.

2. Adjustments to Unaudited Pro Forma Balance Sheet

        

(A)
Represents the historical balance sheet of Ashford Inc. as of September 30, 2015, as attached to this document.

(B)
Represents the historical consolidated balance sheet of Remington, as of September 30, 2015, as included elsewhere in this document.

A-5


Table of Contents


ASHFORD INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (Continued)

2. Adjustments to Unaudited Pro Forma Balance Sheet (Continued)

(C)
Represents adjustments for Ashford Advisors Inc.'s acquisition (directly and indirectly) of an 80% limited partnership interest in Remington and 100% of the general partnership interests in Remington for $331.7 million in consideration in the form of (i) 916,500 shares of Ashford Advisors, Inc. Class B non-voting common stock, representing a 29.4% initial ownership in Ashford Advisors, Inc., with an estimated fair value of $91.7 million; (ii) 9,200,000 shares of Ashford Advisors, Inc. 6.625% non-voting convertible preferred stock with an estimated fair value of $230.0 million; and (iii) $10.0 million zero coupon promissory note payable issued by Remington Hospitality Management, Inc., with an estimated fair value of $9.0 million. Preferred stock, noncontrolling interests in Remington and Class B common stock of Ashford Advisors, Inc. are each classified as mezzanine equity because their terms are such that they are each contingently redeemable at the option of the holders of each respective equity interest based upon the occurrence of an event that is not solely within Ashford Advisors, Inc.'s control. In the event of a change in control, the holders of the Ashford Advisors, Inc. Class B non-voting common stock, the Ashford Advisors, Inc. 6.625% non-voting convertible preferred stock and the 20% limited partnership interest in Remington retained by the Bennetts may put all of their interests back to Ashford Advisors, Inc. and Ashford Advisors, Inc. is obligated to repurchase the interests from the holders.

A-6


Table of Contents


ASHFORD INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (Continued)

2. Adjustments to Unaudited Pro Forma Balance Sheet (Continued)

(D)
The following table reconciles the historical assets and liabilities of Remington as of September 30, 2015, to the pro forma balances included in the pro forma balance sheet as of September 30, 2015 (in thousands):

 
  Historical
Remington (B)
  Adjustments    
  Pro Forma
Remington
 

Assets

                       

Current assets:

                       

Cash and cash equivalents

  $ 8,146   $   (i)   $ 8,146  

Restricted cash

    5,758       (i)     5,758  

Restricted investment for deferred compensation          

    2,674     (186 ) (ii)     2,488  

Prepaid expenses and other

    392       (i)     392  

Receivables

    20,816       (i)     20,816  

Total current assets

    37,786     (186 )       37,600  

Furniture, fixtures and equipment, net

    926       (iii)     926  

Other assets

    524       (iv)     524  

Total assets

  $ 39,236   $ (186 )     $ 39,050  

Liabilities and Equity

                       

Current liabilities:

                       

Accounts payable and accrued expenses

  $ 24,097   $   (i)   $ 24,097  

Capital projects liability

    3,800       (i)     3,800  

Due to affiliates

    11       (i)     11  

Deferred compensation plan

    315       (v)     315  

Other liabilities

    665       (i)     665  

Total current liabilities

    28,888             28,888  

Deferred income

    609       (vi)     609  

Liability for managed properties

    1,321       (vii)     1,321  

Total liabilities

    30,818             30,818  

Net assets

  $ 8,418   $ (8,418 ) (viii)   $  

(i)
Assumes working capital at September 30, 2015 was acquired and approximates fair value.

(ii)
Represents investments in marketable securities and is recorded at fair value. The adjustment represents a reclass to treasury stock for the value of Ashford Inc. common stock.

(iii)
Represents furniture, fixtures and equipment, net, which approximates fair value.

(iv)
Represents the note receivable with a related party, which approximates fair value.

(v)
Represents the deferred compensation plan liability, which approximates fair value.

(vi)
Represents deferred income, which approximates fair value.

A-7


Table of Contents


ASHFORD INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (Continued)

2. Adjustments to Unaudited Pro Forma Balance Sheet (Continued)

(vii)
Represents the liability for managed properties, which approximates fair value.

(viii)
Represents the net working capital adjustment to the purchase price.
(E)
The following table represents the fair value of assets acquired and liabilities assumed not reflected in note (D) above (in thousands):

 
  Fair Value   Estimated Life  

Assets

             

Current deferred tax asset

  $ 390        

Intangible assets

             

Customer relationships:

             

Property management contracts

    149,730     27  

Project management contracts

    128,820     27  

    278,550        

Trade names

    21,240     Indefinite  

    299,790        

Goodwill

    199,412     Indefinite  

  $ 499,592        

Liabilities

             

Deferred tax liability

  $ 88,556        

Back office services liability

    6,104     10  

  $ 94,660        
(F)
Upon closing, Ashford Advisors, Inc. will assume and pay all Transaction Costs (as defined) incurred solely by the Remington Holders (as defined) and Remington in connection with the transaction, up to approximately $2.8 million in the aggregate. Such amounts are not included in the pro forma statement of operations for the year ended December 31, 2014, as these costs are considered to be nonrecurring in nature.

(G)
Represents the income tax adjustment associated with the reversal of the historical deferred tax asset valuation allowance on Ashford Inc.'s deferred tax assets upon completion of the transaction.

(H)
Represents reclass of non-current deferred tax asset to non-current deferred tax liability, net for presentation purposes.

(I)
Represents the redemption of the Ashford LLC common units for cash upon the closing of the transaction.

(J)
Represents an adjustment to noncontrolling interest for the 20% limited partnership interest in Remington retained by the Bennetts, at fair value calculated as 20% of the estimated fair value of Remington of $413.4 million. The 20% limited partnership interest is contingently redeemable for cash based on the occurrence of an event that is not solely within Ashford Inc.'s or any of Ashford Inc.'s subsidiaries' control, which requires it to be classified as mezzanine equity in the Ashford Inc. pro forma balance sheet. See further discussion at footnote (C).

A-8


Table of Contents


ASHFORD INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (Continued)

3. Adjustments to Unaudited Pro Forma Statements of Operations

        

(AA)
Represents the historical statement of operations of Ashford Inc. for the nine months ended September 30, 2015, as attached to this document and the historical statement of operations of Ashford Inc. for the year ended December 31, 2014, as attached to this document.

(BB)
Represents the historical consolidated statements of operations of Remington, for the nine months ended September 30, 2015, and the year ended December 31, 2014, as included elsewhere in this document.

(CC)
Represents the amortization of the back office services liability discussed in footnote (E) to the pro forma balance sheet recorded as a reduction to "salaries and benefits" expense over the ten year term of the agreement to provide certain administrative, legal, tax, accounting and financial services at no charge.

(DD)
Represents straight-line amortization expense of intangible assets discussed in footnote (E) to the pro forma balance sheet over the estimated useful life of 27 years.

(EE)
Represents the elimination of nonrecurring costs directly attributable to the transaction for the nine months ended September 30, 2015.

(FF)
Represents imputed interest expense on the $10 million interest-free promissory note payable issued by Remington Hospitality Management, Inc.

(GG)
Represents the adjustment to income tax expense based on a blended federal and state tax rate of 37.8%.

(HH)
Represents an adjustment to loss from consolidated entities attributable to noncontrolling interests for the 20% limited partnership interest in Remington retained by the Bennetts.

(II)
Represents an adjustment to loss from consolidated entities attributable to noncontrolling interests for the 29.4% interest in Ashford Advisors, Inc. obtained by the Bennetts.

(JJ)
Represents the elimination of net loss attributable to the non-controlling interest in Ashford LLC, as a result of the redemption of the Ashford LLC common units for cash upon the closing of the transaction.

(KK)
Represents the preferred dividend on the 9,200,000 shares of Ashford Advisors, Inc. 6.625% non-voting convertible preferred stock discussed in footnote (C) to the pro forma balance sheet.

(LL)
Pro forma basic earnings per share for the nine months ended September 30, 2015 is based on pro forma net loss attributable to common stockholders divided by 2.0 million weighted average basic shares outstanding. The transaction does not result in any additional issuances of Ashford Inc. common stock upon closing.

(MM)
Pro forma diluted earnings per share for the nine months ended September 30, 2015 is based on pro forma net loss attributable to common stockholders divided by 2.2 million weighted average diluted shares outstanding. Diluted earnings per share excludes any potential shares issued upon the exercise of the Target Call Option (as defined) as the effect would be anti-dilutive. The number of shares to be issued is based on a multiple of adjusted EBITDA of Remington (as defined).

(NN)
Pro forma basic earnings per share for the year ended December 31, 2014 is based on pro forma net loss attributable to common stockholders divided by 2.0 million weighted average

A-9


Table of Contents


ASHFORD INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (Continued)

3. Adjustments to Unaudited Pro Forma Statements of Operations (Continued)

(OO)
Pro forma diluted earnings per share for the year ended December 31, 2014 is based on pro forma net loss attributable to common stockholders divided by 2.0 million weighted average diluted shares outstanding. Diluted earnings per share excludes any potential shares issued upon the exercise of the Target Call Option (as defined) as the effect would be anti-dilutive. The number of shares to be issued is based on a multiple of adjusted EBITDA of Remington (as defined).

A-10


Table of Contents

Annex B

Remington Holdings, L.P. and Subsidiaries
(A Partnership)
Consolidated Financial Statements (Unaudited)
September 30, 2015

B-1


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)
September 30, 2015

Contents

       

Independent Auditor's Report

    B-3  

Consolidated Financial Statements

       

Balance Sheets

    B-4  

Statements of Income and Comprehensive Income

    B-5  

Statement of Partners' Capital

    B-6  

Statements of Cash Flows

    B-7  

Notes to Financial Statements

    B-8  

B-2


Table of Contents

LOGO

Independent Auditor's Review Report

Partners
Remington Holdings, L.P. and Subsidiaries
Dallas, Texas

        We have reviewed the consolidated financial statements of Remington Holdings, L.P. and Subsidiaries (the Partnership), which comprise the consolidated balance sheet as of September 30, 2015, and the related consolidated statements of income and comprehensive income, partners' capital and cash flows for the three-month and nine-month periods ended September 30, 2015 and 2014.

Management's Responsibility

        Management is responsible for the preparation and fair presentation of the financial information in accordance with accounting principles generally accepted in the United States of America; this responsibility includes the design, implementation and maintenance of internal control sufficient to provide a reasonable basis for the preparation and fair presentation of interim financial information in accordance with the applicable financial reporting framework.

Auditor's Responsibility

        Our responsibility is to conduct our reviews in accordance with auditing standards generally accepted in the United States of America applicable to reviews of interim financial information. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial information. Accordingly, we do not express such an opinion.

Conclusion

        Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial information referred to above for it to be in accordance with accounting principles generally accepted in the United States of America.

Report on Consolidated Balance Sheet as of December 31, 2014

        We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2014, and the related consolidated statements of income and comprehensive income, partners' capital and cash flows for the year then ended (not presented herein); and we expressed an unmodified audit opinion on those audited consolidated financial statements in our report dated March 2, 2015, except for the information described in Note 2, which is November 10, 2015. In our opinion, the accompanying consolidated balance sheet of the Partnership as of December 31, 2014, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.

GRAPHIC

Houston, Texas
December 9, 2015

GRAPHIC

   

B-3


Table of Contents


REMINGTON HOLDINGS, L.P. AND SUBSIDIARIES
(A Partnership)

CONSOLIDATED BALANCE SHEETS

As of September 30, 2015 and December 31, 2014
(Unaudited)

 
  2015   2014  

ASSETS

 

Current Assets

             

Cash and cash equivalents

  $ 8,146,390   $ 7,723,587  

Restricted cash for managed properties

    1,453,627     1,284,061  

Restricted cash for insurance reserve and capital projects

    4,304,276     4,912,442  

Restricted investment for deferred compensation

    2,674,205     4,715,636  

Accounts receivable

    2,974,460     8,251,147  

Accounts receivable for managed properties

    16,636,608     12,227,356  

Other receivables

    1,205,410     1,368,776  

Due from affiliate

        6,457  

Prepaid expenses and other

    391,688     402,953  

Total current assets

    37,786,664     40,892,415  

Property and Equipment, At Cost

             

Furniture and fixtures

    596,516     483,804  

Computer software

    1,435,080     1,435,080  

Computer hardware

    1,709,400     1,709,400  

Leasehold improvements

    72,245     72,245  

Total property and equipment

    3,813,241     3,700,529  

Less accumulated depreciation and amortization

    2,887,593     2,594,206  

Net property and equipment

    925,648     1,106,323  

Other Assets

             

Note receivable from related party, net of allowance

    523,819     471,484  

Total assets

  $ 39,236,131   $ 42,470,222  

LIABILITIES AND PARTNERS' CAPITAL

 

Current Liabilities

             

Accounts payable

  $ 138,093   $ 213,598  

Accounts payable and accrued expenses for managed properties

    16,537,737     12,319,417  

Accrued expenses

    7,421,559     7,446,154  

Capital projects liability

    3,800,247     4,300,247  

Deferred compensation arrangement

    314,439     866,217  

Insurance reserve liability

    664,678     662,195  

Due to affiliate

    11,488      

Total current liabilities

    28,888,241     25,807,828  

Deferred revenue

    609,257     799,683  

Reserve liability for managed properties

    1,321,000     1,192,000  

Total non current liabilities

    1,930,257     1,991,683  

Partners' Capital

    8,417,633     14,670,711  

Total liabilities and partners' capital

  $ 39,236,131   $ 42,470,222  

   

See Notes to Consolidated Financial Statements

B-4


Table of Contents


REMINGTON HOLDINGS, L.P. AND SUBSIDIARIES
(A Partnership)

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)

 
  Three months ending September 30,   Nine months ending September 30,  
 
  2015   2014   2015   2014  

Revenues

                         

Property management fees

    7,401,986     6,461,012   $ 21,285,745   $ 18,801,913  

Project management fees

    4,187,180     5,117,820     11,905,165     13,329,148  

Other revenue from managed properties

    60,721,365     52,713,845     184,739,857     163,348,069  

Total revenues

    72,310,531     64,292,677     217,930,767     195,479,130  

Operating Expenses

                         

Property management expenses

    3,420,267     3,278,749     10,095,816     9,896,758  

Project management expenses

    1,891,902     1,754,917     5,681,061     5,310,384  

Other expenses from managed properties

    60,721,365     52,713,845     184,739,857     163,348,069  

Other operating expenses

    1,004     7,944     4,499     14,697  

Reimbursement costs, net

    3,537     46,584     (187,423 )   128,455  

Total operating expenses

    66,038,075     57,802,039     200,333,810     178,698,363  

Operating Income

    6,272,456     6,490,638     17,596,957     16,780,767  

Other Income (Expense)

                         

Dividend income

    172,129     22,131     204,928     63,337  

Gain (Loss) on distribution of restricted investment

    0     0     87,810     (32,521 )

Other

    964     5     3,165     27  

Total other income(expense)

    173,093     22,136     295,903     30,843  

Income Before Provision for Income Taxes

    6,445,549     6,512,774     17,892,860     16,811,610  

Provision for Income Taxes

    54,354     63,477     217,923     262,983  

Net Income

    6,391,195     6,449,297     17,674,937     16,548,627  

Other Comprehensive Income (Loss)

                         

Unrealized gain (loss) on restricted investment

    (725,159 )   (193,883 )   (1,416,696 )   472,245  

Less reclassification adjustment for (gain) loss included in net income

    0     0     (87,810 )   32,521  

Comprehensive Income

  $ 5,666,036   $ 6,255,415   $ 16,170,431   $ 17,053,393  

   

See Notes to Consolidated Financial Statements

B-5


Table of Contents


REMINGTON HOLDINGS, L.P. AND SUBSIDIARIES
(A Partnership)

CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL

Nine Months Ended September 30, 2015
(Unaudited)

 
  Partners'
Capital
  Accumulated
Other
Comprehensive
Income
  Total
Partners'
Capital
 

Balance, December 31, 2014

  $ 11,335,397   $ 3,335,314   $ 14,670,711  

Net income

    17,674,937         17,674,937  

Reclassifications of gain on marketable securities to net income

        (87,810 )   (87,810 )

Unrealized loss on restricted investment

        (1,416,696 )   (1,416,696 )

Distributions

    (22,423,509 )       (22,423,509 )

Balance, September 30, 2015

  $ 6,586,825   $ 1,830,808   $ 8,417,633  

   

See Notes to Consolidated Financial Statements

B-6


Table of Contents


REMINGTON HOLDINGS, L.P. AND SUBSIDIARIES
(A Partnership)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
  Nine months ending September 30,  
 
  2015   2014  

Operating Activities

             

Net income

  $ 17,674,937   $ 16,548,627  

Items not requiring (providing) cash:

             

Depreciation and amortization

    233,556     282,938  

(Gain) loss on distribution of restricted investment

    (87,810 )   32,521  

Non-cash payroll receivable

    (2,976,878 )   2,457,330  

Non-cash payroll payable

    2,976,878     (2,457,330 )

Deferred compensation arrangement

    (131,971 )   675,451  

Changes in:

             

Restricted cash

    608,166     (774,996 )

Restricted cash for managed properties

    (169,566 )   (620,860 )

Accounts receivable

    5,274,691     3,202,098  

Accounts receivable for managed properties

    (789,226 )   (170,180 )

Other receivables

    163,367     (800,258 )

Prepaid expenses and other

    11,265     (73,651 )

Note receivable

    (52,335 )   600,373  

Due from related parties and due to affiliates

    19,941     (97,451 )

Accounts payable and accrued expenses

    (100,101 )   18,688  

Accounts payable and accrued expenses for managed properties

    598,294     766,040  

Capital projects liability

    (500,000 )   1,300,000  

Insurance reserve liability

    2,483     (524,904 )

Reserve liability for managed properties

    129,000     25,000  

Deferred revenue

    (190,426 )   201,229  

Net cash provided by operating activities

    22,694,265     20,590,665  

Investing Activities

             

Purchase of property and equipment

    (52,881 )   (205,990 )

Dividends received from restricted investments

    204,928     63,337  

Purchase of restricted investments for deferred compensation

        (728,390 )

Net cash used in investing activities

    152,047     (871,043 )

Financing Activities

             

Taxes paid on behalf of partners

    (846,997 )   (981,511 )

Distributions to partners

    (21,576,512 )   (18,415,053 )

Net cash used in financing activities

    (22,423,509 )   (19,396,564 )

Increase (decrease) in Cash and Cash Equivalents

    422,803     323,058  

Cash and Cash Equivalents, Beginning of Period

    7,723,587     6,730,625  

Cash and Cash Equivalents, End of Period

  $ 8,146,390   $ 7,053,683  

Supplemental Cash Flow Information

             

Distribution of restricted investment for deferred

             

compensation (OCI)

  $ 87,810   $ (32,521 )

Distribution of restricted investment for deferred

             

compensation (cost)

    331,997     862,453  

Unrealized gain(loss) on restricted investment

    (1,416,696 )   472,242  

   

See Notes to Consolidated Financial Statements

B-7


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements

September 30, 2015

Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

        Remington Holdings, L.P. and Subsidiaries (the Partnership), consists of the following entities:

        The Partnership manages various hotel properties and related asset improvement projects in addition to providing accounting, information technology, legal, and other consulting and administrative services. At September 30, 2015 and 2014, the Partnership held management contracts on 94 and 81 properties, respectively. Of those contracts, 90 and 77 properties, respectively, were under agreements with Ashford Hospitality Trust (AHT), and 1 property was under an agreement with Ashford Hospitality Prime (AHP), related parties through common ownership and management.

Principles of Consolidation

        The consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiaries, LLC, RLH, WQ, RAELLC, RBELLC, RCMLLC, RPARLLC, RPHILLC, RLH-LIN, RLH-ANN and RLI. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

        The Partnership considers all liquid investments with original maturities of three months or less to be cash equivalents. At September 30, 2015 and 2014, cash equivalents consisted primarily of brokered money market mutual funds.

        At September 30, 2015, the Partnership's cash and restricted cash accounts exceeded federally insured limits by approximately $12,754,000.

B-8


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

September 30, 2015

Note 1: Nature of Operations and Summary of Significant Accounting Policies (Continued)

Restricted Cash Accounts

        As of November 1, 2013, the Partnership elected to self-insure certain costs related to the employee health insurance program. As a result, the Partnership funds a reserve of restricted cash to cover health insurance claims from amounts collected from managed properties, and the Partnership records an equal and offsetting liability for the same amount. At September 30, 2015 and December 31, 2014, the Partnership held $504,029 and $577,195 of cash restricted for this insurance liability. The Partnership has purchased insurance that limits its exposure for individual claims to $150,000 and its aggregate annual exposure to $1,000,000.

        The Partnership also holds cash restricted for capital improvements on various properties. These amounts were advanced by property ownership and as a result, the Partnership recorded a liability for the same amount. At September 30, 2015 and December 31, 2014, the Partnership held $3,800,247 and $4,300,247 of cash restricted for these improvement liabilities.

        The Partnership holds restricted cash for managed properties for use in centralized billings functions on behalf of those managed properties. The cash is offset by the net of receivables from managed properties, accounts payable to vendors, accrued expenses and a reserve liability to managed properties for expenses incurred but not yet billed. At September 30, 2015 and December 31, 2014 the Partnership held $1,453,627 and $1,284,061 in restricted cash for managed properties.

Accounts Receivable

        Accounts receivable are stated at the amount billed to the hotels. Ordinarily, accounts receivable are due five days after the monthly gross revenue is determined. The Partnership provides an allowance for doubtful accounts, if any, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Accounts that are past due more than 60 days, are reviewed monthly to determine if they are collectible. Accounts deemed uncollectible are written off and charged to bad debt expense.

Income Taxes

        The Partnership is not directly subject to income taxes under the provisions of the Internal Revenue Code (IRC). Therefore, taxable income or loss is reported to the individual partners for inclusion in their respective tax returns and no provision for federal income taxes has been included in the accompanying consolidated financial statements. A provision for state income taxes is included in the consolidated financial statements. The subsidiaries are single-member LLCs, and are disregarded entities under the IRC. All income related to the Partnership and the consolidated subsidiaries are included in the Federal income tax return of the Partnership. With a few exceptions, the subsidiaries are no longer subject to U.S. federal or state and local income tax examinations by tax authorities for years before 2010.

Revenue Recognition

        The Partnership provides property management services under management agreements that generally provide for a monthly base fee, which is the greater of a pre-defined minimum fee or

B-9


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

September 30, 2015

Note 1: Nature of Operations and Summary of Significant Accounting Policies (Continued)

3 percent of monthly gross revenues. The fee is recognized monthly as earned. The Partnership can also earn an incentive fee which is the lesser of one percent of gross revenues, or the amount that the property's gross operating profit exceeds the budgeted profit. The incentive fee is recognized annually at the end of the year once all determining factors are considered.

        The Partnership receives project management fees generally ranging from 4 percent to 10 percent for certain capital improvements, construction, interior design and other costs. The project management fee is recognized monthly as earned.

        Other revenue from managed properties includes costs for accounting, information technology, legal and other group services provided to hotel properties under management. These are contractually reimbursed by the managed properties. For these revenues which are reimbursed at cost, the consolidated statements of income include an equal and offsetting expense amount—"Other expenses from managed properties." These costs also include payroll costs at managed properties where the Partnership is the employer and also include certain operational and administrative costs as provided for in our contracts with the owners. Since the reimbursements are made based upon the costs incurred with no added margin, these revenues and corresponding expenses have no effect on the Partnership's operating income or net income.

        The Partnership added a department in 2015 for shared revenue management services and recorded related revenues and expenses on the income statement in "Other revenue from managed properties" and "Other expenses from managed properties", respectively. The costs of these services are then billed directly to the properties at full cost without markup resulting in zero net income for the department on the income statement. Revenues and offsetting expenses for the revenue management department for the nine months ending September 30, 2015 and 2014 were approximately $2,257,000 and $1,861,100, respectively.

        Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are charged to expense on the straight-line basis over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the improvements.

        The estimated useful lives for each major depreciable classification of property and equipment are as follows:

Furniture and fixtures

  10 years

Computer software and other

  3 years

Computer hardware

  5 years

Leasehold improvements

  4 years

        The Partnership charges for hotel accounting, information systems and legal services, which include amounts to be used for future asset purchases (advance payments for future use). Upon purchase of an

B-10


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

September 30, 2015

Note 1: Nature of Operations and Summary of Significant Accounting Policies (Continued)

asset deemed by management to be used for any of the above-mentioned monthly service charges, the Partnership records an increase in deferred revenue for the amount of the asset purchase. Deferred revenue is recognized ratably over the estimated life of the related asset.

        Comprehensive income consists of net income and other comprehensive income (loss), net of applicable income taxes. Other comprehensive income (loss) includes unrealized appreciation (depreciation) on available-for-sale securities associated with restricted investments within the deferred compensation plan discussed in Notes 4, 5 and 6 below.

Note 2: Related-party Transactions

        During 2015 and 2014, the Partnership paid for expenses or received benefit of services related to the operation of the entities under common ownership. Total due from (due to) related parties at September 30, 2015 and December 31, 2014, was $(11,488) and $6,457, respectively.

        The note receivable balance due from an entity under common control was $523,819 and $471,484 at September 30, 2015 and December 31, 2014, respectively, net of an allowance of $157,027.

        The accounts receivable balance from the same related party was $26,790 and $22,896 at September 30, 2015 and December 31, 2014, respectively. For the nine months ended September 30, 2015 and 2014, the Partnership earned revenues from this entity in amounts of $723,152 and $305,072, respectively.

        As described in Note 3, Remington Hotel Corporation (RHC) receives rent payments from the Partnership.

        As described in Note 8, the ultimate owners of the Partnership have a minority ownership interest in a majority of the managed properties.

        On September 17, 2015, the Partnership's partners entered into an Acquisition Agreement to sell 80% of the Partnership to Ashford Inc. for total consideration of $331.7 million. Ashford Inc. will have contractual rights to acquire the remaining 20% interest in the Partnership, including a right of first refusal for the life of Ashford Inc.'s ownership as well as there being a formula to call that remaining ownership after ten years and a right to call the preferred after five years. The Acquisition Agreement contains termination rights for both the Partnership's partners and Ashford Inc., including the right of either party to terminate the Acquisition Agreement if the transactions are not closed before June 30, 2016. If the Acquisition Agreement is terminated by Ashford Inc. as provided in the Acquisition Agreement, Ashford Inc. is required to pay the Partnership's partners a termination fee of $6.7 million plus the costs and expenses incurred by them.

Note 3: Operating Leases

        RHC, a related party under common control, is the responsible party under two leases for office space that both expire in April 2019 and require monthly payments of approximately $167,000. In addition to the office space added in December 2013, RHC expanded to an additional floor in the

B-11


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

September 30, 2015

Note 3: Operating Leases (Continued)

original corporate office space with an amendment to the original lease coterminous with the other office space.

        The office space is also shared with the Partnership, its consolidated subsidiaries and AHT. RHC has no formal sublease agreement with the Partnership. Lease expense for the Partnership related to this lease for the nine months ended September 30, 2015 and 2014, was approximately $808,000 and $699,000, respectively.

        Based on the current method RHC uses to determine the reimbursement for lease payments, and due to the addition of an entire floor of office space in October of 2014, the Partnership expects to incur expense of approximately $93,300 and pay cash of approximately $111,600 per month for rent until the lease expires.

Note 4: Deferred Compensation Plan

        The Partnership sponsors a deferred compensation plan that was created in 2004 to purchase shares of stock of an affiliated company (AHT) on the open market and hold for the purpose of providing deferred compensation to certain employees. The stock purchased in the plan is held in a Rabbi Trust and is restricted for use only to provide benefits under the terms of the plan. The plan assets held in trust are reported at fair value as a restricted investment. As grants of shares are made to key employees, the expected future benefit is accrued ratably over the life of the grant. Generally, the grants vest over a 3 year period with vested amounts distributed to employees annually. The cumulative accrued liability related to the grants, are reported as a deferred compensation arrangement.

        In 2014 and 2013, shares of newly created companies, Ashford Inc. (AINC) and Ashford Prime (AHP), respectively, were spun-off from AHT shares. Plan participants were granted shares of the new companies which accrue and vest according to the vesting of related AHT shares.

        Total compensation expense recognized in the consolidated statements of income related to the plan during the nine months ended September 30, 2015 and 2014 was $557,053 and $1,127,108, respectively. The total fair value of the investment at September 30, 2015 and December 31, 2014, was $2,674,205 and $4,715,636, respectively.

B-12


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

September 30, 2015

Note 5: Securities Within Restricted Investments

        The historical cost and approximate fair values, together with gross unrealized gains and losses, of securities restricted for use in the deferred compensation plan are as follows:

 
  Historical Cost   Gross Unrealized Gains   Gross Unrealized Losses   Fair Value  

Available—for-sale securities:

                         

September 30, 2015:

                         

Equity Securities

  $ 577,259   $ 1,830,808   $ 0   $ 2,408,067  

December 31, 2014:

                         

Equity Securities

  $ 1,160,802   $ 3,335,314   $ 0   $ 4,496,116  

        Gross unrealized gains and losses of $87,810 and $(32,521), respectively, resulting from the distribution of available-for-sale securities were recognized for the nine months ended September 30, 2015 and 2014. The components of accumulated other comprehensive income (loss), included in partners' capital are the unrealized gains associated with the available-for-sale securities noted above. As of September 30, 2015 and December 31, 2014, cash equivalents of approximately $266,100 and $219,500, respectively, were held with these securities.

Note 6: Disclosures About Fair Value of Financial Instruments

        Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

B-13


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

September 30, 2015

Note 6: Disclosures About Fair Value of Financial Instruments (Continued)

        The following table presents the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2015 and December 31, 2014:

 
   
  Fair Value Measurements Using  
 
  Fair Value   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

September 30, 2015:

                         

Financial assets:

                         

Money market mutual funds

  $ 7,092,350   $ 7,092,350   $   $  

Restricted investment for deferred compensation:

                         

Money market mutual funds

    266,138     266,138          

AHT common stock

    1,579,094     1,579,094          

AHP common stock

    643,318     643,318          

AINC common stock

    185,655     185,655              

Financial liabilities:

   
 
   
 
   
 
   
 
 

Deferred compensation agreement

    314,439         314,439      

December 31, 2014:

                         

Financial assets:

                         

Money market mutual funds

  $ 4,207,350     4,207,350          

Restricted investment for deferred compensation:

                         

Money market mutual funds

    219,520     219,520          

AHT common stock

    3,380,503     3,380,503          

AHP common stock

    767,155     767,155          

AINC common stock

    348,458     348,458          

Financial liabilities:

                         

Deferred compensation agreement

    866,217         866,217      

        Following is a description of the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the nine months ended September 30, 2015.

        The carrying amounts approximate fair value because of the short maturity on these instruments. This is considered a Level 1 observable input in the valuation hierarchy. The cash equivalents are investments in money market mutual funds.

        Fair value is based on quoted market prices of the underlying investment, which are classified within Level 1 of the valuation hierarchy.

B-14


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

September 30, 2015

Note 6: Disclosures About Fair Value of Financial Instruments (Continued)

        The deferred compensation agreement liability is based on ratably accrued vested shares through September 30, 2015 and December 31, 2014, which are exercisable upon vesting. The liability is the total accrued vested shares multiplied by the fair value of the quoted market price of the underlying investment.

Note 7: Retirement Savings Plan

        The Partnership sponsors a 401(k) retirement savings plan (the Plan) covering substantially all employees. The employer contributions to the Plan are determined annually by the Chief Executive Officer of the Partnership. Expenses for employer contributions to the Plan were $389,814 and $301,589 for the nine months ended September 30, 2015 and 2014, respectively.

Note 8: Significant Estimates and Concentrations

        Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters include the following:

        The Partnership is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Partnership.

        The Partnership invests in affiliated investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the accompanying consolidated balance sheets.

        The owners of the partnerships consolidated in these financial statements have a minority ownership interest in a majority of the hotels for which these companies provide management and other services, and in addition, the owners hold positions on the board of directors of the affiliated ownership of the majority of hotels. Therefore, the Partnership is economically dependent upon affiliate-owned hotels.

Note 9: Subsequent Events

        Subsequent events have been evaluated through the date of the Independent Auditor's Report, which is the date the consolidated financial statements were available to be issued.

B-15


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)
Auditor's Report and Consolidated Financial Statements
December 31, 2014, 2013 and 2012

B-16


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)
December 31, 2014, 2013 and 2012

Contents

       

Independent Auditor's Report

   
B-18
 

Consolidated Financial Statements

   
 
 

Balance Sheets

   
B-20
 

Statements of Income and Comprehensive Income

   
B-21
 

Statement of Partners' Capital

   
B-22
 

Statements of Cash Flows

   
B-23
 

Notes to Financial Statements

   
B-24
 

B-17


Table of Contents

LOGO

Independent Auditor's Report

Partners
Remington Holdings, L.P. and Subsidiaries
Dallas, Texas

        We have audited the accompanying consolidated financial statements of Remington Holdings, L.P. and Subsidiaries (the Partnership), which comprise the consolidated balance sheets as of December 31, 2014 and 2013, and the related consolidated statements of income and comprehensive income, partners' capital and cash flows for the years ended December 31, 2014, 2013 and 2012, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

        Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

        Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

        An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

        We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Remington Holdings, L.P. and Subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the years

   

GRAPHIC

B-18


Table of Contents

ended December 31, 2014, 2013 and 2012, in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

        As discussed in Note 2 to the consolidated financial statements, the 2014, 2013 and 2012 consolidated financial statements have been restated to correct misstatements. Our opinion is not modified with respect to this matter.

GRAPHIC

Houston, Texas
March 2, 2015, except for the information described in Note 2, which is November 10, 2015

B-19


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Consolidated Balance Sheets

December 31, 2014, and 2013

 
  2014   2013  
 
  (Restated)
  (Restated)
 

Assets

             

Current Assets

             

Cash and cash equivalents

  $ 7,723,587   $ 6,730,625  

Restricted cash for insurance reserve and capital projects

    4,912,442     3,799,686  

Restricted cash for managed properties

    1,284,061     1,266,092  

Restricted investment for deferred compensation

    4,715,636     3,867,455  

Accounts receivable

    8,251,147     5,910,730  

Accounts receivable for managed properties

    12,227,356     15,809,929  

Other receivables

    1,368,776     465,080  

Due from affiliate

    6,457      

Prepaid expenses and other

    402,953     291,596  

Total current assets

    40,892,415     38,141,193  

Property and Equipment, At Cost

             

Land

        31,000  

Furniture and fixtures

    483,804     288,520  

Computer software

    1,435,080     1,417,293  

Computer hardware

    1,709,400     1,622,328  

Leasehold improvements

    72,245     72,245  

Total property and equipment

    3,700,529     3,431,386  

Less accumulated depreciation and amortization

   
2,594,206
   
2,179,122
 

Net property and equipment

    1,106,323     1,252,264  

Other Assets

             

Note receivable from related party, net of allowance

    471,484     1,071,856  

Total assets

  $ 42,470,222   $ 40,465,313  

Liabilities and Partners' Capital

             

Current Liabilities

             

Accounts payable

  $ 213,597   $ 102,164  

Accounts payable and accrued expenses for managed properties

    12,319,417     15,917,021  

Accrued expenses

    7,446,155     5,657,810  

Capital projects liability

    4,300,247     3,000,247  

Deferred compensation arrangement

    866,217     680,352  

Insurance reserve liability

    662,195     764,338  

Due to affiliate

        177,967  

Total current liabilities

    25,807,828     26,299,899  

Non Current Liabilities

   
 
   
 
 

Deferred revenue

    799,683     576,081  

Reserve liability for managed properties

    1,192,000     1,159,000  

    1,991,683     1,735,081  

Partners' Capital

   
14,670,711
   
12,430,333
 

Total liabilities and partners' capital

  $ 42,470,222   $ 40,465,313  

B-20


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Consolidated Statements of Income and Comprehensive Income

Years Ended December 31, 2014, 2013 and 2012

 
  2014   2013   2012  
 
  (Restated)
  (Restated)
  (Restated)
 

Revenues

                   

Property management fees

  $ 30,704,104   $ 24,043,068   $ 24,282,999  

Project management fees

    17,180,511     16,802,939     11,274,111  

Other revenue from managed properties

    207,189,318     190,282,575     175,142,988  

Total revenues

    255,073,933     231,128,582     210,700,098  

Operating Expenses

                   

Property management expenses

    13,215,087     9,540,356     9,809,119  

Project management expenses

    7,189,672     5,937,816     5,386,607  

Other expenses from managed properties

    207,189,318     190,282,575     175,142,988  

Other operating expenses

    20,610     10,028     17,527  

Reimbursed costs

    178,009     53,597     12,010  

Total operating expenses

    227,792,696     205,824,372     190,368,251  

Operating Income

    27,281,237     25,304,210     20,331,847  

Other Income (Expense)

                   

Dividend income

    85,469     31,618     43,729  

Gain(Loss) on sale of asset

    44,064     (600 )    

Gain(Loss) on distribution of restricted investment

    (170,961 )   970,174     1,000,758  

Guaranteed payment to partner

        (1,401 )   (449,092 )

Other

    132     (268 )   (143 )

Total other income(expense)

    (41,296 )   999,523     595,252  

Income Before Provision for Income Taxes

    27,239,941     26,303,733     20,927,099  

Provision for Income Taxes

    201,110     155,934     122,890  

Net Income

    27,038,831     26,147,799     20,804,209  

Other Comprehensive Income (Loss)

                   

Unrealized gain (loss) on restricted investment

    990,921     421,015     880,548  

Less reclassification adjustment for gain(loss) included in net income

    170,961     (970,174 )   (1,000,758 )

Comprehensive Income

  $ 28,200,713   $ 25,598,640   $ 20,683,999  

B-21


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Consolidated Statements of Partners' Capital

Years Ended December 31, 2014, 2013 and 2012

 
  Partners'
Capital
  Accumulated
Other
Comprehensive
Income
  Total
Partners'
Capital
 

Balance, January 1, 2012

  $ 8,651,076   $ 2,842,801   $ 11,493,877  

Net income

    20,804,209         20,804,209  

Reclassifications of gains on marketable securities to net income

        (1,000,758 )   (1,000,758 )

Unrealized gain on restricted investment

        880,548     880,548  

Distributions

    (19,063,783 )       (19,063,783 )

Balance, December 31, 2012

    10,391,502     2,722,591     13,114,093  

Net income

    26,147,799         26,147,799  

Reclassifications of gains on marketable securities to net income

        (970,174 )   (970,174 )

Unrealized gain on restricted investment

        421,015     421,015  

Distributions

    (26,282,400 )       (26,282,400 )

Balance, December 31, 2013

    10,256,901     2,173,432     12,430,333  

Net income

    27,038,831         27,038,831  

Reclassifications of loss on marketable securities to net income

        170,961     170,961  

Unrealized gain on restricted investment

        990,921     990,921  

Distributions

    (25,960,334 )       (25,960,334 )

Balance, December 31, 2014

  $ 11,335,398   $ 3,335,314   $ 14,670,711  

B-22


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Consolidated Statements of Cash Flows

Years Ended December 31, 2014, 2013 and 2012

 
  2014   2013   2012  
 
  (Restated)
  (Restated)
  (Restated)
 

Operating Activities

                   

Net income

  $ 27,038,831   $ 26,147,799   $ 20,804,209  

Items not requiring (providing) cash:

                   

Depreciation and amortization

    418,022     334,362     222,890  

(Gain)loss on distribution of restricted investment

    170,961     (970,174 )   (1,000,758 )

Non-cash payroll receivable

    3,732,741     (2,570,617 )   (1,296,746 )

Non-cash payroll payable

    (3,732,741 )   2,570,617     1,296,746  

Deferred compensation arrangement

    971,526     619,546     1,519,441  

Allowance for note receivable from related party

        (600,000 )   180,336  

(Gain)loss on disposal of asset

    (44,064 )   600     428  

Changes in:

                   

Restricted cash

    (1,112,757 )   (591,938 )   (1,130,893 )

Restricted cash for managed properties

    (17,969 )   (1,055,694 )   735,522  

Accounts receivable

    (2,340,425 )   (106,118 )   (1,100,013 )

Accounts receivable for managed properties

    (150,167 )   866,638     (744,215 )

Other receivables

    (903,696 )   (294,619 )   50,035  

Prepaid expenses and other

    (111,357 )   (54,164 )   66,489  

Note receivable

    600,373          

Due from related parties and due to affiliates

    (184,424 )   400,521     (181,539 )

Accounts payable and accrued expenses

    1,899,786     635,176     791,228  

Accounts payable and accrued expenses for managed properties

    135,136     (323,294 )   (22,107 )

Capital projects liability

    1,300,000     2,499,916     500,106  

Insurance reserve liability

    (102,142 )   (1,908,069 )   630,552  

Reserve liability for managed properties

    33,000     512,350     30,800  

Deferred revenue

    223,602     186,014     (129,736 )

Net cash provided by operating activities

    27,824,236     26,298,852     21,222,775  

Investing Activities

                   

Purchase of property and equipment

    (300,774 )   (691,297 )   (534,829 )

Proceeds from sale of property and equipment

    72,755     1,278      

Dividends recevied from restricted investments

    85,469     31,611     43,729  

Purchase of restricted investments for deferred compensation

    (728,390 )   (1,000,000 )   (970,433 )

Net cash used in investing activities

    (870,940 )   (1,658,408 )   (1,461,533 )

Financing Activities

                   

Taxes paid on behalf of partners

    (1,056,511 )   (760,424 )   (585,543 )

Distributions to partners

    (24,903,823 )   (25,521,976 )   (18,478,240 )

Net cash used in financing activities

    (25,960,334 )   (26,282,400 )   (19,063,783 )

Increase (Decrease) in Cash and Cash Equivalents

    992,962     (1,641,956 )   697,459  

Cash and Cash Equivalents, Beginning of Year

    6,730,625     8,372,581     7,675,122  

Cash and Cash Equivalents, End of Year

  $ 7,723,587   $ 6,730,625   $ 8,372,581  

Supplemental Cash Flow Information

                   

Distribution of restricted investment for deferred compensation (OCI)

  $ (170,961 ) $ 970,174   $ 1,000,758  

Distribution of restricted investment for deferred compensation (cost)

    956,622     248,476     978,810  

Unrealized gain(loss) on restricted investment

    990,921     421,015     880,548  

B-23


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements

December 31, 2014, 2013 and 2012

Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

        The Partnership manages various hotel properties and related asset improvement projects in addition to providing accounting, information technology, legal, and other consulting and administrative services. At December 31, 2014, 2013 and 2012, the Partnership held management contracts on 80, 79 and 69 properties, respectively. Of those contracts, 76, 75 and 66 properties, respectively, were under agreements with Ashford Hospitality Trust (AHT), and beginning in 2013, 1 property was under an agreement with Ashford Hospitality Prime (AHP), related parties through common ownership and management.

Principles of Consolidation

        The consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiaries, LLC, RLH, WQ, RAELLC, RBELLC, RCMLLC, RPARLLC, RPHILLC, RLH-LIN, RLH-ANN and RLI. RLI had no economic activity in 2012. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

        The Partnership considers all liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2014 and 2013, cash equivalents consisted primarily of brokered money market mutual funds.

B-24


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

December 31, 2014, 2013 and 2012

Note 1: Nature of Operations and Summary of Significant Accounting Policies (Continued)

        At December 31, 2014, the Partnership's cash and restricted cash accounts exceeded federally insured limits by approximately $12,018,950.

Restricted Cash Accounts

        As of November 1, 2013, the Partnership elected to self-insure certain costs related to the employee health insurance program. As a result, the Partnership funds a reserve of restricted cash to cover health insurance claims from amounts collected from managed properties, and the Partnership records an equal and offsetting liability for the same amount. At December 31, 2014 and 2013, the Partnership held cash restricted for this insurance liability of $577,195 and $764,439, respectively. The Partnership has purchased insurance that limits its exposure for individual claims to $150,000 and its aggregate annual exposure to $1,000,000.

        The Partnership also holds cash restricted for capital improvements on various properties. These amounts were advanced by property ownership and as a result, the Partnership recorded a liability for the same amount. At December 31, 2014 and 2013, the Partnership held cash restricted for these improvement liabilities of $4,335,247 and $3,035,247, respectively.

        The Partnership holds restricted cash for managed properties for use in centralized billings functions on behalf of those managed properties. The cash is offset by the net of receivables from managed properties, accounts payable to vendors, accrued expenses and a reserve liability to managed properties for expenses incurred but not yet billed. At December 31, 2014, and 2013 the Partnership held $1,284,061 and $1,266,092 in restricted cash for managed properties.

Accounts Receivable

        Accounts receivable are stated at the amount billed to the hotels. Accounts receivable are ordinarily due five days after the monthly gross revenue is determined. The Partnership provides an allowance for doubtful accounts, if any, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Accounts that are past due more than 60 days are reviewed monthly to determine if they are collectible. Accounts deemed uncollectible are written off and charged to bad debt expense.

Income Taxes

        The Partnership is not directly subject to income taxes under the provisions of the Internal Revenue Code (IRC). Therefore, taxable income or loss is reported to the individual partners for inclusion in their respective tax returns and no provision for federal income taxes has been included in the accompanying consolidated financial statements. A provision for state income taxes is included in the consolidated financial statements. The subsidiaries are single-member LLCs, and are disregarded entities under the IRC. All income related to the Partnership and the consolidated subsidiaries is included in the Federal income tax return of the Partnership. With a few exceptions, the subsidiaries are no longer subject to U.S. federal or state and local income tax examinations by tax authorities for years before 2010.

B-25


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

December 31, 2014, 2013 and 2012

Note 1: Nature of Operations and Summary of Significant Accounting Policies (Continued)

Revenue Recognition

        The Partnership provides property management services under management agreements that generally provide for a monthly base fee, which is the greater of a pre-defined minimum fee or 3 percent of monthly gross revenues. The fee is recognized monthly as earned. The Partnership is also able to earn an incentive fee, which is the lesser of one percent of gross revenues or the amount that the property's gross operating profit exceeds the budgeted amount. The incentive fee is recognized annually as earned.

        The Partnership receives project management fees generally ranging from 4 percent to 10 percent for certain capital improvements, construction, interior design and other costs. The project management fee is recognized monthly as earned.

        Other revenue from managed properties includes costs for accounting, information technology, legal and other group services provided to hotel properties under management. These are contractually reimbursed by the managed properties. For these revenues which are reimbursed at cost, the consolidated statements of income include an equal and offsetting expense amount—"Other expenses from managed properties." These costs also include payroll costs at managed properties where the Partnership is the employer and also include certain operational and administrative costs as provided for in our contracts with the owners. Since the reimbursements are made based upon the costs incurred with no added margin, these revenues and corresponding expenses have no effect on the Partnership's operating income or net income.

        Prior to 2014, the costs of the fixed asset accounting services provided for all projects managed by the Partnership's project management department were covered by the hotel accounting services fees received from the managed properties. Beginning in 2014, the Partnership separated its fixed asset accounting services from its hotel accounting services in the general ledger and billed those services directly to AHT at cost.

Property and Equipment

        Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization is charged to expense on the straight-line basis over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the improvements.

        The estimated useful lives for each major depreciable classification of property and equipment are as follows:

Furniture and fixtures

    10 years  

Computer software and other

    3 years  

Computer hardware

    5 years  

Leasehold improvements

    5 years  

B-26


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

December 31, 2014, 2013 and 2012

Note 1: Nature of Operations and Summary of Significant Accounting Policies (Continued)

Reclassifications

        Certain reclassifications have been made to the 2013 and 2012 consolidated financial statements to conform to the 2014 consolidated financial statement presentation. These reclassifications had no effect on earnings.

Deferred Revenue

        The Partnership charges for hotel accounting, information systems and legal services, which include amounts to be used for future asset purchases (advance payments for future use). Upon purchase of an asset deemed by management to be used for any of the above-mentioned monthly service charges, the Partnership records an increase in deferred revenue for the amount of the asset purchase. Deferred revenue is recognized ratably over the estimated life of the related asset.

Comprehensive Income

        Comprehensive income consists of net income and other comprehensive income(loss), net of applicable income taxes. Other comprehensive income(loss) includes unrealized appreciation (depreciation) on available-for-sale securities associated with restricted investments within the deferred compensation plan discussed in Notes 5, 6 and 7 below.

Note 2: Restatement and Reclassification

        We have restated years ended December 31, 2014, 2013 and 2012 for various accounts. Certain reimbursed costs for payroll and payroll related expenses for employees of the Partnership employed in the operation of the managed hotel properties previously recorded on a net basis are now reported on a gross basis to record both the revenues and the related offsetting expenses. In addition certain other reimbursed expenses previously recorded on a net basis are now reported on a gross basis. The balance sheet adjustments related to reporting these items on a gross basis includes recording the receivables for payroll, payroll related expenses and other reimbursed costs from the managed properties and the related liabilities for these amounts. Additionally, a Partnership restricted cash account used for managed property expenses and the related liabilities have also been reflected on the revised consolidated financial statements of the Partnership. These adjustments had no impact on net income or net cash generated by operations.

B-27


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

December 31, 2014, 2013 and 2012

Note 2: Restatement and Reclassification (Continued)

        The following table illustrates the corrections as associated with increases (decreases) in the respective line items in the financial statements:

 
  2014
(As Reported)
  Payroll and
related
reimbursements
  Restricted cash
for managed
properties
  Reclassify
Deferred
Revenue
  2014
(Restated)
 

Balance Sheet

                               

Restricted cash for managed properties

  $   $   $ 1,284,061   $   $ 1,284,061  

Accounts receivable for managed properties

  $   $ 12,180,346   $ 47,010   $   $ 12,227,356  

Total current assets

  $ 27,380,998   $ 12,180,346   $ 1,331,071   $   $ 40,892,415  

Total assets

  $ 28,958,805   $ 12,180,346   $ 1,331,071   $   $ 42,470,222  

Accounts payable and accrued expenses for managed properties

 
$

 
$

12,180,346
 
$

139,071
 
$

 
$

12,319,417
 

Deferred Revenue

  $ 799,683   $   $   $ (799,683 ) $  

Total current liabilities

  $ 14,288,094   $ 12,180,346   $ 139,071   $ (799,683 ) $ 25,807,828  

Deferred Revenue

 
$

 
$

 
$

 
$

799,683
 
$

799,683
 

Reserve liability for managed properties

  $   $   $ 1,192,000   $   $ 1,192,000  

Total non current liabilities

  $   $   $ 1,192,000   $ 799,683   $ 1,991,683  

Total liabilities and partners' equity

  $ 28,958,805   $ 12,180,346   $ 1,331,071   $   $ 42,470,222  

Income Statement

   
 
   
 
   
 
   
 
   
 
 

Other revenue from managed properties

  $ 9,493,021   $ 170,570,049   $ 27,126,248   $   $ 207,189,318  

Total revenues

  $ 57,377,636   $ 170,570,049   $ 27,126,248   $   $ 255,073,933  

Other expenses from managed properties

 
$

9,493,021
 
$

170,570,049
 
$

27,126,248
 
$

 
$

207,189,318
 

Total operating expopenses

  $ 30,096,399   $ 170,570,049   $ 27,126,248   $   $ 227,792,696  

Statement of Cash Flows

   
 
   
 
   
 
   
 
   
 
 

Non-cash payroll receivable

  $   $ 3,732,741   $   $   $ 3,732,741  

Non-cash payroll payable

  $   $ (3,732,741 ) $   $   $ (3,732,741 )

Restricted cash for managed properties

  $   $   $ (17,969 ) $   $ (17,969 )

Accounts receivable for managed properties

  $   $   $ (150,167 ) $   $ (150,167 )

Accounts payable and accrued expenses for managed properties

  $   $   $ 135,136   $   $ 135,136  

Reserve liability for managed properties

  $   $   $ 33,000   $   $ 33,000  

B-28


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

December 31, 2014, 2013 and 2012

Note 2: Restatement and Reclassification (Continued)


 
  2013
(As Reported)
  Payroll and
related
reimbursements
  Restricted cash
for managed
properties
   
  2013
(Restated)
 

Balance Sheet

                               

Restricted cash for managed properties

  $   $   $ 1,266,092   $   $ 1,266,092  

Accounts receivable for managed properties

  $   $ 15,913,086   $ (103,157 ) $   $ 15,809,929  

Total current assets

  $ 21,065,172   $ 15,913,086   $ 1,162,935   $   $ 38,141,193  

Total assets

  $ 23,389,292   $ 15,913,086   $ 1,162,935   $   $ 40,465,313  

Accounts payable and accrued expenses for managed properties

 
$

 
$

15,913,086
 
$

3,935
 
$

 
$

15,917,021
 

Deferred Revenue

  $ 576,081   $   $   $ (576,081 ) $  

Total current liabilities

  $ 23,389,292   $ 15,913,086   $ 3,935   $ (576,081 ) $ 38,730,232  

Deferred Revenue

 
$

 
$

 
$

 
$

576,081
 
$

576,081
 

Reserve liability for managed properties

  $   $   $ 1,159,000   $   $ 1,159,000  

Total non current liabilities

  $   $   $ 1,159,000   $ 576,081   $ 1,735,081  

Total liabilities and partners' equity

  $ 23,389,292   $ 15,913,086   $ 1,162,935   $   $ 40,465,313  

Income Statement

   
 
   
 
   
 
   
 
   
 
 

Other revenue from managed properties

  $ 7,291,895   $ 160,503,089   $ 22,487,591   $   $ 190,282,575  

Total revenues

  $ 48,137,902   $ 160,503,089   $ 22,487,591   $   $ 231,128,582  

Other expenses from managed properties

 
$

7,291,895
 
$

160,503,089
 
$

22,487,591
 
$

 
$

190,282,575
 

Total operating expenses

  $ 22,833,692   $ 160,503,089   $ 22,487,591   $   $ 205,824,372  

Statement of Cash Flows

   
 
   
 
   
 
   
 
   
 
 

Non-cash payroll receivable

  $   $ (2,570,617 ) $   $   $ (2,570,617 )

Non-cash payroll payable

  $   $ 2,570,617   $   $   $ 2,570,617  

Restricted cash for managed properties

  $   $   $ (1,055,694 ) $   $ (1,055,694 )

Accounts receivable for managed properties

  $   $   $ 866,638   $   $ 866,638  

Accounts payable and accrued expenses for managed properties

  $   $   $ (323,294 ) $   $ (323,294 )

Reserve liability for managed properties

  $   $   $ 512,350   $   $ 512,350  

B-29


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

December 31, 2014, 2013 and 2012

Note 2: Restatement and Reclassification (Continued)

 
  2012
(As Reported)
  Payroll and
related
reimbursements
  Restricted cash
for managed
properties
  2012
(Restated)
 

Income Statement

                         

Other revenue from managed properties          

  $ 6,662,215   $ 153,327,790   $ 15,152,983   $ 175,142,988  

Total revenues

  $ 42,219,325   $ 153,327,790   $ 15,152,983   $ 210,700,098  

Other expenses from managed properties

 
$

6,662,215
 
$

153,327,790
 
$

15,152,983
 
$

175,142,988
 

Total operating expenses

  $ 21,887,478   $ 153,327,790   $ 15,152,983   $ 190,368,251  

Statement of Cash Flows

   
 
   
 
   
 
   
 
 

Non-cash payroll receivable

  $   $ (1,296,746 ) $   $ (1,296,746 )

Non-cash payroll payable

  $   $ 1,296,746   $   $ 1,296,746  

Restricted cash for managed properties          

  $   $   $ 735,522   $ 735,522  

Accounts receivable for managed properties

  $   $   $ (744,215 ) $ (744,215 )

Accounts payable and accrued expenses for managed properties

  $   $   $ (22,107 ) $ (22,107 )

Reserve liability for managed properties          

  $   $   $ 30,800   $ 30,800  

Note 3: Related-party Transactions

        During 2014, 2013 and 2012, the Partnership paid for expenses or received benefit of services related to the operations of entities under common ownership. Total due from (due to) related parties at December 31, 2014, 2013 and 2012, was $6,457, $(177,967) and $222,571, respectively.

        The note receivable balance due from an entity under common control was $471,484 and $1,071,856 for 2014 and 2013, respectively, net of an allowance of $157,027. The accounts receivable balance from the same related party was $22,896 and $24,810 at December 31, 2014 and 2013, respectively. For the years ended December 31, 2014, 2013 and 2012, the Partnership earned revenues from this entity in amounts of $412,528, $428,527 and $413,305, respectively. As described in Note 4, Remington Hotel Corporation (RHC) receives rent payments from the Partnership.

        As described in Note 9, the ultimate owners of the Partnership have a minority ownership interest in a majority of the managed properties.

Note 4: Operating Leases

        RHC, a related party under common control, is the responsible party under two leases for office space that both expire in April 2019 and require monthly payments of approximately $167,000. In addition to the office space added in December 2013, RHC expanded to an additional floor in the original corporate office space with an amendment to the original lease coterminous with the other office space.

        The office space is also shared with the Partnership, its consolidated subsidiaries and AHT. RHC has no formal sublease agreement with the Partnership. Lease expense for the Partnership related to

B-30


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

December 31, 2014, 2013 and 2012

Note 4: Operating Leases (Continued)

this lease for the years ended December 31, 2014, 2013 and 2012, was approximately $967,000, $716,000 and $601,000, respectively.

        Based on the current method RHC uses to determine the reimbursement for lease payments, and due to the addition of an entire floor of office space in October of 2014, the Partnership expects to expense approximately $104,000 and pay cash of approximately $123,000 per month for rent expense until the lease expires.

Note 5: Deferred Compensation Plan

        The Partnership sponsors a deferred compensation plan that was created in 2004 to purchase shares of stock of an affiliated company (AHT) on the open market and hold for the purpose of providing deferred compensation to certain employees. The stock purchased in the plan is held in a Rabbi Trust and is restricted for use only to provide benefits under the terms of the plan. The plan assets held in trust are reported at fair value as a restricted investment. As grants of shares are made to key employees, the expected future benefit is accrued ratably over the life of the grant. Generally, the grants vest over a 3 year period with vested amounts distributed to employees annually. The cumulative accrued liability related to the grants, are reported as a deferred compensation arrangement.

        In 2014 and 2013, shares of newly created companies, Ashford Inc.(AINC) and Ashford Prime (AHP), respectively, were spun-off from AHT shares. Plan participants were granted shares of the new companies which accrue and vest according to the vesting of related AHT shares.

        Total compensation expense recognized in the consolidated statements of income related to the plan during 2014, 2013 and 2012 was $1,466,992, $1,011,368 and $1,605,082, respectively. The total fair value of the investment at December 31, 2014, 2013 and 2012, was $4,715,636, $3,867,455 and $3,303,161, respectively.

Note 6: Securities Within Restricted Investments

        The historical cost and approximate fair values, together with gross unrealized gains and losses, of securities restricted for use in the deferred compensation plan are as follows:

 
  Historical
Cost
  Gross
Unrealized
Gains
  Gross
Unrealized
Losses
  Fair Value  

Available-for-sale securities:

                         

December 31, 2014:

                         

Equity Securities

  $ 1,160,802   $ 3,335,314   $ 0   $ 4,496,116  

December 31, 2013:

                         

Equity Securities

  $ 1,563,923   $ 2,173,432   $ 0   $ 3,737,355  

December 31, 2012:

                         

Equity Securities

  $ 475,832   $ 2,722,591   $ 0   $ 3,198,423  

B-31


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

December 31, 2014, 2013 and 2012

Note 6: Securities Within Restricted Investments (Continued)

        Gross unrealized (losses) and gains of $(170,961), $970,174 and $1,000,758, respectively, resulting from the distribution of available-for-sale securities were recognized for 2014, 2013 and 2012. The components of accumulated other comprehensive income (loss), included in partners' capital are the unrealized gains associated with the available-for-sale securities noted above. As of December 31, 2014, 2013 and 2012, cash equivalents of approximately $219,500, $130,000 and $105,000, respectively, are held with these securities.

Note 7: Disclosures About Fair Value of Financial Instruments

        Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

B-32


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

December 31, 2014, 2013 and 2012

Note 7: Disclosures About Fair Value of Financial Instruments (Continued)

Recurring Measurements

        The following table presents the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2014, 2013 and 2012:

 
   
  Fair Value Measurements Using  
 
  Fair Value   Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

December 31, 2014:

                         

Financial assets:

                         

Money market mutual funds

  $ 4,207,350   $ 4,207,350   $   $  

Restricted investment for deferred compensation:

                         

Money market mutual funds

    219,520     219,520          

AHT common stock

    3,380,503     3,380,503          

AHP common stock

    767,155     767,155          

AINC common stock

    348,458     348,458              

Financial liabilities:

   
 
   
 
   
 
   
 
 

Deferred compensation agreement          

    866,217         866,217      

December 31, 2013

   
 
   
 
   
 
   
 
 

Financial assets:

                         

Money market mutual funds

    4,327,025     4,327,025          

Restricted investment for deferred compensation:

                         

Money market mutual funds

    130,100     130,100          

AHT common stock

    2,674,424     2,674,424          

AHP common stock

    1,062,931     1,062,931          

Financial liabilities:

   
 
   
 
   
 
   
 
 

Deferred compensation agreement          

    680,352         680,352      

December 31, 2012

   
 
   
 
   
 
   
 
 

Financial assets:

                         

Money market mutual funds

    6,147,466     6,147,466          

Restricted investment for deferred compensation:

                         

Money market mutual funds

    104,738     104,738          

AHT common stock

    3,198,423     3,198,423          

Financial liabilities:

   
 
   
 
   
 
   
 
 

Deferred compensation agreement          

    885,916         885,916      

B-33


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

December 31, 2014, 2013 and 2012

Note 7: Disclosures About Fair Value of Financial Instruments (Continued)

        Following is a description of the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the year ended December 31, 2014.

Cash and Cash Equivalents

        The carrying amounts approximate fair value because of the short maturity on these instruments. This is considered a Level 1 observable input in the valuation hierarchy. The cash equivalents are investments in money market mutual funds.

Restricted Investment for Deferred Compensation

        Fair value is based on quoted market prices of the underlying investment, which are classified within Level 1 of the valuation hierarchy.

Deferred Compensation Agreement

        The deferred compensation agreement liability is based on total shares vested up to December 31, 2014, 2013 and 2012, which are exercisable upon vesting. The liability is the actual vested shares multiplied by the fair value of the quoted market price of the underlying investment.

Note 8: Retirement Savings Plan

        The Partnership sponsors a 401(k) retirement savings plan (the Plan) covering substantially all employees. The employer contributions to the Plan are determined annually by the Chief Executive Officer of the Partnership. Expenses for employer contributions to the Plan were $390,183, $343,761 and $333,529 for 2014, 2013 and 2012, respectively.

Note 9: Significant Estimates and Concentrations

        Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters include the following:

General Litigation

        The Partnership is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Partnership.

B-34


Table of Contents


Remington Holdings, L.P. and Subsidiaries
(A Partnership)

Notes to Consolidated Financial Statements (Continued)

December 31, 2014, 2013 and 2012

Note 9: Significant Estimates and Concentrations (Continued)

Restricted Investments for Deferred Compensation

        The Partnership invests in affiliated investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the accompanying consolidated balance sheets.

Economic Dependency

        The owners of the partnerships consolidated in these financial statements have a minority ownership interest in a majority of the hotels for which these companies provide management and other services, and in addition, the owners hold positions on the board of directors of the affiliated ownership of the majority of hotels. Therefore, the Partnership is economically dependent upon affiliate-owned hotels.

Note 10: Subsequent Events

        Subsequent events have been evaluated through the date of the Independent Auditor's Report, which is the date the consolidated financial statements were available to be issued.

B-35


Table of Contents


ANNEX C

ACQUISITION AGREEMENT

        ACQUISITION AGREEMENT (this "Agreement"), dated as of September 17, 2015, is entered into between Archie Bennett, Jr. and Monty J. Bennett (collectively, the "LP Transferors"); Remington Holdings GP, LLC, a Delaware limited liability company and the general partner of the Target (the "General Partner") (each of the LP Transferors and the General Partner individually, a "Remington Holder" and collectively, the "Remington Holders"); solely for the purpose of conveying its interest in the Economic Interest (defined below), MJB Investments, LP ("MJB Investments"); solely for the purpose of conveying his interest in the Profits Interest (defined below), Mark A. Sharkey ("Sharkey"); Remington Holdings, LP, a Delaware limited partnership (the "Target"); Ashford, Inc., a Delaware corporation (the "Company"); Ashford Advisors, Inc., a Delaware corporation and wholly owned subsidiary of the Company ("Newco"); Remington Hospitality Management, Inc., a Delaware corporation and wholly owned subsidiary of Newco ("Newco Sub"); Ashford GP Holdings I, LLC, a Delaware limited liability company and wholly owned subsidiary of Newco ("GP Holdings I"); and Remington GP Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of Newco Sub ("GP Holdings"). Capitalized terms used in this Agreement have the meanings given such terms in Article I or in the applicable Section cross referenced in Article I.


PRELIMINARY STATEMENTS

        A.    The LP Transferors own all of the issued and outstanding limited partnership interests of record in the Target, which are subject to the Profits Interest held by Sharkey described below, and which in the case of Monty J. Bennett is also subject to the Economic Interests held by MJB Investments described below (the "LP Interests"); the Target beneficially owns substantially all of the issued and outstanding equity securities of its Subsidiaries; the General Partner owns all of the issued and outstanding general partnership interests in the Target (the "GP Interests"); MJB Investments owns the total economic interests in the Target represented by the LP Interests held by Monty J. Bennett (the "Economic Interests"), which were assigned to it by Monty J. Bennett; Sharkey holds an equity ownership interest in the Target that, subject to certain terms, entitles him to up to $3,000,000 of the total economics in the Target under certain circumstances (the "Profits Interest"), which was issued to him by the Target; the LP Transferors own all of the outstanding equity securities of the General Partner; the Target owns all of the issued and outstanding general partnership interests in Marietta Leasehold, LP (the "Marietta GP Interests"); the LP Transferors own all of the issued and outstanding Class A limited partnership interests in Marietta Leasehold, LP, and three other Persons (the "Marietta Class B Holders") own all of the issued and outstanding Class B limited partnership interests in Marietta Leasehold, LP (collectively, the "Marietta LP Interests" and together with the Marietta GP Interests, the "Marietta Interests").

        B.    Newco desires to acquire, directly and indirectly, and the Remington Holders, Sharkey and MJB Investments desire to transfer to Newco, directly and indirectly, 80% of the LP Interests, 100% of the Profits Interest, 80% of the Economic Interests (the "Transferred Economic Interests"), 100% of the GP Interests, and 100% of the Marietta Interests pursuant to transactions set forth in this Agreement whereby (i) the Target will acquire 100% of the Marietta LP Interests from the LP Transferors and the Marietta Class B Holders, (ii) GP Holdings I and GP Holdings will acquire 100% of the GP Interests (with GP Holdings directly acquiring 100% of the Base GP Interest and GP Holdings I acquiring any Excess GP Interest) and (iii) Newco will acquire the Transferred Economic Interests, the Profits Interest, and all except 20% of the LP Interests (the GP Interests, the Transferred Economic Interests, the Profits Interest and the acquired LP Interests collectively being the "Transferred Securities"), in each case from the Remington Holders, Sharkey or MJB Investments, as applicable, in exchange for the consideration provided in this Agreement.

C-1


Table of Contents

        C.    The Parties intend that the exchange of LP Interests, Transferred Economic Interests, the Profits Interest and any Excess GP Interest for Newco Stock under this Agreement qualify as a tax-free exchange under § 351 of the Code, and that this Agreement, as well as the transactions contemplated pursuant to the Company Contribution Agreement, will together be taken as a plan of exchange under § 351 of the Code.

        THEREFORE, in consideration of the foregoing (which is incorporated by reference in this Agreement), the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which all Parties agree and acknowledge, the Parties intending to be legally bound agree as follows:


ARTICLE I
DEFINITIONS

        The following terms have the meanings specified or referred to in this Article I:

        "Action" means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

        "Adverse Company Recommendation" has the meaning set forth in Section 6.04(d).

        "Adverse Tax Change" means a change in Tax Law after the date of this Agreement (or the interpretation thereof by a taxing authority) as a result of which the exchange of Newco Stock for LP Interests, Transferred Economic Interests and any Excess GP Interest and the contributions contemplated pursuant to the Company Contribution Agreement would not qualify as a tax-free exchange under § 351 of the Code.

        "Affiliate" of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term "control" (including derivative terms the terms) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

        "Affordable Care Act" means the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010.

        "Aggregate Consideration" has the meaning set forth in Section 2.02.

        "Agreement" has the meaning set forth in the Preamble.

        "Assignment" has the meaning set forth in Section 2.04(d)(i).

        "Audited Financial Statements" has the meaning set forth in Section 3.06.

        "Balance Sheet" has the meaning set forth in Section 3.06.

        "Balance Sheet Date" has the meaning set forth in Section 3.06.

        "Base GP Interest" means the portion of the GP Interest that has a fair market value equal to the fair market value of the Newco Sub Note as of the Closing Date.

        "Basket" has the meaning set forth in Section 9.02(a).

        "Benefit Plan" has the meaning set forth in Section 3.19(a).

        "BMO" means BMO Capital Markets Corp.

        "Business Day" means any day except Saturday, Sunday or any other day on which commercial banks located in Dallas, Texas are authorized or required by Law to be closed for business.

C-2


Table of Contents

        "CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

        "Closing" has the meaning set forth in Section 2.05.

        "Closing Adjustment" has the meaning set forth in Section 2.06(a)(ii).

        "Closing Date" has the meaning set forth in Section 2.05.

        "Closing Working Capital" means: (a) Current Assets, less (b) Current Liabilities, determined as of the open of business on the Closing Date.

        "Closing Working Capital Statement" has the meaning set forth in Section 2.06(b)(i).

        "Code" means the Internal Revenue Code of 1986.

        "Commencement Date" means, with respect to each Remington Holder, the date after the Closing Date on or after which such Remington Holder is not an officer, director, or employee of the Company and its Affiliates.

        "Company" has the meaning set forth in the Preamble.

        "Company Acquisition Proposal" means any proposal or offer relating to (a) a merger, consolidation, share exchange or business combination involving the Company or any of its Subsidiaries representing 10% or more of the assets of the Company and its Subsidiaries, taken as a whole, (b) a sale, lease, exchange, mortgage, transfer or other disposition, in a single transaction or series of related transactions, of 10% or more of the assets of the Company and its Subsidiaries, taken as a whole, (c) a purchase or sale of shares of capital stock or other securities, in a single transaction or series of related transactions, representing 10% or more of the voting power of the capital stock of the Company, including by way of a tender offer or exchange offer or (d) any other transaction having a similar effect to those described in clauses (a) through (c).

        "Company Board" means the Board of Directors of the Company.

        "Company Common Stock" means the common stock, par value $0.01 per share, of the Company.

        "Company Contribution Agreement" means the Contribution Agreement, dated as of the Closing Date, between the Company and Newco, in form and substance reasonably satisfactory to the Company and the Remington Holders, setting forth the terms and conditions upon which the Company will contribute substantially all of its assets to Newco, and Newco will assume all of the liabilities of the Company.

        "Company Intervening Event" means an event, change, development, effect, occurrence or state of facts, in each case (a) that is material to the Transactions taken as a whole, (b) that arises or occurs after the date of this Agreement and that becomes known to the Special Committee before the Required Stockholder Vote, and (c) that, prior to the date of this Agreement, was not known to or reasonably foreseeable by the Special Committee; provided, that in no event will the receipt, existence of, or terms of a Company Acquisition Proposal or any inquiry relating to a Company Acquisition Proposal or any consequence thereof constitute an Intervening Event.

        "Company Material Adverse Effect" means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Company and its subsidiaries, taken as a whole, or (b) the ability of the Company to consummate the Transactions on a timely basis; provided, however, that "Company Material Adverse Effect" will not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions, (ii) conditions generally affecting the industries in which the Company

C-3


Table of Contents

operates; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement, except pursuant to Section 3.05 and Section 6.07; (vi) any changes in applicable Laws or accounting rules, including GAAP; (vii) any action taken or omission by Ashford Hospitality Trust, Inc. or Ashford Hospitality Prime, Inc., or by any Person controlled by the Remington Holders; (viii) the public announcement, pendency, or completion of the Transactions or the Transaction Documents; or (ix) resulting from acts of god, such as hurricanes, tornadoes, floods, earthquakes or other natural disasters; provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (iv), (vi) and (ix) immediately above will be taken into account in determining whether a Company Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on the Company compared to other participants in the industries in which the Company conducts its businesses.

        "Company Parties" means the Company, Newco, Newco Sub, GP Holdings I, GP Holdings and (after the Closing) the Target Companies and their respective Subsidiaries.

        "Company Recommendation" has the meaning set forth in Section 6.08(a).

        "Company SEC Documents" has the meaning set forth in Section 4.05(a).

        "Company Subsidiary" means a Company Party other than the Company.

        "Company Superior Proposal" means an unsolicited bona fide Company Acquisition Proposal (except that references to "10%" in the definition of such term will be deemed to be references to "50%") made in writing and not solicited in violation of Section 6.04 that the Special Committee has determined in its good faith judgment, after receipt of advice from the Special Committee's financial advisor and legal counsel, (a) is reasonably likely to be consummated in accordance with its terms, taking into account all legal, financial and regulatory aspects of the proposal and the Person making the proposal (including any conditions relating to financing, regulatory approvals or other events or circumstances beyond the control of the party invoking the condition), and (b) if consummated, would result in a transaction more favorable to the stockholders of the Company (excluding the Remington Holders and their Affiliates, and including Ashford Hospitality Trust, Inc. and Ashford Hospitality Prime, Inc.) from a financial point of view (including the effect of any Parent Termination Fee required under this Agreement) than the Transactions (after taking into account any revisions to the terms of the transaction contemplated by Section 6.04(e) and the time likely to be required to consummate such Company Acquisition Proposal).

        "Company's Accountants" means Ernst & Young LLP.

        "Contract" means any contract, lease, deed, mortgage, license, instrument, note, commitment, undertaking, indenture, joint venture and every other agreement, understanding, commitments and legally binding arrangements, whether written or oral.

        "Contributed Assets" means the assets contributed pursuant to the Company Contribution Agreement.

        "Current Assets" means the current assets of the Target Companies, including cash and cash equivalents, accounts receivable, inventory and prepaid expenses, but excluding (a) the portion of any prepaid expenses of which the Target Companies will not receive the benefit following the Closing, and (b) deferred Tax assets, each as determined in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Audited Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.

C-4


Table of Contents

        "Current Liabilities" means current liabilities of the Target Companies, including accounts payable, accrued Taxes and accrued expenses, but excluding (a) the current portion of long term debt, and (b) deferred Tax liabilities, each as determined in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Audited Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.

        "DGCL" means the Delaware General Corporation Law.

        "Disclosure Schedules" means the Disclosure Schedules delivered by the Remington Holders and Target to the Company and delivered by the Company to the Remington Holders, as applicable, simultaneously with the execution and delivery of this Agreement.

        "Disputed Amounts" has the meaning set forth in Section 2.06(c)(iii).

        "Dollars or $" means the lawful currency of the United States.

        "Economic Interests" has the meaning set forth in the Preliminary Statements.

        "Encumbrance" means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal or offers, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

        "Environmental Claim" means any Action, Governmental Order, Encumbrance, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

        "Environmental Law" means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term "Environmental Law" includes the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

        "Environmental Notice" means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

C-5


Table of Contents

        "Environmental Permit" means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.

        "ERISA" means the Employee Retirement Income Security Act of 1974.

        "ERISA Affiliate" means all employers, trades or businesses (whether or not incorporated) that would be treated together with the Target or any of its Affiliates as a "single employer" within the meaning of Section 414 of the Code.

        "Estimated Closing Working Capital" has the meaning set forth in Section 2.06(a)(i).

        "Estimated Closing Working Capital Statement" has the meaning set forth in Section 2.06(a)(i).

        "Excess GP Interest" has the meaning set forth in Section 7.01(c).

        "Excess Stock" has the meaning set forth in Section 7.01(c).

        "Exchanges" has the meaning set forth in Section 7.01(b).

        "Excluded Tax Contracts" means Contracts entered into in the ordinary course of business, which Contracts do not deal principally with the allocation or sharing of Taxes, and in which Contracts the provisions dealing with Taxes are of a type typically included in such Contracts (such as employment agreements, leases and loan agreements).

        "Existing Indemnification Agreements" has the meaning set forth in Section 6.14(d).

        "Fairness Opinion" has the meaning set forth in Section 4.12.

        "Financial Statements" has the meaning set forth in Section 3.06.

        "GAAP" means United States generally accepted accounting principles in effect from time to time.

        "General Partner" has the meaning set forth in the Preamble.

        "Government Contracts" has the meaning set forth in Section 3.10(a)(ix).

        "Governmental Authority" means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

        "Governmental Order" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

        "GP Holdings" has the meaning set forth in the Preamble.

        "GP Holdings I" has the meaning set forth in the Preamble.

        "GP Holdings Certificate of Formation" means the Certificate of Formation of GP Holdings as in effect on the date of this Agreement and in the form of Exhibit A.

        "GP Holdings I Certificate of Formation" means the Certificate of Formation of GP Holdings I as in effect on the date of this Agreement and in the form of Exhibit B.

        "GP Interests" has the meaning set forth in the Preliminary Statements.

        "Hazardous Materials" means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive

C-6


Table of Contents

materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

        "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

        "Independent Accountant" has the meaning set forth in Section 2.06(c)(iii).

        "Insurance Policies" has the meaning set forth in Section 3.15.

        "Intellectual Property" means all intellectual property and industrial property rights and assets, and all rights, interests and protections that are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, pursuant to any Law, whether registered or unregistered, including any and all: (a) trademarks, service marks, trade names, brand names, logos, trade dress, design rights and other similar designations of source, sponsorship, association or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications and renewals for, any of the foregoing; (b) internet domain names, whether or not trademarks, registered in any top-level domain by any authorized private registrar or Governmental Authority, web addresses, web pages, websites and related content, accounts with Twitter, Facebook and other social media companies and the content found thereon and related thereto, and URLs; (c) works of authorship, expressions, designs and design registrations, whether or not copyrightable, including copyrights, author, performer, moral and neighboring rights, and all registrations, applications for registration and renewals of such copyrights; (d) inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections and other confidential and proprietary information and all rights therein; (e) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other Governmental Authority-issued indicia of invention ownership (including inventor's certificates, petty patents and patent utility models); and (f) software and firmware, including data files, source code, object code, application programming interfaces, architecture, files, records, schematics, computerized databases and other related specifications and documentation.

        "Interim Balance Sheet" has the meaning set forth in Section 3.06.

        "Interim Balance Sheet Date" has the meaning set forth in Section 3.06.

        "Interim Financial Statements" has the meaning set forth in Section 3.06.

        "Investor Rights Agreement" means the Investor Rights Agreement, dated as of the Closing Date, between the Company, Newco, Newco Sub, the Target, the Remington Holders, Sharkey and MJB Investments, in the form of Exhibit C.

        "Knowledge of the Company or the Company's Knowledge" or any other similar knowledge qualification with respect to the Company, means the actual knowledge of any member of the Special Committee after good-faith inquiry, which good-faith inquiry means the Special Committee providing the representations and warranties contained in Article IV of this Agreement to the "named executive officers," within the meaning of Item 402 of Regulation S-K under the Exchange Act, of the Company, excluding Monty J. Bennett, and inquiring of such individuals whether such representations and warranties are true and correct.

        "Knowledge of the Remington Holders or the Remington Holders' Knowledge" or any other similar knowledge qualification with respect to Remington Holders, means the actual knowledge of each of Archie Bennett, Jr., Monty J. Bennett, Mark A. Sharkey, Robert Haiman and Sheryl Ransome, in each case after good-faith inquiry, which good-faith inquiry means the Remington Holders providing the representations and warranties contained in Article III of this Agreement to the individuals listed in this definition and inquiring of such individuals whether such representations and warranties are true and correct.

C-7


Table of Contents

        "Law" means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

        "Liabilities" has the meaning set forth in Section 3.07.

        "LP Interest Assignment" has the meaning set forth in Section 2.04(b)(i).

        "LP Interests" has the meaning set forth in the Preliminary Statements.

        "LP Transferors" has the meaning set forth in the Preamble.

        "Management Agreement" means the Management Agreement, dated as of the Closing Date, between the Company and Newco, in form and substance reasonably satisfactory to the Company and the Remington Holders, pursuant to which (a) the Company, as the parent corporation of Newco, will provide management services to, and perform other services and incur expenses for the benefit of, Newco and its Subsidiaries after the Closing, and (b) Newco and its Subsidiaries will make payments to the Company of management fees and reimburse the Company for the actual costs and expenses of the Company reasonably necessary for it to operate in compliance with all applicable laws and regulations and otherwise on a basis consistent with the Transaction Documents. Such costs and expenses may include, without limitation, those incurred, solely by the Company and not by any Subsidiary of the Company, in: compensation of executive management; recruiting, retaining, and compensating board members; fulfillment of public company reporting, compliance, taxes, business and any other licensing fees, and other related obligations; listing securities on securities exchanges and maintaining such listing; insurance, including director and officer insurance; indemnifying and advancing expenses to directors, officers and other persons; retaining public accountants; retaining legal counsel; litigation management; and discharging settlements or judgments.

        "Management Contracts" has the meaning set forth in Section 3.09(a).

        "Marietta Class B Holders" has the meaning set forth in the Preliminary Statements.

        "Marietta GP Interests" has the meaning set forth in the Preliminary Statements.

        "Marietta Interests" has the meaning set forth in the Preliminary Statements.

        "Marietta LP Interests" has the meaning set forth in the Preliminary Statements.

        "Material Contracts" has the meaning set forth in Section 3.10(a).

        "MJB Investments" has the meaning set forth in the Preliminary Statements.

        "Multiemployer Plan" has the meaning set forth in Section 3.19(c).

        "Newco" is defined in the Preamble.

        "Newco Certificate of Incorporation" means the Certificate of Incorporation of Newco as in effect on the date of this Agreement and in the form of Exhibit D.

        "Newco Common Stock" means the Newco Voting Common Stock and the Newco Nonvoting Common Stock.

        "Newco Contribution Agreement" means the Contribution Agreement, dated as of the Closing Date, between Newco and Newco Sub, in form and substance reasonably satisfactory to the Company and the Remington Holders, setting forth the terms upon which Newco will contribute the Transferred Securities, as applicable, to Newco Sub.

        "Newco Nonvoting Common Stock" means the authorized Class B nonvoting common stock of Newco, par value $0.01 per share, provided for in the Newco Certificate of Incorporation.

C-8


Table of Contents

        "Newco Preferred Stock" means shares of nonvoting preferred stock of Newco, par value $25 per share, convertible into shares of Newco Nonvoting Common Stock, as authorized by the Newco Preferred Stock Certificate of Designations.

        "Newco Preferred Stock Certificate of Designation" means the preferred stock certificate of designation of Newco setting forth the rights and preferences of the Newco Preferred Stock, to be effective as of the Closing, in the form of Exhibit E.

        "Newco Stock" means Newco Common Stock or Newco Preferred Stock.

        "Newco Sub" is defined in the Preamble.

        "Newco Sub Certificate of Incorporation" means the Certificate of Incorporation of Newco Sub as in effect on the date of this Agreement and in the form of Exhibit F.

        "Newco Sub Common Stock" means the authorized common stock of Newco Sub, par value $0.01 per share, as provided for in Newco Sub Certificate of Incorporation.

        "Newco Sub Contribution Agreement" means the Contribution Agreement, dated as of the Closing Date, between Newco Sub and GP Holdings, in form and substance reasonably satisfactory to the Company and the Remington Holders, setting forth the terms upon which Newco Sub will contribute the Transferred Securities, as applicable, to GP Holdings.

        "Newco Sub Note" means the non-negotiable promissory note or notes (if more than one such note is requested by the General Partner prior to the Closing) to be issued by Newco Sub to the General Partner at the Closing in the aggregate principal amount of $10,000,000 that are payable in 16 consecutive and equal quarterly installments commencing on the first day of the month that is 90 days after the Closing Date, in form and substance reasonably satisfactory to the Company and the Remington Holders.

        "Newco Voting Common Stock" means the authorized Class A voting common stock of Newco, par value $0.01 per share, provided for in the Newco Certificate of Incorporation.

        "Office Leases" means the (a) Office Lease, dated December 2, 2003, by and between Centura Tower, Ltd. and Remington Hotel Corporation, as amended, relating to Centura Tower I, Suite 1100, 14185 Dallas Parkway, Dallas, Texas 75254, (b) Sublease Agreement, dated as of December 3, 2003, by and between Remington Hotel Corporation and Ashford Hospitality Trust, Inc., and (c) Lease Agreement, dated September 6, 2013, by and among Remington Hotel Corporation and Crow-Billingsley McKinney 380, Ltd., Trammell Crow Company No. 33 Ltd., Crow-Billingsley Belt Line, Ltd., Hemingway Development Corp., Inc., PBC 14 AR LAND, Ltd., Henry Land, Ltd., Billingsley Lake Carolyn Partners, Ltd., University Business Park Phase I Limited, Crow-Billingsley Plano Parkway, Ltd., Crow-Billingsley UMF Plano, Ltd., 5050 Luna No. 2, LLC, Savoy Realty Company, Limited, Crow-Billingsley Marsh Lane, Ltd., CB Beltline No. 1, Ltd., Crow-Billingsley BC Land, Ltd., 5050 Thimphu, LLC and Billingsley ML 5050, Ltd., relating to Suite No. 500, 5050 Quorum Drive, Addison, Texas 75254.

        "Organizational Documents" means (a) in the case of a Person that is a corporation, its articles or certificate of incorporation and its by-laws, regulations or similar governing instruments required by the laws of its jurisdiction of formation or organization; (b) in the case of a Person that is a partnership, its articles or certificate of partnership, formation or association, and its partnership agreement (in each case, limited, limited liability, general or otherwise); (c) in the case of a Person that is a limited liability company, its articles or certificate of formation or organization, and its limited liability company agreement or operating agreement; and (d) in the case of a Person that is none of a corporation, partnership (limited, limited liability, general or otherwise), limited liability company or natural person, its governing instruments as required or contemplated by the laws of its jurisdiction of organization.

C-9


Table of Contents

        "Parent Termination Fee" has the meaning set forth in Section 10.02(b).

        "Party" means each Person executing and delivering this Agreement and its permitted successors and assigns.

        "Permit" means any permit, license, franchise, approval, authorization, registration, certificate, variance and similar rights obtained, or required to be obtained, from Governmental Authorities.

        "Permitted Encumbrances" has the meaning set forth in Section 3.11(a).

        "Person" means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

        "Post-Closing Adjustment" has the meaning set forth in Section 2.06(b)(ii).

        "Post-Closing Tax Period" means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.

        "Pre-Closing Tax Period" means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

        "Private Letter Ruling" has the meaning set forth in Section 8.01(e).

        "Profits Interest Assignment" has the meaning set forth in Section 2.04(d)(i).

        "Proxy Statement" has the meaning set forth in Section 4.05(c).

        "Qualified Benefit Plan" has the meaning set forth in Section 3.19(c).

        "Real Property" means any and all real property owned, leased or subleased by the Target Companies, together with all buildings, structures and facilities located thereon.

        "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Closing Date, in form and substance reasonably satisfactory to the Company and the Remington Holders, relating to the registration of the shares of Company Common Stock issued in respect of the exercise of the call and put rights contemplated under the Investor Rights Agreement.

        "Release" means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

        "Remington Holder Adverse Tax Change" means a change in Tax Law after the date of this Agreement (or the clarification or interpretation thereof by a taxing authority in the form of published guidance) as a result of which (a) the exchange of Newco Stock for LP Interests, Transferred Economic Interests and any Excess GP Interest and the contribution contemplated pursuant to the Company Contribution Agreement would not qualify as a tax-free exchange under § 351 of the Code, (b) the exchange of Newco Stock for LP Interests, Transferred Economic Interests and any Excess GP Interest, or the distribution of any Excess Stock by the General Partner pursuant to Section 7.01(b)(iii) would cause any Remington Holder to recognize any material taxable income for federal income tax purposes, or (c) dividends on the Newco Stock would not be "qualified dividend income" within the meaning of § 1(h)(11) of the Code, in whole or in part.

        "Remington Holders" has the meaning set forth in the Preamble.

C-10


Table of Contents

        "Remington Holder Acquisition Proposal" means any inquiry, proposal or offer from any Person (other than the Company or any of its controlled Affiliates) concerning (a) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination involving any of the Target Companies representing 10% or more of the assets of the Target Companies, (b) a sale, lease, exchange, mortgage, transfer or other disposition, in a single transaction or series of related transactions, of 10% or more of the assets of the Target Companies, (c) a purchase or sale of shares of capital stock or other securities, in a single transaction or series of related transactions, representing any of the voting power of the capital stock of the Target Companies or the General Partner or (d) any other transaction having a similar effect to those described in clauses (a) through (c).

        "Remington Holder Related Party" means the Target Companies, the Remington Holders, or their immediate family members, and any of the Remington Holders' Affiliates the majority of equity interests in which are beneficially owned by any of the Remington Holders, and any executive officer or director of any such Affiliate.

        "Remington Holders' Accountants" means the certified public accounting firm, BKD LLP.

        "Representative" means, with respect to any Person, any and all directors, managing members, managers, officers, employees, consultants, financial advisors, counsel, accountants and agents of such Person.

        "Required Stockholder Vote" means the affirmative vote of a majority of the issued and outstanding shares of Company Common Stock authorizing and approving this Agreement, the other Transaction Documents, and the Transactions, to the extent required by the DGCL or the rules of the NYSE MKT.

        "Resolution Period" has the meaning set forth in Section 2.06(c)(ii).

        "Review Period" has the meaning set forth in Section 2.06(c)(i).

        "SEC" means the United States Securities and Exchange Commission, or any successor Governmental Agency administering United States federal securities laws.

        "Sharkey" has the meaning set forth in the Preamble.

        "Special Committee" means the Special Committee of the Company Board constituted to consider, among other things, this Agreement and the Transactions.

        "Statement of Objections" has the meaning set forth in Section 2.06(c)(ii).

        "Stockholder Meeting" has the meaning set forth in Section 6.08(a).

        "Straddle Period" has the meaning set forth in Section 7.04(a).

        "Subsidiary" means, with respect to any Person, any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation's or other Person's board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than equity securities or other interests having such power only upon the happening of a contingency that has not occurred) are held by such Person of one or more of its Subsidiaries. When used without reference to a particular Person, "Subsidiary" means a Subsidiary of the Target.

        "Target" has the meaning set forth in the Preamble.

        "Target Companies" means the Target and its Subsidiaries, collectively, and "Target Company" means any one of the Target Companies.

        "Target Intellectual Property" means all Intellectual Property that is owned, licensed or held for use by the Target Companies.

C-11


Table of Contents

        "Target IP Agreements" means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, permissions and other Contracts (including any right to receive or obligation to pay royalties or any other consideration), whether written or oral, relating to Intellectual Property to which any of the Target Companies is a party, beneficiary or otherwise bound.

        "Target IP Registrations" means all Target Intellectual Property that is subject to any issuance registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

        "Target Limited Partnership Agreement" means the Limited Partnership Agreement of the Target, dated as of the Closing Date, between the General Partner and the other parties thereto, in the form of Exhibit G.

        "Target Material Adverse Effect" means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise), or assets of any of the Target Companies, taken as a whole, or (b) the ability of the Remington Holders to consummate the Transactions on a timely basis; provided, however, that "Target Material Adverse Effect" will not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions, (ii) conditions generally affecting the industries in which the Target operates; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement, except pursuant to Section 3.05 and Section 6.07; (vi) any changes in applicable Laws or accounting rules, including GAAP; (vii) any action taken or omission by any Person controlled by the Company; (viii) the public announcement, pendency, or completion of the Transactions or the Transaction Documents; or (ix) resulting from acts of god, such as hurricanes, tornadoes, floods, earthquakes or other natural disasters; provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (iv), (vi), and (ix) immediately above will be taken into account in determining whether a Target Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on the Target compared to other participants in the industries in which the Target conducts its businesses.

        "Target Schedule Supplement" has the meaning set forth in Section 6.05(c).

        "Target Securities" means the issued and outstanding equity interests (including limited and general partnership interests and limited liability company interests) of the Target.

        "Target Working Capital" has the meaning set forth in Section 2.06(a)(ii).

        "Taxes" means (a) any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under § 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, escheat or unclaimed property, alternative or add-on minimum, estimated, or other tax or like governmental assessment or charge, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, including any interest, penalty, or addition thereto, whether disputed or not, in each case imposed by a Government Authority (b) any liability for the payment of any amount of a type described in clause (a) arising as a result of being or having been a member of any consolidated, combined, unitary or similar group or being or having been included or required to be included in any Tax Return related thereto, and (c) any liability for or in respect of the payment of any amount of any items described in clause (a) or clause (b) as a result of any contract, assumption or operation of Law, or as a result of being a transferee or successor to any Person or as a result of any express or implied obligation to indemnify any other Person.

C-12


Table of Contents

        "Tax Claim" has the meaning set forth in Section 7.05.

        "Tax Return" means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, filed or required to be filed with a Governmental Authority.

        "Termination Date" has the meaning set forth in Section 10.01(b)(ii).

        "Transaction Costs" has the meaning set forth in Section 11.01.

        "Transaction Documents" means this Agreement, the Newco Certificate of Incorporation, the Newco Preferred Stock Certificate of Designation, the GP Holdings I Certificate of Formation, the Newco Sub Certificate of Incorporation, the GP Holdings Certificate of Formation, the Company Contribution Agreement, the Newco Contribution Agreement, the Newco Sub Contribution Agreement, the Investor Rights Agreement, the Target Limited Partnership Agreement, the Management Agreement, and the Registration Rights Agreement.

        "Transactions" means all of the transactions contemplated by this Agreement and the other Transaction Documents, including the exchange of the Transferred Securities pursuant to this Agreement, the issuance of the Newco Securities, the contributions pursuant to the Company Contribution Agreement, the Newco Contribution Agreement and the Newco Sub Contribution Agreement, the performance of the obligations under the Investor Rights Agreement, and the Stockholder Meeting.

        "Transfer Tax" has the meaning set forth in Section 7.01(e).

        "Transferred Economic Interests" has the meaning set forth in the Preliminary Statements.

        "Transferred Securities" has the meaning set forth in the Preliminary Statements.

        "Undisputed Amounts" has the meaning set forth in Section 2.06(c)(iii).

        "Union" has the meaning set forth in Section 3.20(a).

        "WARN Act" means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.


ARTICLE II
ACQUISITION; TRANSACTIONS

        Section 2.01    Acquisition.     Subject to the terms and conditions set forth in this Agreement, at the Closing, the Remington Holders, Sharkey and MJB Investments, as applicable, agree to transfer all of the Remington Holders', Sharkey's and MJB Investments' right, title and interest in and to (a) 80% of the LP Interests to Newco, and the Company agrees to cause Newco to acquire the same from the Remington Holders, as applicable, (b) all of the Transferred Economic Interests to Newco, and the Company agrees to cause Newco to acquire the same from MJB Investments, (c) all of the Profits Interest to Newco, and the Company agrees to cause Newco to acquire the same from Sharkey, and (d) the GP Interests to GP Holdings I or GP Holdings (with GP Holdings directly acquiring 100% of the Base GP Interest and GP Holdings I acquiring any Excess GP Interest), and Newco and Newco Sub agrees to cause GP Holdings I and GP Holdings, respectively, to acquire the same from the Remington Holders, as applicable, in each case for the consideration specified in Section 2.02.


        
Section 2.02    Consideration.     The aggregate consideration for the Transferred Securities (the "Aggregate Consideration") will be $331,650,000 to be funded through:

C-13


Table of Contents

        The portions of the Aggregate Consideration that will be allocated to each of the Remington Holders and MJB Investments is as set forth on Schedule 2.02. Subject to the execution of a mutually acceptable agreement between the Target and Sharkey pertaining to the terms of the Profits Interest, the portion of the Aggregate Consideration that will be allocated to Sharkey is as set forth on Schedule 2.02.


        
Section 2.03    Transactions To Be Effected Preparatory to and at the Closing.     

C-14


Table of Contents


        
Section 2.04    Transactions to be Effected at the Closing.     

C-15


Table of Contents


        
Section 2.05    Closing.     Subject to the terms and conditions of this Agreement, the transfer of the Transferred Securities contemplated by this Agreement will take place at a closing (the "Closing") to be held at 10:00 a.m., Dallas, Texas time, no later than two weeks after the last of the conditions to Closing set forth in Article VIII have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), at the offices of Norton Rose Fulbright US LLP, 2200 Ross Avenue, Suite 3600, Dallas, Texas 75201, or at such other time or on such other date or at such other place as the Remington Holders and the Company may mutually agree upon in writing (the day on which the Closing takes place being the "Closing Date").


        
Section 2.06    Aggregate Consideration Adjustment.     

C-16


Table of Contents

C-17


Table of Contents


ARTICLE III
REPRESENTATIONS AND WARRANTIES OF REMINGTON HOLDERS

        Except as set forth in the Disclosure Schedules, the Remington Holders, severally, but not jointly, represent and warrant to the Company as set forth below in this Article III. For the avoidance of doubt, no representations or warranties are being made by the Target, MJB Investments or Sharkey.


        
Section 3.01    Organization and Authority of the Remington Holders and MJB Investments.     Each of the Remington Holders, Sharkey and MJB Investments has the power and capacity to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to carry out its obligations under this Agreement and the other Transaction Documents to which it is party and to consummate the Transactions. The General Partner has given all required consent for the Remington Holders to consummate the Transactions. By executing and delivering this Agreement the Remington Holders, Sharkey and MJB Investments consent in writing to the execution, delivery, and performance of this Agreement and the other Transaction Documents to which it is a party. The execution and delivery by the Remington Holders, Sharkey and MJB Investments of this Agreement and the other Transaction Document to which it is a party, the performance by the Remington Holders, Sharkey and MJB Investments of their obligations under this Agreement and the other Transaction Documents to which it is a party and the consummation by the Remington Holders, Sharkey and MJB Investments of the Transactions do not require the permission, consent or waiver of any other Person. This Agreement has been duly executed and delivered by the Remington Holders, Sharkey and MJB Investments, and (assuming due authorization, execution and delivery by the other Parties) this Agreement constitutes a legal, valid and binding obligation of the Remington Holders, Sharkey and MJB Investments enforceable against the Remington Holders, Sharkey and MJB Investments in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). When the other Transaction Documents to which the Remington Holders, Sharkey and MJB Investments are or will be a party have been duly executed and delivered by the Remington Holders, Sharkey and MJB Investments (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of the Remington Holders, Sharkey and MJB Investments enforceable against them in accordance with their terms, except as such

C-18


Table of Contents

enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). The General Partner has full limited liability company power and authority to enter into this Agreement and the other Transaction Documents to which the General Partner is a party, to carry out its obligations under this Agreement and the other Transaction Documents and to consummate the Transactions. The execution and delivery by the General Partner of this Agreement and any other Transaction Document to which the General Partner is a party, the performance by the General Partner of its obligations under this Agreement and the other Transaction Documents and the consummation of the Transactions by the General Partner have been duly authorized by all requisite corporate action on the part of the General Partner.


        
Section 3.02    Organization, Authority and Qualification of the Target Companies.     Schedule 3.02 sets forth, for each of the Target Companies, its legal name, its type of legal entity, its jurisdiction of organization, and each jurisdiction in which it is qualified to do business as a foreign entity. Each of the Target Companies is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has full power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. The General Partner is a limited liability company duly organized, validly existing and in good standing under the Laws of the state of Delaware and has full limited liability company power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is now currently conducted. Schedule 3.02 sets forth each jurisdiction in which each of the Target Companies is licensed or qualified to do business, and each of the Target Companies is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not have a material effect on such Target Company. All actions taken by each of the Target Companies in connection with this Agreement and the other Transaction Documents will be duly authorized on or prior to the Closing. The Remington Holders have delivered to the Company copies of the Organizational Documents of each of the Target Companies. None of the Target Companies is in default under or in violation of any of its Organizational Documents.


        
Section 3.03    Capitalization.     

C-19


Table of Contents


        
Section 3.04    Subsidiaries.     Except as set forth in Schedule 3.04, the Target does not own, or have any interest in any securities or have any ownership interest in any other Person, except for (a) the equity securities of its Subsidiaries, all of which, except as set forth in Schedule 3.04, are owned solely by the Target, and (b)  marketable securities held in the ordinary course of business as short term investments included in cash equivalents on the balance sheet of the Target.


        
Section 3.05    No Conflicts; Consents.     The execution, delivery and performance by the Remington Holders and the Target of this Agreement and the other Transaction Documents to which they are a party, and the consummation of the Transactions and the other Transaction Documents, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the Organizational Documents of any of the Target Companies; (b) conflict with or result in a violation or breach, in any material respect, of any provision of any Law or Governmental Order applicable to the Remington Holders or any of the Target Companies; (c) except as set forth in Schedule 3.05, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which the Remington Holders or any of the Target Companies is a party as a principal or by which the Remington Holders or any of the Target Companies is bound or to which any of their respective properties and assets are subject (including any Material Contract) or any Permit affecting the properties, assets or business of any of the Target Companies; or (d) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on any properties or assets of any of the Target Companies, except where the conflict, violation, breach, default, acceleration, termination, modification, cancellation, failure to give notice or Encumbrance would not be material, individually or in the aggregate, to any of the Target Companies. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to the Remington Holders or any of the Target Companies, in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the Transactions, except for such filings as may be required under the HSR Act, and such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which, in the aggregate, would not be material to any of the Target Companies.


        
Section 3.06    Financial Statements.     True, correct and complete copies of the Target's consolidated (a) audited financial statements consisting of balance sheets as of December 31 in each of the years 2014, 2013 and 2012 and the related statements of income and retained earnings, members' or partners' equity and cash flows for each of the years then ended (collectively, the "Audited Financial Statements"), and (b) the unaudited financial statements consisting of the balance sheets as at June 30, 2015 and the related statements of income and retained earnings, partners' equity and cash flows for the six-month period then ended (the "Interim Financial Statements" and together with the Audited Financial Statements, the "Financial Statements") are included as Schedule 3.06. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring

C-20


Table of Contents

year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Audited Financial Statements). The Financial Statements are based on the books and records of the Target Companies, and fairly present in all material respects the financial condition of the Target Companies as of the respective dates they were prepared and the results of the operations of the Target Companies for the periods indicated. The balance sheet of the Target Companies as of December 31, 2014 is referred to in this Agreement as the "Balance Sheet" and such date is the "Balance Sheet Date" and the balance sheet of the Target Companies as of June 30, 2015 is referred to in this Agreement as the "Interim Balance Sheet" and such date is the "Interim Balance Sheet Date."


        
Section 3.07    Undisclosed Liabilities.     The Target Companies (a), to the Knowledge of the Remington Holders, have no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise and (b) have no liabilities, obligations or commitments of a type required to be reflected on financial statements or notes thereto prepared in accordance with GAAP (collectively, "Liabilities"), except: (i) those that are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet Date; (ii) those that have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date and that are not, individually or in the aggregate, material in amount; or (iii) as set forth on Schedule 3.07.


        
Section 3.08    Absence of Certain Changes, Events and Conditions.     Except as set forth on Schedule 3.08 or as expressly contemplated by this Agreement, since the Balance Sheet Date, and other than in the ordinary course of business consistent with past practice, there has not been, with respect to any of the Target Companies, any:

C-21


Table of Contents

C-22


Table of Contents


        
Section 3.09    Management Contracts.     


        
Section 3.10    Material Contracts.     

C-23


Table of Contents

C-24


Table of Contents


        
Section 3.11    Title to Assets; Real Property.     


        
Section 3.12    Condition and Sufficiency of Assets.     The buildings, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property owned or leased by the Target Companies, together with all other properties and assets of the Target Companies, if any, constitute all of the rights, property and assets necessary to conduct the business of the Target Companies in all material respects as currently conducted.

C-25


Table of Contents


        
Section 3.13    Intellectual Property.     

C-26


Table of Contents


        Section 3.14    Accounts Receivable.     The accounts receivable reflected on the Interim Balance Sheet and the accounts receivable arising after the date thereof and included in the Closing Working Capital Statement (a) have arisen from bona fide transactions entered into by the Target Companies involving the sale of goods or the rendering of services in the ordinary course of business consistent with past practice; (b) constitute only valid, undisputed claims of the Target Companies not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course of business consistent with past practice; and (c) subject to a reserve for bad debts shown on the Interim Balance Sheet or, with respect to accounts receivable arising after the Interim Balance Sheet Date, on the accounting records of the Target Companies, are collectible in full within 90 days after billing. The reserve for bad debts shown on the Interim Balance Sheet or, with respect to accounts receivable arising after the Interim Balance Sheet Date, on the accounting records of the Target Companies have been determined in accordance with GAAP, consistently applied, subject to normal year-end adjustments and the absence of disclosures normally made in footnotes.


        
Section 3.15    Insurance.     Schedule 3.15 sets forth a true, correct and complete list of all material policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers' compensation, vehicular, directors' and officers' liability, fiduciary liability and other casualty and property insurance maintained by any of the Target Companies (collectively, the "Insurance Policies"). True, correct and complete copies of the Insurance Policies have been made available to the Company. The Insurance Policies are in full force and effect and will remain in full force and effect following the consummation of the Transactions without any increase in premium, charges, fees or penalties resulting from the Transactions. None of the Target Companies or any of their Affiliates (including the Remington Holders) has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any Insurance Policies. All premiums due on the Insurance Policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each Insurance Policy. The Insurance Policies do not provide for any material retrospective premium adjustment or other experience-based liability on the part of the Target Companies. All Insurance Policies (a) are valid and binding in accordance with their terms; and (b) have not been subject to any lapse in coverage. Except as set forth on Schedule 3.15, there are no claims related to the business of the Target Companies pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. None of the Target Companies is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any Insurance Policy.


        
Section 3.16    Legal Proceedings; Governmental Orders.     

C-27


Table of Contents


        
Section 3.17    Compliance With Laws; Permits.     


        
Section 3.18    Environmental Matters.     

C-28


Table of Contents


        
Section 3.19    Employee Benefit Matters.     

C-29


Table of Contents

C-30


Table of Contents


        
Section 3.20    Employment Matters.     


        
Section 3.21    Taxes.     Except as set forth in Schedule 3.21:

C-31


Table of Contents

C-32


Table of Contents

C-33


Table of Contents


        
Section 3.22    Brokers; Financial Advisors.     Except for the Remington Holder's engagement of Robert W. Baird & Co. Incorporated, no broker, finder, financial advisor or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Transactions or any other Transaction Document based upon arrangements made by or on behalf of the Remington Holders or the Target Companies. The LP Transferors will be solely responsible for all fees and amounts owing to Robert W. Baird & Co. Incorporated.


        
Section 3.23    Related Party Transactions.     

C-34


Table of Contents


        Section 3.24    Accredited Investor Status.     


        
Section 3.25    No Other Representations and Warranties.     Except for the representations and warranties contained in this Article III (including the related portions of the Disclosure Schedules), none of the Target, the Remington Holders nor any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Target or the Remington Holders, including any representation or warranty as to the accuracy or completeness of any information regarding the Target furnished or made available to the Company and its Representatives in any form in expectation of the transactions contemplated hereby or as to the future revenue, profitability or success of the Target, or any representation or warranty arising from statute or otherwise in law.


        
Section 3.26    Full Disclosure.     None of the information supplied or to be supplied by the Remington Holders, the Target Companies or any of their Representatives for inclusion or incorporation by reference in the Proxy Statement will, at the time the Proxy Statement is first mailed to the Company's stockholders or at the time of the Stockholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.


ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        Except as set forth in the Disclosure Schedules or as disclosed in the Company SEC Documents, the Company represents and warrants to the Remington Holders as follows in this Article IV. For the avoidance of doubt, no representations or warranties are being made by any member of the Special Committee.

        Section 4.01    Organization and Authority and Qualification of the Company.    The Company is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware and has full corporate power and authority to own, operate or lease the properties and assets

C-35


Table of Contents

now owned, operated or leased by it and to carry out its business as it is currently conducted. The Company has full corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which the Company is a party, to carry out its obligations under this Agreement and the other Transaction Documents and to consummate the Transactions. The Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary, except where failure to be so licensed, qualified or in good standing would not have a Company Material Adverse Effect. The execution and delivery by the Company of this Agreement and any other Transaction Document to which the Company is a party, the performance by the Company of its obligations under this Agreement and the other Transaction Documents and the consummation by the Company of the Transactions have been duly authorized by all requisite corporate action on the part of the Company, except for approval of the stockholders of the Company as required under the DGCL and the rules of the New York Stock Exchange. This Agreement has been duly executed and delivered by the Company, and (assuming due authorization, execution and delivery by the other Parties) this Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). When the other Transaction Documents to which the Company is or will be a party have been duly executed and delivered by the Company (assuming due authorization, execution and delivery by each of the other parties thereto), such Transaction Document will constitute a legal and binding obligation of the Company enforceable against it in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

        Section 4.02    Organizational Documents.    The Company has delivered or made available to the Remington Holders true and correct copies of the Organizational Documents of the Company and each of its Subsidiaries. Neither the Company nor any of its Subsidiaries is in violation of any of the provisions of its Organizational Documents.

        Section 4.03    Subsidiaries.    Schedule 4.03 lists each of the Subsidiaries of the Company as of the date hereof and its place of organization. Schedule 4.03 sets forth, for each Subsidiary that is not, directly or indirectly, wholly owned by the Company, (x) the number and type of any capital stock of, or other equity or voting interests in, such Subsidiary that is outstanding as of the date hereof and (y) the number and type of shares of capital stock of, or other equity or voting interests in, such Subsidiary that, as of the date hereof, are owned, directly or indirectly, by the Company. All of the outstanding shares of capital stock of, or other equity or voting interests in, each Subsidiary of the Company that is owned directly or indirectly by the Company have been validly issued, were issued free of pre-emptive rights, except as set forth on Schedule 4.03, and are fully paid and non-assessable, and are free and clear of all Encumbrances, including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other equity or voting interests, except for any Encumbrances (x) imposed by applicable securities Laws or (y) arising pursuant to the Organizational Documents of any non-wholly owned Subsidiary of the Company. Except for the capital stock of, or other equity or voting interests in, its Subsidiaries, the Company does not own, directly or indirectly, any capital stock of, or other equity or voting interests in, any Person.

        Section 4.04    Capitalization of the Company.    The authorized capital stock of the Company consists of: 200,000,000 authorized shares, consisting of 100,000,000 authorized shares of common stock, 50,000,000 authorized shares of blank check common stock and 50,000,000 authorized shares of blank check preferred stock. As of the date of this Agreement, (x) 1,989,787 shares of common stock were

C-36


Table of Contents

issued and outstanding, and (y) 659 shares of common stock were issued and held by the Company in its treasury. All of the outstanding shares of capital stock of the Company are, and all shares of capital stock of the Company which may be issued as contemplated or permitted by this Agreement will be, when issued, duly authorized and validly issued, fully paid and non-assessable and not subject to any pre-emptive or similar rights (and not issued in violation of any preemptive or similar rights). As of the date of this Agreement, except as set forth in this Section 4.04, (i) there are no other equity securities of the Company or any of its Subsidiaries issued or authorized and reserved for issuance, (ii) there are no outstanding options, warrants, preemptive rights, subscriptions, calls or other rights, convertible securities, exchangeable securities, agreements or commitments of any character obligating the Company or any of its Subsidiaries to issue, transfer or sell any equity interest the Company or such Subsidiary or any securities convertible into or exchangeable for such equity interests, or any commitment to authorize, issue or sell any such equity securities, except pursuant to the Transaction Documents, and (iii) there are no contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any equity interest in the Company or any of its Subsidiaries or any such securities or agreements listed in clause (ii) of this sentence, except pursuant to the Transaction Documents or as set forth on Schedule 4.04. Neither the Company nor any of its Subsidiaries has outstanding bonds, debentures, notes or other Indebtedness, the holders of which have the right to vote (or which are convertible or exchangeable into or exercisable for securities having the right to vote) with the Company's stockholders on any matter. There are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting or registration of capital stock or other equity interest of the Company or any of its Subsidiaries, except pursuant to the Transaction Documents. No Subsidiary of the Company owns any capital stock of the Company.

        Section 4.05    Company SEC Documents; Proxy Statement.    

C-37


Table of Contents

C-38


Table of Contents

        Section 4.06    Absence of Certain Changes or Events.    Since the date of the Company Balance Sheet, except in connection with the execution and delivery of this Agreement and the consummation of the Transactions, the business of the Company and each of its Subsidiaries has been conducted in the ordinary course of business and there has not been or occurred any Company Material Adverse Effect or any event, condition, change or effect that could reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

        Section 4.07    No Conflicts; Consents.    The execution, delivery and performance by each of the Company, Newco, Newco Sub and GP Holdings of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the Transactions, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the Organizational Documents of the Company, Newco or Newco Sub, GP Holdings or any of its other Subsidiaries; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to the Company, Newco, Newco Sub, GP Holdings or any of its other Subsidiaries or any other respective properties or assets; (c) require the consent, notice or other action by any Person under any Contract to which the Company or any of its Subsidiaries is a party as of the date hereof; or (d) result in the creation of an Encumbrance (other than Permitted Encumbrance) on any of the properties or assets of the Company or any of its Subsidiaries. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to the Company, Newco, Newco Sub, GP Holdings or any of its other Subsidiaries in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the Transactions, except for such filings as may be required under the HSR Act and filings expressly described in this Agreement and the other Transaction Documents.

        Section 4.08    Taxes.    

C-39


Table of Contents

        Section 4.09    Legal Proceedings; Governmental Orders.    

C-40


Table of Contents

        Section 4.10    Compliance with Laws; Permits.    

        Section 4.11    Brokers; Financial Advisors.    Except for the Special Committee's engagement of BMO, no broker, finder, financial advisor or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Transactions or any other Transaction Document based upon arrangements made by or on behalf of the Company, the Company Board or the Special Committee. The Company will be responsible for, and will pay when due, all fees and amounts owing to BMO.

        Section 4.12    Fairness Opinion.    The Special Committee and the Company Board have received the opinion of BMO to the effect that, subject to the assumptions, qualifications and limitations relating to such opinion, as of the date of this Agreement, the Aggregate Consideration is fair, from a financial point of view, to the holders of Company Common Stock (the "Fairness Opinion"), and, as of the date of this Agreement, such Fairness Opinion has not been withdrawn, revoked or modified. A true, complete and correct copy of such Fairness Opinion will be delivered to the Remington Holders promptly after the date of this Agreement for informational purposes only.

        Section 4.13    No Other Representations and Warranties.    Except for the representations and warranties contained in this Article IV (including the related portions of the Disclosure Schedules), the Company has not made and does not make any other express or implied representation or warranty, either written or oral, on behalf of the Company, including any representation or warranty as to the accuracy or completeness of any information regarding the Company furnished or made available to the Remington Holders and their Representatives in any form in expectation of the transactions contemplated hereby or as to the future revenue, profitability or success of the Company, or any representation or warranty arising from statute or otherwise in law.

        Section 4.14    Full Disclosure.    None of the information supplied or to be supplied by the Company or any of its Representatives for inclusion or incorporation by reference in the Proxy Statement will, at the time the Proxy Statement is first mailed to the Company's stockholders or at the time of the Stockholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.


ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NEWCO

        Except as set forth in the Disclosure Schedules, Newco represents and warrants to the Company and the Remington Holders as follows:


        
Section 5.01    Organization and Authority of Newco, Newco Sub and GP Holdings.     Newco is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware and has full corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to carry out its obligations under this Agreement

C-41


Table of Contents

and the other Transaction Documents and to consummate the Transactions. Newco Sub is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware and has full corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to carry out its obligations under this Agreement and the other Transaction Documents and to consummate the Transactions. GP Holdings is a limited liability company duly organized, validly existing and in good standing under the Laws of the state of Delaware and has full power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to carry out its obligations under this Agreement and the other Transaction Documents and to consummate the Transactions. The execution and delivery by each of Newco, Newco Sub and GP Holdings of this Agreement and any other Transaction Document to they are a party, the performance by each of them of their obligations under this Agreement and the other Transaction Documents and the consummation by each of them of the Transactions have been duly authorized by all requisite action on the part of Newco, Newco Sub and GP Holdings. This Agreement has been duly executed and delivered by each of Newco, Newco Sub and GP Holdings, and (assuming due authorization, execution and delivery by the other Parties) this Agreement constitutes a legal, valid and binding obligation of each of Newco, Newco Sub and GP Holdings enforceable against each of them in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). When the other Transaction Documents to which Newco, Newco Sub or GP Holdings is or will be a party have been duly executed and delivered by such Party (assuming due authorization, execution and delivery by each other parties thereto), such Transaction Document will constitute a legal and binding obligation of such Party enforceable against it in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).


        
Section 5.02    Capitalization of Newco.     The authorized capital stock of Newco consists of: 113,000,000 shares of capital stock, consisting of (i) 100,000,000 shares of Series A voting common stock, par value $0.01 per share; (ii) 3,500,000 shares of Series B non-voting common stock, par value $0.01 per share); and (iii) 9,500,000 shares of blank check preferred stock, par value $25.00. As of the date of this Agreement, (x) 100 shares of Series A voting common stock were issued and outstanding, and (y) no shares were issued and held by Newco in its treasury. All of the outstanding shares of capital stock of Newco are, and all shares of capital stock of Newco which may be issued as contemplated or permitted by this Agreement will be, when issued, duly authorized and validly issued, fully paid and non-assessable and not subject to any pre-emptive or similar rights (and were not issued in violation of any preemptive or similar rights). As of the date of this Agreement, except as set forth in this Section 5.02 or as contemplated by the other Transaction Documents, (i) there are no other equity securities of Newco or any of its Subsidiaries issued or authorized and reserved for issuance, (ii) there are no outstanding options, warrants, preemptive rights, subscriptions, calls or other rights, convertible securities, exchangeable securities, agreements or commitments of any character obligating Newco or any of its Subsidiaries to issue, transfer or sell any equity interest of Newco or such Subsidiary or any securities convertible into or exchangeable for such equity interests, or any commitment to authorize, issue or sell any such equity securities, except pursuant to this Agreement, and (iii) there are no contractual obligations of Newco or any of its Subsidiaries to repurchase, redeem or otherwise acquire any equity interest in Newco or any of its Subsidiaries or any such securities or agreements listed in clause (ii) of this sentence. Neither Newco nor any of its Subsidiaries has outstanding bonds, debentures, notes or other Indebtedness, the holders of which have the right to vote (or which are convertible or exchangeable into or exercisable for securities having the right to vote) with Newco's stockholders on any matter. There are no voting trusts or other agreements or understandings to which Newco or any of its Subsidiaries is a party with respect to the voting or

C-42


Table of Contents

registration of capital stock or other equity interest of Newco or any of its Subsidiaries. No Subsidiary of Newco owns any capital stock of Newco.


        
Section 5.03    GP Holdings and GP Holdings I.     GP Holdings and GP Holdings I are currently, and at all times since their formation have been, treated as entities disregarded from Newco Sub and Newco, respectively, for federal income tax purposes. No election has been made to treat GP Holdings or GP Holdings I as a corporation for any Tax purposes.


        
Section 5.04    No Other Representations and Warranties.     Except for the representations and warranties contained in this Article V (including the related portions of the Disclosure Schedules), neither Newco nor any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Newco, including any representation or warranty as to the accuracy or completeness of any information regarding Newco furnished or made available to the Remington Holders and its Representatives or to the Company and its Representatives in any form in expectation of the transactions contemplated hereby or as to the future revenue, profitability or success of Newco, or any representation or warranty arising from statute or otherwise in law.


ARTICLE VI
COVENANTS

        Section 6.01    Conduct of Business Prior to the Closing.     From the date of this Agreement until the Closing, except as otherwise provided in this Agreement or consented to in writing by the Company (which consent will not be unreasonably withheld or delayed), the Target Companies and the Remington Holders will (i) conduct the business of the Target Companies in the ordinary course of business consistent with past practice; and (ii) use reasonable best efforts to maintain and preserve intact the current organization, business and franchise of the Target Companies and to preserve the rights, franchises, goodwill and relationships of their employees, customers, lenders, suppliers, regulators and others having business relationships with the Target Companies. Without limiting the foregoing, from the date of this Agreement until the Closing Date, except as consented to in writing by the Company, the Target Companies and the Remington Holders will:

C-43


Table of Contents


        
Section 6.02    Access to Information.     From the date of this Agreement until the Closing, the Target Companies and the Remington Holders will (a) afford the Company and its Representatives full and free access to and the right to inspect all of the Real Property, properties, assets, premises, books and records, Management Contracts and other Contracts, and other documents and data related to the Target Companies; (b) furnish the Company and its Representatives with such financial, operating and other data and information related to the Target Companies as the Company or any of its Representatives may reasonably request; and (c) instruct the Representatives of the Remington Holders and the Target Companies to cooperate with the Company in its investigation of the Target Companies; provided that any such investigation will be conducted during normal business hours upon reasonable advance notice to the Target Companies and in such a manner as not to interfere unreasonably with the normal operations of the Target Companies. No investigation by the Company or other information received by the Company will operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the Target Companies or the Remington Holders in this Agreement or in any other Transaction Document. Notwithstanding anything to the contrary in this Agreement, none of the Remington Holders will be required to provide copies of their individual Tax Returns or workpapers with respect thereto.


        
Section 6.03    No Solicitation by the Target Companies or Remington Holders.     


        
Section 6.04    No Solicitation by the Company; No Adverse Company Recommendation.     

C-44


Table of Contents

C-45


Table of Contents

C-46


Table of Contents


        
Section 6.05    Notice of Certain Target Events.     


        
Section 6.06    Confidentiality.     From and after the Closing, the Remington Holders will hold, and will cause their Affiliates to hold, and will use their best efforts to cause their respective Representatives to hold, in confidence and to use only for the benefit of the Company, Newco, Newco Sub and GP Holdings and the Target Companies any and all information, whether written or oral, concerning the Target Companies, except to the extent that the Remington Holders can show that such information (a) is generally available to and known by the public through no fault of the Remington Holders, any of their Affiliates or their respective Representatives; (b) is lawfully acquired by the Remington Holders, any of their Affiliates or their respective Representatives from and after the Closing from sources that are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation; or (c) is relevant to a Tax audit, examination, litigation, or proceeding or to the filing of a Tax Return. If the Remington Holders or any of their Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by

C-47


Table of Contents

other requirements of Law, the Remington Holders will promptly notify the Company in writing and will disclose only that portion of such information that the Remington Holders are advised by their counsel in writing is legally required to be disclosed, provided that the Remington Holders will use their reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.


        
Section 6.07    Governmental Approvals and Consents; Cooperation.     

C-48


Table of Contents


        
Section 6.08    Stockholder Meeting; Proxy Statement.     

C-49


Table of Contents


        
Section 6.09    Books and Records.     


        
Section 6.10    Closing Conditions.     From the date of this Agreement until the Closing, each Party will take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article VIII.


        
Section 6.11    Public Announcements.     Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no Party will make any public announcements in respect of this Agreement or the Transactions or otherwise communicate with any news media without the prior written consent of the other Parties (which consent will not be unreasonably withheld or delayed), and the Parties will cooperate as to the timing and contents of any such announcement.


        
Section 6.12    Further Assurances.     Following the Closing, each of the Parties will, and will cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions

C-50


Table of Contents

of this Agreement and the other Transaction Documents and give effect to the Transactions. In the event that the agreement referenced in the last sentence of Section 2.02 is not executed by the Target and Sharkey at least five days prior to the Closing, then no such consideration will be allocated to Sharkey and such consideration will instead be proportionately allocated to the Remington Holders and MJB Investments and Schedule 2.02 will be updated accordingly


        
Section 6.13    Knowledge of the Parties.     


        
Section 6.14    Indemnification and Insurance.     

C-51


Table of Contents


ARTICLE VII
TAX MATTERS

        Section 7.01    Tax Covenants.     

C-52


Table of Contents

C-53


Table of Contents


        
Section 7.02    Prohibited Actions.     Subject to and to the extent not inconsistent with Section 7.05, without the prior written consent of the Remington Holders (which consent will not be unreasonably delayed, conditioned or withheld), the Company Parties will not (and will cause their Affiliates,

C-54


Table of Contents

subsidiaries and respective Representatives to not) (a) amend any Tax Return of a Target Company for a Pre-Closing Tax Period or Straddle Period, file a Tax Return of a Target Company for a Pre-Closing Tax Period in a jurisdiction where such Target Company has not historically filed Tax Returns, (b) initiate contact with taxing authorities regarding Taxes or Tax items with respect to any Pre-Closing Tax Period of the Target Companies, (c) make any voluntary disclosures with respect to Taxes or Tax items for Pre-Closing Tax Periods of the Target Companies, (d) change any accounting method or adopt any convention that shifts taxable income from a Post-Closing Tax Period to a Pre-Closing Tax Period or shifts deductions or losses from a Pre-Closing Tax Period to a Post-Closing Tax Period, (e) make any Tax election that has retroactive effect to any Pre-Closing Tax Period of the Target Companies, or (f) otherwise take any action to the extent such action could create or increase a claim with respect to this Agreement with respect to Taxes, or increase the taxable income or gain (or decrease the taxable losses, credits or deductions) allocated to any Remington Holder with respect to a Pre-Closing Tax Period.


        
Section 7.03    Termination of Existing Tax Sharing Agreements.     Any and all existing Tax sharing agreements (whether written or not), other than Excluded Tax Contracts, binding upon any of the Target Companies will be terminated as of the Closing Date. After such date none of the Target Companies, the Remington Holders or any of the Remington Holders' Affiliates and their respective Representatives will have any further rights or liabilities thereunder.


        
Section 7.04    Straddle Period.     


        
Section 7.05    Contests.     Newco Sub agrees to give written notice to the Remington Holders of the receipt of any written notice by any Company Party, and the Remington Holders agree to give to Newco Sub written notice of the receipt of any written notice by them, that involves the assertion of any claim, or the commencement of any Action, with respect to the Target Companies which could result in a breach of a representation or warranty in Section 3.21 or relates to any Pre-Closing Tax Period of any Target Company (including, for the avoidance of doubt, any partnership-level proceeding or claim related to an IRS Form 1065 of the Target for an applicable period but excluding any partner-level proceeding or claim of any Remington Holder) (a "Tax Claim"). The Remington Holders will have the right (but not the obligation) to control the contest or resolution of any Tax Claim; provided, that (a) the Remington Holders will have provided written notice to Newco Sub of its intention to control such Tax Claim, and (b) the Remington Holders will obtain the prior written consent of the Target (which consent will not be unreasonably withheld or delayed) before entering into any settlement or concession of such Tax Claim if such settlement or concession could reasonably be expected to adversely impact the liability of Newco Sub, the Target or their Affiliates for Taxes for any

C-55


Table of Contents

Post-Closing Tax Period; provided, further, that Newco Sub will be entitled to participate in the defense of such Tax Contest and to employ counsel of its choice for such purpose, the fees and expenses of which separate counsel will be borne by Newco Sub. To the extent the Remington Holders do not control a Tax Claim, the Company Parties may defend against such Tax Claim; provided that the Remington Holders will be entitled to participate in the defense of such Tax Claim and to employ counsels of their choice for such purpose, the fees and expenses of which separate counsel will be borne by the respective Remington Holders; provided further that such Tax Claim may not be settled or conceded without the prior written consent of the Remington Holders, which consent will not be unreasonably withheld or delayed. In the event of a conflict between this Section 7.05 and any other section of this Agreement, this Section 7.05 will govern with respect to the control of Tax Claims.


        
Section 7.06    Cooperation and Exchange of Information.     The Remington Holders and Newco Sub will provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax Return pursuant to this Article VII or in connection with any audit or other proceeding in respect of Taxes of the Target Companies, including the execution of any power of attorney that is reasonably required in connection with a Tax Claim controlled by the Remington Holders pursuant to Section 7.05. Such cooperation and information will also include Newco Sub, GP Holdings, and the Target Companies providing copies of relevant Tax Returns or portions thereof, together with accompanying schedules, related work papers and documents relating to rulings or other determinations by tax authorities. Newco Sub will retain all Tax Returns, schedules and work papers, records and other documents in its possession (or in the possession of GP Holdings and its subsidiaries or the Target Companies) relating to Tax matters of the Target Companies for any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other documents relate. Prior to transferring, destroying or discarding any Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of the Target Companies for any taxable period beginning before the Closing Date, Newco Sub, GP Holdings, the Target and their subsidiaries will provide the Remington Holders with reasonable written notice and offer the Remington Holders the opportunity to take custody of such materials.


        
Section 7.07    Refunds.     Except to the extent treated as an asset in the calculation of Closing Working Capital, any refunds (or credits for overpayment) of Taxes of the Target Companies, including any interest received from a Governmental Authority thereon, attributable to any Pre-Closing Tax Period of the Target Companies will be for the account of the LP Transferors. Promptly upon the Target's (or any of its Affiliates') receipt of any such refund (or credit for overpayment), Newco Sub will pay over any such refund (or the amount of any such credit), including any interest thereon but net of the amount of any costs, fees, expenses or Taxes incurred by any of the Company Parties in obtaining such refunds (or credits for overpayment), to the LP Transferors within 15 days of receipt or entitlement thereto, with each such LP Transferor being entitled to receive half of such amounts; provided, however, that the LP Transferors will be obligated to return to Newco Sub the amount, if any, by which the amount of such refund actually paid over to the LP Transferors is thereafter reduced by the relevant Governmental Authority, together with interest payable thereon imposed by such Governmental Authority.


        
Section 7.08    Survival.     Notwithstanding anything in this Agreement to the contrary, the provisions of Section 3.21, Section 4.08 and this Article VII will survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus six months.


        
Section 7.09    GP Holdings I.     Newco will cause GP Holdings I to continue to remain in existence and be treated as disregarded as an entity separate from Newco for tax purposes and will not permit GP Holdings I to make an election to be treated as a corporation for tax purposes.

C-56


Table of Contents


ARTICLE VIII
CONDITIONS TO CLOSING

        Section 8.01    Conditions to Obligations of All Parties.     The obligations of each Party to consummate the Transactions will be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:


        
Section 8.02    Conditions to Obligations of the Company, Newco and Newco Sub.     The obligations of the Company, Newco, Newco Sub and GP Holdings to consummate the Transactions will be subject to the fulfillment or the Company's waiver, at or prior to the Closing, of each of the following conditions:

C-57


Table of Contents

C-58


Table of Contents


        
Section 8.03    Conditions to Obligations of the Remington Holders and the Target Companies.     The obligations of the Remington Holders and the Target Companies to consummate the Transactions will be subject to the fulfillment or the Remington Holders' waiver, at or prior to the Closing, of each of the following conditions:

C-59


Table of Contents


ARTICLE IX
SURVIVAL; LIMITATIONS

        Section 9.01    Survival.     Subject to the limitations and other provisions of this Agreement, the representations and warranties contained in (a) Article III (other than any representations or warranties contained in Section 3.21, which are subject to Article VII) will survive the Closing and will remain in full force and effect until the date that is 18 months after the Closing Date, unless the Company is notified in writing of any breach of such representations and warranties during such 18-month period, then the later of such 18-month period and 90 days following receipt of such written notice; provided, that the representations and warranties in (i) Section 3.01, Section 3.02, Section 3.03, Section 3.22, and Section 3.23(b), will survive indefinitely and (ii) Section 3.18 and Section 3.19 will survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus three months; and (b) Article IV (other than any representations or warranties contained in Section 4.08, which are subject to Article VII) will survive the Closing and will remain in full force and effect until the date that is 18 months from the Closing Date, unless the Remington Holders are notified in writing of any breach of such representations and warranties during such 18-month period, then the later of such 18-month period and 90 days following receipt of such written notice; provided, that the representations and warranties in Section 4.01, Section 4.04, and Section 4.11 will survive indefinitely; and (c) Article V will survive the Closing and will remain in full force and effect indefinitely. All covenants and agreements of the Parties contained in this Agreement (other than any

C-60


Table of Contents

covenants or agreements contained in Article VII, which are subject to Article VII) will survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period will not thereafter be barred by the expiration of the relevant representation or warranty and such claims will survive until finally resolved. Sections 3.25, 4.13 and 5.04 will survive the Closing and remain in full force and effect indefinitely.


        
Section 9.02    Limitations; Qualifications.     Any recovery for breaches of representations or warranties under this Agreement will be subject to the following limitations:


        
Section 9.03    Remedies Not Exclusive.     Unless otherwise expressly stated in this Agreement, no right or remedy described or provided in this Agreement is intended to be exclusive or to preclude a party from pursuing other rights and remedies to the extent available under this Agreement, at law or in equity, and all rights and remedies are cumulative and not exclusive of any rights and remedies at law. Nothing in this Section 9.03 will limit any Person's right to seek and obtain any equitable relief to which any Person may be entitled or to seek any remedy on account of any Person's actual fraud, criminal activity or bad faith.


ARTICLE X
TERMINATION

        Section 10.01    Termination.     This Agreement may be terminated at any time prior to the Closing:

C-61


Table of Contents

C-62


Table of Contents


        Section 10.02    Effect of Termination.     


ARTICLE XI
MISCELLANEOUS

        Section 11.01    Expenses.     Except as otherwise expressly provided in this Agreement, (a) Newco, regardless of whether the Closing occurs, will pay all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants and one-half of all filing and other similar fees payable in connection with any filings or submissions under the HSR Act and one-half of any Transfer Taxes (collectively, "Transaction Costs"), incurred by the Company, Newco, Newco Sub, GP Holding and GP Holding I in connection with this Agreement and the Transactions; and (b) Newco, only if the Closing occurs, will assume and pay all Transaction Costs incurred by the Remington Holders and the Target Companies in connection with this Agreement and the Transactions (including one-half of any Transfer Taxes), plus all bonuses and other payments made to employees and agents of the Target Companies in connection with the Closing, up to $2,750,000 in the aggregate. The Remington Holders will be responsible for the payment of any Transaction Costs and/or bonuses in excess of $2,750,000. In addition, if and to the extent that the LP Transferors are required to make any payments to the Company, Newco or Newco Sub under this Agreement, other than a Closing Adjustment or Post-Closing Adjustment as a result of Estimated Working Capital or Closing Working Capital being less than Target Working Capital, such payment obligation shall be treated as an adjustment to the Aggregate Consideration and satisfied by reducing the number shares of Newco Nonvoting Common Stock issuable pursuant to Section 2.02(a) by a number of shares equal to the amount of such obligation divided by $100, and to the extent such obligation is greater than the value of the number of shares of Newco Nonvoting Common Stock issuable pursuant to Section 2.02(a) , the remaining amount of such obligation shall be satisfied by reducing the number of shares of Newco

C-63


Table of Contents

Preferred Stock issuable pursuant to Section 2.02(b) by a number of shares equal to the remaining amount of such obligation divided by $25.


        
Section 11.02    Notices.     All notices, requests, consents, claims, demands, waivers and other communications under this Agreement will be in writing and will be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the fourth day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a party as is specified in a notice given in accordance with this Section 11.02):

C-64


Table of Contents


        
Section 11.03    Interpretation.     For purposes of this Agreement:


        
Section 11.04    Severability.     If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) the Parties will agree on a suitable and equitable provision to be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances will not be affected by such

C-65


Table of Contents

invalidity or unenforceability, nor will such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.


        
Section 11.05    Entire Agreement.     This Agreement and the other Transaction Documents constitute the sole and entire agreement of the Parties with respect to the subject matter contained in this Agreement and in the other Transaction Documents, and supersede all prior written, and prior and contemporaneous oral, understandings, negotiations, arrangements and agreements, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.


        
Section 11.06    Successors and Assigns.     This Agreement will be binding upon and will inure to the benefit of the Parties and their respective successors and permitted assigns. No Party may assign its rights or delegate its obligations (by operation of law or otherwise) under this Agreement without the prior written consent of the other Parties, which consent will not be unreasonably withheld or delayed. No assignment will relieve the assigning Party of any of its obligations under this Agreement. Any assignment or delegation in violation of this Section 11.06 is void and of no effect.


        
Section 11.07    No Third-Party Beneficiaries.     This Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing in this Agreement, express or implied, is intended to, or will, confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. The representations and warranties in this Agreement are the product of negotiations among the Parties and are for the sole benefit of the Parties. Any inaccuracies in such representations and warranties are subject to waiver by the Parties hereto in accordance with Article VIII without notice of liability to any other Person. In some instances, the representations and warranties in this Agreement may represent an allocation among the Parties of risks associated with particular matters regardless of knowledge of any of the Parties. Consequently, Persons other than the Parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.


        
Section 11.08    Amendment and Modification; Waiver.     This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party. No waiver by any Party of any of the provisions of this Agreement will be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party will operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement will operate or be construed as a waiver thereof; nor will any single or partial exercise of any right, remedy, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. Notwithstanding anything in this Section 11.08, no amendment, modification, supplement, or waiver of any provision of this Agreement will be effective, and no determination may be made by the Company under this Agreement, and no action with respect to this Agreement can be made by the Company, without the prior written approval of the Special Committee.


        
Section 11.09    Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.     

C-66


Table of Contents


        
Section 11.10    Specific Performance.     The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms of this Agreement and that the Parties will be entitled to specific performance of the terms of this Agreement, in addition to any other remedy to which they are entitled at law or in equity without the need to demonstrate irreparable harm or to post any bond or surety.


        
Section 11.11    Counterparts.     This Agreement may be executed in counterparts (including by portable document format (pdf)), each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission will be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.


        
Section 11.12    Special Committee.     No amendment or waiver of any provision of this Agreement will be effective, and no determination may be made by the Company under this Agreement, and no action with respect to this Agreement can be made by the Company, without the prior written approval of the Special Committee.

[SIGNATURE PAGES FOLLOW]

C-67


Table of Contents

        IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed to be effective as of the date first written above.

  /s/ ARCHIE BENNETT, JR.

Archie Bennett, Jr.

 

/s/ MONTY J. BENNETT


Monty J. Bennett

 

REMINGTON HOLDINGS, LP

 

By:

 

REMINGTON HOLDINGS GP, LLC, its general partner

 

By:

 

/s/ ARCHIE BENNETT, JR.


      Name:   Archie Bennett, Jr.

      Title:   Member

 

By:

 

/s/ MONTY J. BENNETT


      Name:   Monty J. Bennett

      Title:   Member

 

REMINGTON HOLDINGS GP, LLC

 

By:

 

/s/ ARCHIE BENNETT, JR.


      Name:   Archie Bennett, Jr.

      Title:   Member

 

By:

 

/s/ MONTY J. BENNETT


      Name:   Monty J. Bennett

      Title:   Member

[Signature Page to Acquisition Agreement]


Table of Contents

  ASHFORD, INC.

 

By:

 

/s/ DAVID BROOKS


      Name:   David Brooks

      Title:   Chief Operating Officer

 

ASHFORD ADVISORS, INC.

 

By:

 

/s/ DAVID BROOKS


      Name:   David Brooks

      Title:   Chief Operating Officer

 

REMINGTON HOSPITALITY MANAGEMENT, INC.

 

By:

 

/s/ DAVID A. BROOKS


      Name:   David A. Brooks

      Title:   Chief Operating Officer

 

MJB INVESTMENTS, LP

 

By:

 

MJB Investments GP, LLC, its general partner

 

By:

 

/s/ MONTY J. BENNETT


      Name:   Monty J. Bennett

      Title:   Sole Member

[Signature Page to Acquisition Agreement]


Table of Contents

  /s/ MARK A. SHARKEY

Mark A. Sharkey

 

ASHFORD GP HOLDINGS I, LLC

 

By:

 

Ashford Advisors, Inc., its sole member

 

By:

 

/s/ DAVID BROOKS


      Name:   David Brooks

      Title:   Chief Operating Officer

 

REMINGTON GP HOLDINGS, LLC

 

By:

 

Remington Hospitality Management, Inc., its sole member

 

By:

 

/s/ DAVID A. BROOKS


      Name:   David A. Brooks

      Title:   Chief Operating Officer

[Signature Page to Acquisition Agreement]


Table of Contents


ANNEX D

CERTIFICATE OF DESIGNATION
OF 6.625% CONVERTIBLE PREFERRED STOCK OF ASHFORD ADVISORS, INC.

        Pursuant to Section 151 of the General Corporation Law of the State of Delaware, Ashford Advisors, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), in accordance with the provisions of Section 103 thereof, does hereby submit the following:

        WHEREAS, the Certificate of Incorporation of the Corporation (the "Certificate of Incorporation") authorizes the issuance of up to 9,200,000 shares of preferred stock of the Corporation ("Preferred Stock") in one or more series, and expressly authorizes the Board of Directors of the Corporation (the "Board"), subject to limitations prescribed by law, to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock, and, with respect to each such series, to establish and fix the number of shares to be included in any series of Preferred Stock and the designation, rights, preferences, powers, restrictions and limitations of the shares of such series; and

        WHEREAS, it is the desire of the Board to establish and fix the number of shares to be included in a new series of Preferred Stock and the designation, rights, preferences and limitations of the shares of such new series.

        NOW, THEREFORE, BE IT RESOLVED, that the Board does hereby provide for the issue of a series of Preferred Stock and does in this Certificate of Designation (the "Certificate of Designation") establish, fix, state and express the designation, rights, preferences, powers, restrictions and limitations of such series of Preferred Stock as follows:

        1.    Designation.    There shall be a series of Preferred Stock designated as "6.625% Convertible Preferred Stock, par value $25.00 per share" (the "6.625% Convertible Preferred Stock"). The number of Shares constituting such series shall be 9,200,000. The rights, preferences, powers, restrictions and limitations of the 6.625% Convertible Preferred Stock shall be as set forth in this Certificate of Designation.

        2.    Defined Terms.    For purposes hereof, the following terms shall have the following meanings:

        "6.625% Convertible Preferred Stock" has the meaning set forth in Section 1.

        "6.625% Convertible Preferred Stock Breach" has the meaning set forth in Section 7.1.

        "6.625% Convertible Preferred Stock Certificate" has the meaning set forth in Section 12.

        "Acquisition Agreement" means the Acquisition Agreement dated as of September 17, 2015, by and among Archie Bennett, Jr., Monty J. Bennett, MJB Investments, LP, Mark A. Sharkey, Ashford, Inc. and the other parties thereto.

        "Board" has the meaning set forth in the Recitals.

        "Certificate of Designation" has the meaning set forth in the Recitals.

        "Certificate of Incorporation" has the meaning set forth in the Recitals.

        "Class A Common Stock" means the Class A Voting Common Stock, par value $0.01 per share, of the Corporation.

        "Class B Common Stock" means the Class B Nonvoting Common Stock, par value $0.01 per share, of the Corporation.

        "Common Stock" means the Class A Common Stock, the Class B Common Stock and any other class of common stock authorized by the Certificate of Incorporation.

D-1


Table of Contents

        "Convertible Securities" means any securities (directly or indirectly) convertible into or exchangeable for Common Stock.

        "Corporation" has the meaning set forth in the Preamble.

        "Conversion Shares" means the shares of Common Stock or other capital stock of the Corporation then issuable upon conversion of the 6.625% Convertible Preferred Stock in accordance with the terms of Section 6.

        "Date of Issuance" means, for any Share of 6.625% Convertible Preferred Stock, the date on which the Corporation initially issues such Share (without regard to any subsequent transfer of such Share or reissuance of the certificate(s) representing such Share).

        "DGCL" means the Delaware General Corporation Law.

        "Dividend Payment Date" has the meaning set forth in Section 4.1.

        "Excluded Issuances" means any issuance or sale by the Corporation after the Date of Issuance of: (a) shares of Common Stock issued on the conversion of the 6.625% Convertible Preferred Stock or (b) shares of Common Stock issued as contemplated by the Investor Rights Agreement, including Section 5.04 thereof.

        "Investor Rights Agreement" means the Investor Rights Agreement, dated as of the date of this Certificate of Designation, by and among the Corporation, Ashford, Inc., Archie Bennett, Jr., Monty J. Bennett, MJB Investments, LP and Mark Sharkey (each a "Transferor" and collectively, the "Transferors") and the other parties thereto.

        "Junior Securities" has the meaning set forth in Section 3.

        "Liquidation" has the meaning set forth in Section 5.1.

        "Liquidation Value" means, with respect to any Share on any given date, twenty five United States dollars ($25) (as adjusted for any stock splits, stock dividends, recapitalizations or similar transaction with respect to the 6.625% Convertible Preferred Stock) plus all unpaid accrued and accumulated dividends on such Share (whether or not declared).

        "Management Agreement" means the Management Agreement, dated as of the date of this Certificate of Designation, between the Corporation and Ashford, Inc.

        "Options" means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.

        "Pari Passu Securities" has the meaning set forth in Section 3.

        "Person" means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association or other entity.

        "Preferred Conversion Ratio" means $120, as adjusted pursuant to Section 6.

        "Preferred Stock" has the meaning set forth in the Recitals.

        "Securities Act" means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, that is in effect at the time.

        "Senior Securities" has the meaning set forth in Section 3.

        "Share(s)" means share(s) of the 6.625% Convertible Preferred Stock.

        "Subsidiary" means, with respect to any Person, any other Person of which a majority of the outstanding shares or other equity interests having the power to vote for directors or comparable managers are owned, directly or indirectly, by the first Person.

D-2


Table of Contents

        "Supermajority of Holders" has the meaning set forth in Section 8.3.

        "Transfer Agent" has the meaning set forth in Section 14.

        "Transferor" has the meaning specified in the defined term Investor Rights Agreement herein.

        3.    Rank.    With respect to payment of dividends and distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, all Shares of the 6.625% Convertible Preferred Stock shall rank (i) prior to the Corporation's Common Stock and any class or series of capital stock of the Corporation hereafter created (unless, with the consent of a Supermajority of Holders obtained in accordance with Article 8 hereof, such class or series of capital stock specifically, by its terms, ranks senior to or pari passu with the 6.625% Convertible Preferred Stock) (collectively with the Common Stock, "Junior Securities"); (ii) pari passu with any class or series of capital stock of the Corporation hereafter created (with the written consent of a Supermajority of Holders obtained in accordance with Article 8 hereof) specifically ranking, by its terms, on parity with the 6.625% Convertible Preferred Stock (the "Pari Passu Securities"); and (iii) junior to any class or series of capital stock of the Corporation 6.625% Convertible Preferred Stock hereafter created (with the written consent of a Supermajority of Holders obtained in accordance with Article 8 hereof) specifically ranking, by its terms, senior to the 6.625% Convertible Preferred Stock (collectively, the "Senior Securities").

        4.    Dividends.    

        4.1    Accrual and Payment of Dividends.    From and after the Date of Issuance of any Share, cumulative dividends on such Share shall accrue, whether or not declared by the Board and whether or not there are funds legally available for the payment of dividends,on a daily basis in arrears at the rate of 6.625% per annum on the sum of the Liquidation Value thereof. All accrued dividends on any Share shall be paid in cash only when, as and if declared by the Board out of funds legally available therefor or upon a liquidation of the 6.625% Convertible Preferred Stock in accordance with the provisions of Section 5; provided, that to the extent not paid on the last day of March, June, September and December of each calendar year (each such date, a "Dividend Payment Date"), all accrued dividends on any Share shall accumulate and compound on the applicable Dividend Payment Date whether or not declared by the Board or funds are legally available thereof and shall remain accumulated, compounding dividends until paid in cash pursuant hereto or converted pursuant to Section 6. All accrued and accumulated dividends on the Shares shall be prior and in preference to any dividend on any Junior Securities and shall be fully declared and paid before any dividends are declared and paid, or any other distributions or redemptions are made, on any Junior Securities.

        4.2    Participating Dividends.    Subject to Section 4.1, in addition to the dividends accruing on the 6.625% Convertible Preferred Stock pursuant to Section 4.1 hereof, if the Corporation declares or pays a dividend or distribution on the Common Stock, whether such dividend or distribution is payable in cash, securities or other property, including the purchase or redemption by the Corporation or any of its Subsidiaries of shares of Common Stock for cash, securities or property, the Corporation shall simultaneously declare and pay a dividend on the 6.625% Convertible Preferred Stock on a pro rata basis with the Common Stock determined on an as-converted basis assuming all Shares had been converted pursuant to Section 6 as of immediately prior to the record date of the applicable dividend or distribution (or if no record date is fixed, the date as of which the record holders of Common Stock entitled to such dividends or distributions are to be determined).

        4.3    Partial Dividend Payments.    Except as otherwise provided in this Certificate of Designation, if at any time the Corporation pays less than the total amount of dividends then accrued and accumulated with respect to the 6.625% Convertible Preferred Stock, such payment shall be distributed pro rata among the holders thereof based upon the aggregate accrued and accumulated but unpaid dividends on the Shares held by each such holder.

D-3


Table of Contents

        5.    Liquidation.    

        5.1    Liquidation.    In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (a "Liquidation"), the holders of Shares of 6.625% Convertible Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of Junior Securities by reason of their ownership thereof, an amount in cash equal to the aggregate Liquidation Value of all Shares held by such holder.

        5.2    Participation With Junior Securities on Liquidation.    In addition to and after payment in full of all preferential amounts required to be paid to the holders of 6.625% Convertible Preferred Stock upon a Liquidation under this Section 5, the holders of Shares of 6.625% Convertible Preferred Stock then outstanding shall be entitled to participate with the holders of shares of Common Stock then outstanding, pro rata as a single class based on the number of outstanding shares of Common Stock on an as-converted basis held by each holder as of immediately prior to the Liquidation, in the distribution of all the remaining assets and funds of the Corporation available for distribution to its stockholders.

        5.3    Insufficient Assets.    If upon any Liquidation the remaining assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of the Shares of 6.625% Convertible Preferred Stock the full preferential amount to which they are entitled under Section 5.1, (a) the holders of the Shares shall share ratably in any distribution of the remaining assets and funds of the Corporation in proportion to the respective full preferential amounts which would otherwise be payable in respect of the 6.625% Convertible Preferred Stock in the aggregate upon such Liquidation if all amounts payable on or with respect to such Shares were paid in full, and (b) the Corporation shall not make or agree to make any payments to the holders of Junior Securities.

        5.4    Notice.    

        6.    Conversion.    

        6.1    Right to Convert.    Subject to the provisions of this Section 6, at any time and from time to time on or after the Date of Issuance, any holder of 6.625% Convertible Preferred Stock shall have the right by written election to the Corporation to convert all or any portion of the outstanding Shares of 6.625% Convertible Preferred Stock (including any fraction of a Share) held by such holder along with the aggregate accrued or accumulated and unpaid dividends thereon into an aggregate number of shares of Class B Common Stock (including any fraction of a share) as is determined by (i) multiplying the number of Shares (including any fraction of a Share) to be converted by the Liquidation Value

D-4


Table of Contents

thereof, and then (ii) dividing the result by the Preferred Conversion Ratio in effect immediately prior to such conversion.

        6.2    Procedures for Conversion.    In order to effectuate a conversion of Shares of 6.625% Convertible Preferred Stock pursuant to Section 6.1, a holder shall (a) submit a written election to the Corporation that such holder elects to convert Shares, the number of Shares elected to be converted and (b) surrender, along with such written election, to the Corporation the certificate or certificates representing the Shares being converted,duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto) or, in the event the certificate or certificates are lost, stolen or missing, accompanied by an affidavit of loss executed by the holder. The conversion of such Shares hereunder shall be deemed effective as of the date of surrender of such 6.625% Convertible Preferred Stock certificate or certificates or delivery of such affidavit of loss. Upon the receipt by the Corporation of a written election and the surrender of such certificate(s) and accompanying materials, the Corporation shall as promptly as practicable (but in any event within twenty-one (21) days thereafter) deliver to the relevant holder (a) a certificate in such holder's name (or the name of such holder's designee as stated in the written election) for the number of shares of Common Stock (including any fractional share) to which such holder shall be entitled upon conversion of the applicable Shares as calculated pursuant to Section 6.1 and, if applicable (b) a certificate in such holder's name for the number of Shares of 6.625% Convertible Preferred Stock (including any fractional share) represented by the certificate or certificates delivered to the Corporation for conversion but otherwise not elected to be converted pursuant to the written election. All shares of capital stock issued hereunder by the Corporation shall be duly and validly issued, fully paid and nonassessable, free and clear of all taxes, liens, charges and encumbrances with respect to the issuance thereof.

        6.3    Effect of Conversion.    All shares of 6.625% Convertible Preferred Stock converted as provided in this Section 6 shall no longer be deemed outstanding as of the effective time of the applicable conversion and all rights with respect to such Shares shall immediately cease and terminate as of such time, other than the right of the holder to receive shares of Class B Common Stock in exchange therefor.

        6.4    Reservation of Stock.    The Corporation shall at all times when any Shares of 6.625% Convertible Preferred Stock are outstanding reserve and keep available out of its authorized but unissued shares of capital stock, solely for the purpose of issuance upon the conversion of the 6.625% Convertible Preferred Stock, such number of shares of Class B Common Stock issuable upon the conversion of all outstanding 6.625% Convertible Preferred Stock pursuant to this Section 6, taking into account any adjustment to such number of shares so issuable in accordance with Section 6.6 hereof. The Corporation shall take all such actions as may be necessary to assure that all such shares of Class B Common Stock may be so issued without violation of any applicable law or governmental regulation. The Corporation shall not close its books against the transfer of any of its capital stock in any manner which would prevent the timely conversion of the Shares of 6.625% Convertible Preferred Stock.

        6.5    No Charge or Payment.    The issuance of certificates for shares of Class B Common Stock upon conversion of Shares of 6.625% Convertible Preferred Stock pursuant to Section 6.1 shall be made without payment of additional consideration by, or other charge, cost or tax to, the holder in respect thereof.

        6.6    Adjustment to Preferred Conversion Ratio and Number of Conversion Shares.    In order to prevent dilution of the conversion rights granted under this Section 6, the Preferred Conversion Ratio and the number of Conversion Shares issuable on conversion of the Shares of 6.625% Convertible Preferred Stock shall be subject to adjustment from time to time as provided in this Section 6.6.

D-5


Table of Contents

D-6


Table of Contents

D-7


Table of Contents

        7.    Breach of Obligations.    

        7.1    6.625% Convertible Preferred Stock Breach.    In addition to any other rights which a holder of Shares of 6.625% Convertible Preferred Stock is entitled under any other contract or agreement and any other rights such holder may have pursuant to applicable law, the holders of Shares of 6.625% Convertible Preferred Stock shall have the rights and remedies set forth in Section 7.2 in the event the Corporation fails to pay in cash any dividend on a Dividend Payment Date pursuant to Section 4.1, whether or not such payment is declared by the Board or is legally permissible or is otherwise prohibited, for two (2) consecutive quarterly periods (a "6.625% Convertible Preferred Stock Breach"); provided, that 6.625% Convertible Preferred Stock Breach will not be deemed to have occurred in the event that the failure to pay in cash any dividend on a Dividend Payment Date pursuant to Section 4.1 was substantially caused by any action or omission on the part of any holder of Shares of 6.625% Convertible Preferred Stock in such holder's capacity as a director or officer of the Corporation.

        7.2    Consequences of Breach.    If a 6.625% Convertible Preferred Stock Breach has occurred and is continuing, then until such arrearage is paid in cash in full (at which time the rights hereunder shall terminate, subject to revesting in the event of each and every subsequent 6.625% Convertible Preferred Stock Breach):

        8.    Voting Rights and Protective Provisions.    

        8.1    General.    The holders of 6.625% Convertible Preferred Stock shall have no voting rights whatsoever except (a) as otherwise required by the DGCL, and (b) as provided in Section 8.2 and Section 8.3.

D-8


Table of Contents

        8.2    6.625% Convertible Preferred Stock Directors.    When a 6.625% Convertible Preferred Stock Breach has occurred and is continuing, the holders of 6.625% Convertible Preferred Stock shall have the right, voting as a class, to elect two (2) directors as provided by Section 7.2.

        8.3    Protection Provisions.    So long as any Shares of 6.625% Convertible Preferred Stock are outstanding, the Corporation shall not take any of the following corporate actions (whether by merger, consolidation or otherwise) without first obtaining the approval (by vote or written consent, as provided by the DGCL) of the holders of at least 66.67% ("Supermajority of Holders") of the shares of the 6.625% Convertible Preferred Stock at the time outstanding:

        9.    No Preemptive Rights.    No holder of the 6.625% Convertible Preferred Stock shall be entitled as a matter of right to subscribe for or purchase, or have any preemptive right or any other right to remediate dilution with respect to, any part of any new or additional issue of stock of any class whatsoever, or of securities convertible into any stock of any class whatsoever, whether now or hereafter authorized and whether issued for cash or other consideration or by way of dividend, except as otherwise provided in the Investor Rights Agreement.

        10.    Reissuance of 6.625% Convertible Preferred Stock.    Any Shares of 6.625% Convertible Preferred Stock redeemed, converted or otherwise acquired by the Corporation or any Subsidiary shall be cancelled and retired as authorized and issued shares of capital stock of the Corporation and no such Shares shall thereafter be reissued, sold or transferred.

        11.    Record Holders.    To the fullest extent permitted by applicable law, the Corporation (and any Transfer Agent for the 6.625% Convertible Preferred Stock) may deem and treat the record holder of any share of the 6.625% Convertible Preferred Stock as the true and lawful owner thereof for all purposes, and the Corporation (and any such Transfer Agent) shall not be affected by any notice to the contrary.

        12.    Form.    The 6.625% Convertible Preferred Stock shall be issued in substantially the form set forth in Exhibit A (the "6.625% Convertible Preferred Stock Certificate") and shall have such insertions as are appropriate or required or permitted by this Certificate of Designations and may have such letters, numbers or other marks of identification and such legends and endorsements, stamped, printed

D-9


Table of Contents

lithographed or engraved thereon, as the Corporation may deem appropriate and as are not inconsistent with the provisions of this Certificate of Designation. 6.625% Convertible Preferred Stock Certificates shall be issued in registered form only. The Corporation shall keep and maintain, or shall cause to be kept and maintained, a register in which, subject to such reasonable regulations as the Corporation may prescribe, the Corporation shall providefor the registration of shares and transfers, exchanges or substitutions as provided herein.

        13.    Transfer Restrictions and Legends.    Each 6.625% Convertible Preferred Stock Certificate shall bear the legend set forth in Exhibit A hereto. Shares of 6.625% Convertible Preferred Stock may not be reoffered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of by a holder except pursuant to a registration statement that has become effective under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act.

        14.    Transfer Agent.    The Corporation may, its sole discretion, appoint or remove a transfer agent and registrar for the 6.625% Convertible Preferred Stock (the "Transfer Agent") in accordance with the agreement between the Corporation and the Transfer Agent.

        15.    Transfer.    A holder may transfer a 6.625% Convertible Preferred Stock Certificate only upon surrender of such certificate for registration of transfer, presented at the principal executive offices of the Corporation (or the offices of the Transfer Agent, if a Transfer Agent has been appointed) with a written instruction in form satisfactory to the Corporation (and Transfer Agent) duly executed by such holder, and accompanied by certification that such transfer will comply with the appropriate transfer restrictions applicable to such 6.625% Convertible Preferred Stock Certificate.

        16.    Lost or Stolen Certificates.    Upon receipt by the Corporation of (i) evidence of the loss, theft, destruction or mutilation of any Preferred Stock Certificates and (ii) (y) in the case of loss, theft or destruction, indemnity (without bond or other security) reasonably satisfactory to the Corporation, or (z) in the case of mutilation, the Preferred Stock Certificate(s) (surrendered for cancellation), the Corporation shall execute and deliver new Preferred Stock Certificate(s) of like tenor and date. However, the Corporation shall not be obligated to reissue such lost, stolen, destroyed or mutilated Preferred Stock Certificate(s) if the holder contemporaneously requests the Corporation to convert such 6.625% Convertible Preferred Stock.

        17.    Waiver.    Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the holders of 6.625% Convertible Preferred Stock granted hereunder may be waived as to all shares of 6.625% Convertible Preferred Stock (and the holders thereof) upon the written consent of a Supermajority of Holders, unless a higher percentage is required by applicable law, in which case the written consent of the holders of not less than such higher percentage of shares of 6.625% Convertible Preferred Stock shall be required.

        18.    Notices.    Except as otherwise provided in this Certificate of Designation, all notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. The address for such communications are (i) if to the Corporation, 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254, (972) 392-1929 (facsimile number),Attention: Chief Operating Officer, and (ii) to any stockholder, at such holder's address at it appears in the stock records of the Corporation.

D-10


Table of Contents

        IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the Corporation by its Chief Operating Officer this [    ] day of [                    ], 2015(1).

    ASHFORD ADVISORS, INC.

 

 

By:

 

 

        Name:   David A. Brooks
        Title:   Chief Operating Officer

   


(1)
Certificate of Designation to be signed and filed on the closing date.

[Signature Page to Certificate of Designation]


Table of Contents


Exhibit A

[Form of Certificate for 6.625% Convertible Preferred Stock](2)

   


(2)
To be supplied between signing and closing.

[Signature Page to Certificate of Designation]


Table of Contents


ANNEX E

INVESTOR RIGHTS AGREEMENT

        INVESTOR RIGHTS AGREEMENT (this "Agreement") is entered into as of [                        ], 2015(1), by and among Ashford, Inc., a Delaware corporation (the "Company"), Ashford Advisors, Inc., a Delaware corporation ("Newco"), Remington Hospitality Management, Inc., a Delaware corporation and wholly-owned subsidiary of Newco ("Newco Sub"), Archie Bennett, Jr., Monty J. Bennett, MJB Investments, LP (each a "Remington Holder" and collectively, the "Remington Holders"), Mark A. Sharkey ("Sharkey"), Remington Holdings GP, LLC, a Delaware limited liability company and the general partner of Target prior to the Closing (the "Remington GP"), Remington Holdings, L.P., a Delaware limited partnership ("Target"), and any other Persons that become parties to this Agreement by joinder as provided in this Agreement. Capitalized terms used in this Agreement and not otherwise defined have the meanings given such terms in Article 1 or in the applicable Section cross-referenced in Article 1.


PRELIMINARY STATEMENTS

        A.    The Company, Newco, Newco Sub, the Remington Holders and certain other Persons are parties to the Acquisition Agreement, dated as of September 17, 2015 (the "Acquisition Agreement").

        B.    As a condition to the Closing pursuant to the Acquisition Agreement, the parties have agreed to enter into this Agreement in order to provide, among other things, governance and operational covenants.

        THEREFORE, in consideration of the foregoing (which is incorporated by reference in this Agreement), the mutual covenants contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the parties agree as follows:


ARTICLE 1
DEFINITIONS

        1.01    Definitions.     Terms used in this Agreement and not otherwise defined in this Agreement will have the following meanings.

        "AAA" has the meaning set forth in Section 4.04(b)(ii).

        "Acquisition Agreement" has the meaning set forth in the Preliminary Statements.

        "Adjusted EBITDA" means, with respect to the Target Companies and for any period, net income before interest, income taxes, depreciation and amortization for such period, with such items determined in accordance with GAAP consistent with the audited financial statements of the Target Companies for the most recent fiscal year end, as adjusted for non-recurring and one-time events using the Company's as reported methodology for any such adjustments but applied to the Target Companies.

        "Agreement" has the meaning set forth in the Preamble.

        "Affiliate" means, with respect to a specified Person, any other Person that directly or indirectly controls, or is under common control with, or is controlled by, such specified Person. As used in this definition, "control" (including with its correlative terms) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

   


(1)
To be signed and dated as of the closing date.

E-1


Table of Contents

        "Appraiser" means an investment banker or other financial analyst that has experience determining the fair market value of securities, assets and/or businesses.

        "Approved Transfer" means any Transfer of Newco Shares or Retained Target Interests that is not a Permitted Transfer that the Company approves by a resolution duly adopted by the Special Committee, which approval will not be unreasonably withheld, conditioned or delayed.

        "Arbitration Notice" has the meaning set forth in Section 4.04(b)(ii).

        "Arbitrator" has the meaning set forth in Section 4.04(b)(iii).

        "Base Strike Price" means $25; provided, that at any time prior to the Closing, a Majority in Interest of the Remington Holders may elect in writing to set the Base Strike Price at a specified amount less than $25, in which case such specified amount shall be the Base Strike Price.

        "Beneficially Own," and its correlative terms, when used with reference to a security, has the meaning ascribed to such term in Rule 13d-3(d)(1) the Exchange Act.

        "Business Day" means any day except Saturday, Sunday or any other day on which commercial banks located in Dallas, Texas are authorized or required by Law to be closed for business.

        "Call Option Closing" has the meaning set forth in Section 4.02(d).

        "Change of Control" means the occurrence of any of the following, in each case that was not consented to, voted for or otherwise supported by Monty J. Bennett: (a) any Person (other than the Remington Holders, their controlled Affiliates, any trust or other estate in which a Remington Holder has a substantial beneficial interest or as to which such Remington Holder serves as trustee or in a similar fiduciary capacity, any Immediate Family Member of a Remington Holder, or any Group of which any Remington Holder is a member) acquires Beneficial Ownership of securities of the Company or Newco that, together with the securities of the Company or Newco previously Beneficially Owned by the first such Person, constitutes more than 50% of the total voting power of the Company's or Newco's outstanding securities, or (b) the sale, lease, transfer or other disposition (other than as collateral) of all or a majority of the Company's or Newco's (taken as a whole) assets or income or revenue generating capacity, other than to any direct or indirect majority-owned and controlled Affiliate of the Company.

        "Change of Control Put Option" has the meaning set forth in Section 4.03(a).

        "Charter" means the Certificate of Incorporation of Newco, as may be amended, modified or supplemented from time to time.

        "Code" means the Internal Revenue Code of 1986.

        "Closing" means the consummation of the transactions contemplated by the Acquisition Agreement.

        "Closing Date" means the date on which the Closing is effective.

        "Commencement Date" means, with respect to each Remington Holder, the date on or after which Monty J. Bennett is not the principal executive officer of the Company.

        "Company" has the meaning set forth in the Preamble.

        "Company Board" means the Board of Directors of the Company that manages the business and affairs of the Company.

        "Company Cleansed Shares" has the meaning set forth in Section 5.03(b).

        "Company Common Stock" means the common stock of the Company, par value $0.01 per share, entitled to cast one vote on all matters in which holders of common stock may vote.

E-2


Table of Contents

        "Conversion Price" means $120, as adjusted as provided in Section 4.05.

        "Covered Investor" means each Remington Holder, Sharkey and each Person that succeeds to the interests of a Remington Holder or Sharkey as a result of a Permitted Transfer.

        "Deferral Period" has the meaning set forth in Section 2.02(a).

        "Exchange Act" means the Securities Exchange Act of 1934.

        "GAAP" means generally accepted accounting principles in the United States consistently applied.

        "GP Holdings" means Remington GP Holdings, LLC, a Delaware limited liability company and wholly owned Subsidiary of Newco Sub and the general partner of Target after the Closing.

        "GP Interests" means all of the issued and outstanding general partnership interests in Target.

        "Group" has the meaning ascribed to such term under Rule 13d-5(b) under the Exchange Act.

        "Holder" means any Person Beneficially Owning Registrable Securities.

        "Holder Group Investor" means each Remington Holder and each Person that succeeds to the interests of a Remington Holder as a result of an Intra-Group Transfer.

        "Incentive Fees" has the meaning set forth in Section 5.10.

        "Incentive Liabilities" has the meaning set forth in Section 5.10.

        "Independent Newco Sub Nominee" has the meaning set forth in Section 5.02.

        "Immediate Family Member" means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, step-siblings, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of a referenced natural person.

        "In-Scope Service Providers" means the executive officers of the Target Companies, and any independent contractors or consultants spending a majority of their respective time on the Restricted Business.

        "Intra-Group Transfer" means the Transfer of Newco Shares or Retained Target Interests by a Remington Holder, a Holder Group Investor or a Covered Investor to: (a) an Immediate Family Member of a Covered Investor, or a trust established for the benefit of one or more such Immediate Family Members, in each case, without consideration and for bona fide estate, succession or tax planning purposes, or (b) a Person that is majority Beneficially Owned and is controlled by a Covered Investor; provided that, in each of the foregoing cases, the transferee becomes a party to this Agreement as a Covered Investor.

        "IPO" means the sale by Newco in its first underwritten public offering of newly-issued equity securities not exceeding 20% of the voting stock of Newco under the Securities Act, registered on Form S-1 or its equivalent, in a primary registration resulting in aggregate net proceeds to Newco in an amount reasonably acceptable to Newco and a Majority in Interest of the Holder Group Investors.

        "LIBOR" shall mean the rate per annum equal to the one-day London Interbank Offered Rate fixed by the British Bankers Association for United States dollar deposits in the London interbank marked at approximately 11:00 a.m., London, England time (or as soon thereafter as practicable) as determined by the Company from any broker, quoting service or commonly available source utilized by the Company.

        "Major Investor" means a Person, that Beneficially Owns no less than 20% of the issued and outstanding shares of Newco Common Stock (taking into account such Person's Newco Preferred Stock on an as-converted basis).

E-3


Table of Contents

        "Majority in Interest" of the Remington Holders, the Holder Group Investors or the Covered Investors, as applicable, means, at any time, those Remington Holders, Holder Group Investors or Covered Investors, as applicable, holding in the aggregate a majority of the total number of shares of Newco Common Stock (in all cases taking into account the Newco Preferred Stock on an as-converted basis) held by all Remington Holders, Holder Group Investors or Covered Investors, as applicable.

        "Mandatory Registration Statement" has the meaning set forth in Section 2.01.

        "Multiple" has the meaning set forth in Section 4.04(b).

        "New Securities" has the meaning set forth in Section 5.11.

        "Newco" has the meaning set forth in the Preamble to this Agreement.

        "Newco Board" means the board of directors of Newco that manages the business and affairs of Newco.

        "Newco Common Stock" means collectively, the Newco Voting Common Stock and the Newco Nonvoting Common Stock.

        "Newco Cleansed Shares" has the meaning set forth in Section 5.03(d).

        "Newco Nonvoting Common Stock" means the common stock of Newco, par value $0.01 per share, which has no voting rights (except as required by law), but has all other rights and preferences of the Newco Voting Common Stock, as authorized by the Charter.

        "Newco Preferred Stock" means the 6.625% convertible preferred stock of Newco, par value $25 per share, issued to the Remington Holders at the Closing, as authorized by the Preferred Stock Certificate of Designation.

        "Newco Preferred Stock Cash Amount" means, at any date of determination, an amount in cash, determined on a per share basis, equal to (a) the Base Strike Price multiplied by 100.5%, plus (b) all accrued and unpaid dividends, as provided by the Preferred Stock Certificate of Designation, plus, (c) in the event that the Change of Control Put Option is exercised prior to the fifth anniversary of the Closing Date, an additional amount equal to 3% of the Base Strike Price per annum for each year, inclusive of the year in which the Change of Control Put Option is exercised, until the fifth anniversary of the Closing Date.

        "Newco Shares" means shares of Newco Common Stock and Newco Preferred Stock.

        "Newco Sub" has the meaning set forth in the Preamble.

        "Newco Sub Board" means the Board of Directors of Newco Sub that manages the business and affairs of Newco Sub.

        "Newco Sub Note" means the non-negotiable promissory note or notes (if more than one such note is requested by the Remington GP prior to the Closing) to be issued by Newco Sub to the Remington GP at the Closing in the aggregate principal amount of $10,000,000.

        "Newco Voting Common Stock" means the common stock of Newco, par value $0.01 per share, which has one vote per outstanding share and all of the other rights and preferences as the Newco Nonvoting Common Stock, as authorized by the Charter.

        "Participation Notice" has the meaning set forth in Section 5.11(c).

        "Permitted Indebtedness" means all aggregate obligations (including all obligations in respect of principal, accrued interest and fees), solely to the extent relating to the ordinary course acquisition of furniture, fixtures and equipment, (a) for the deferred purchase price of property (including any

E-4


Table of Contents

deferred purchase price liabilities, earn-outs, contingency payments, installment payments, seller notes or similar liabilities), and (b) under capital leases (in accordance with GAAP).

        "Permitted Transfer" means a Transfer to any of the following transferees of Newco Shares or Retained Target Interests: (a) an Intra-Group Transfer; (b) any Transfer as part of the exercise of the conversion rights of the Newco Preferred Stock as set forth in the Preferred Stock Certificate of Designation or the exercise of the conversion rights of the Newco Nonvoting Common Stock as set forth in the Charter; (c) any Transfer to a bona fide charitable foundation, and (d) any Transfer made pursuant to Sections 4.01, 4.02 or 4.03. In each of the foregoing cases, the transferee must become a party to this Agreement as a Covered Investor.

        "Person" means any individual; any public or private entity, including any corporation, partnership, limited partnership, limited liability company, trust, or business enterprise or any governmental agency or instrumentality; and any Group.

        "Pre-Emptive Notice" has the meaning set forth in Section 5.11(a).

        "Pre-Emptive Share" means, with respect to all Holder Group Investors, a percentage equal to the total number of New Securities specified in the Pre-Emptive Notice, multiplied by a fraction (a) the numerator of which is the sum of the total number of Newco Shares held by such Holder Group Investor (determined on a fully-diluted and an as-converted basis) and (b) the denominator of which is sum of the total number of Newco Shares outstanding (determined on a fully-diluted and an as-converted basis), in each case calculated as of the date on which the Pre-Emptive Notice is delivered to the Holder Group Investors, such amount to be allocated ratably in accordance with each Holder Group Investor's pro rata percentage thereof or as the exercising Holder Group Investors may mutually agree

        "Pre-Emption Period" means the period beginning on the date on which the Pre-Emptive Notice is delivered to the Holder Group Investors and ending 30 days thereafter

        "Preferred Call Option" has the meaning set forth in Section 4.02(a).

        "Preferred Stock Certificate of Designation" means the Certificate of Designation of 6.625% Convertible Preferred Stock of Ashford Advisors, Inc. in effect as of the Closing.

        "Private Letter Ruling" has the meaning set forth in Section 5.07.

        "Proceedings" has the meaning set forth in Section 6.06(b).

        "Property Management Business" means the property and project management business as conducted by the Target Companies on and prior to the date of this Agreement, and excluding, for clarity, the asset management business as conducted by the Company on or prior to the date of this Agreement.

        "Prospectus" means the Prospectus included in a Registration Statement (including a Prospectus that includes any information previously omitted from a Prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A, Rule 430B or Rule 430C promulgated under the Securities Act), as amended or supplemented by any Prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

        "Put Option Closing" has the meaning set forth in Section 4.03(b).

E-5


Table of Contents

        "Reference Shares" means all voting securities of the Company or of Newco, as applicable, that are (without duplication):

"register," "registered," and "registration" refer to a registration effected by preparing and filing a Registration Statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such Registration Statement or document.

        "Registrable Securities" means all Newco Shares issued and outstanding, and all Newco Shares issuable upon exercise or conversion of any other securities of Newco (or the successor Person of Newco in the event Newco is converted into another form of Person), Beneficially Owned or held by any Covered Investor, excluding, however, (a) any Registrable Securities sold in a transaction in which its registration rights under Article 2 are not validly assigned.

        "Registration Statement" means a Registration Statement of Newco in the form required to register the resale of the Registrable Securities under the Securities Act, and including any Prospectus, amendments and supplements to such Registration Statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such Registration Statement.

        "Remington GP" has the meaning set forth in the Preamble.

        "Remington Holder" has the meaning set forth in the Preamble.

        "Remington Limited Partnership Agreement" means the Agreement of Limited Partnership of Remington Holdings, L.P. dated as of the date of this Agreement.

        "Restricted Business" means the business conducted by the Target Companies on the date of this Agreement, excluding direct or indirect ownership of any interest in real property that does not involve any activity enumerated in clauses (a) or (b) below, but including any of the following:

        "Restricted Period" has the meaning set forth in Section 3.02(a).

        "Retained Target Interests" has the meaning set forth in Section 4.02(b).

        "Retained Target Interests Purchase Price" has the meaning set forth in Section 4.04(a).

        "Rules" has the meaning set forth in Section 4.04(b)(ii).

E-6


Table of Contents

        "SEC" means the United States Securities and Exchange Commission and any other governmental authority charged with administering the federal securities of the United States from time to time.

        "Securities Act" means the Securities Act of 1933.

        "Seller Nominee" has the meaning set forth in Section 5.01.

        "Seller Newco Sub Nominee" has the meaning set forth in Section 5.02.

        "Sole Voting Shares" means all voting securities of the Company (or of Newco, as applicable) that any Covered Investor has the sole power to vote and all such voting securities held by any Immediate Family Member of such Covered Investor or a trust established for the benefit of such Covered Investor or an Immediate Family Member of such Covered Investor.

        "Special Committee" means a committee of the independent directors of the Company Board irrevocably delegated full powers of the Company Board with respect to this Agreement and the performance, amendment, modification or waiver of any term of this Agreement.

        "Subsidiary" means, with respect to any Person, any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation's or other Person's board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than equity securities or other interests having such power only upon the happening of a contingency that has not occurred) are held by such Person or one or more of its Subsidiaries

        "Target" has the meaning set forth in the Preamble.

        "Target Companies" means, collectively, Target and its Subsidiaries.

        "Target Call Option" has the meaning set forth in Section 4.02(b).

        "Transactions" means all the transactions contemplated by the Acquisition Agreement and the other Transaction Documents (each as defined in the Acquisition Agreement).

        "Transfer" and its correlative terms mean any sale, assignment, pledge, hypothecation, transfer, or other disposition or encumbrance of any Newco Shares or Retained Target Interests, or any beneficial interest therein, but does not include a bona fide pledge of Newco Shares or Retained Target Interests in an arms'-length lending transaction with a Person that is not an Affiliate of such pledgor of Newco Shares or Retained Target Interests.

        "Violation" means losses, claims, damages, or liabilities (joint or several) or actions in respect thereof, to which a Person may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations: (a) any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, including any preliminary Prospectus or final Prospectus contained therein or any amendments or supplements thereto; (b) the omission or alleged omission to state therein a material fact required to be stated, or necessary to make the statements therein not misleading, or (c) any violation or alleged violation by any other party to this Agreement, of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law.

E-7


Table of Contents

        "VWAP" means the dollar volume-weighted average price for Company Common Stock on its principle trading market during the period beginning at 9:30:01 a.m., New York City time (or such other time as such trading market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City time (or such other time as such trading market publicly announces is the official close of trading), as reported by Bloomberg, L.P. through its "Volume at Price" function or, if the foregoing does not apply, the dollar volume-weighted average price of Company Common Stock in the over-the-counter market on the electronic bulletin board for Company Common Stock during the period beginning at 9:30:01 a.m., New York time (or such other time as such trading market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York City time (or such other time as such trading market publicly announces is the official close of trading), as reported by Bloomberg, L.P., or, if no dollar volume-weighted average price is reported for the Company Common Stock by Bloomberg, L.P. for such hours, the average of the highest closing bid price and the lowest closing ask prices of any of the market makers for the Company Common Stock as reported in the "pink sheets" by Pink Sheets LLC (formerly The National Quotation Bureau, Inc.). If the VWAP cannot be calculated for Company Common Stock on a particular date on any of the foregoing bases, the VWAP will be the fair market value of Company Common Stock on such date as determined by the Special Committee in good faith.


ARTICLE 2
Registration Rights

        2.01    Mandatory Registration.    As soon as practicable following the second anniversary of the Closing Date, and based on good faith consultation between Newco and a Majority in Interest of the Holder Group Investors, Newco will use its best efforts to prepare and file with the SEC a Registration Statement providing for either or both of an IPO of Newco Voting Common Stock or the registration and resale, on a continuous or delayed basis, of all of the Registrable Securities (the "Mandatory Registration Statement"), and to cause the Mandatory Registration Statement to be declared effective under the Securities Act by the SEC as soon as reasonably practicable, but no later than the third anniversary of the Closing Date. Until a Majority in Interest of the Holder Group Investors otherwise determine, Monty J. Bennett shall serve as the designated representative of the Holder Group Investors with which Newco will consult pursuant to this Section 2.01.

        2.02    Obligations of Newco.    Whenever required under this Article 2 to effect the registration of any Registrable Securities, Newco will, as expeditiously as possible,

E-8


Table of Contents

        2.03    Furnish Information.    It will be a condition precedent to the obligations of Newco to take any action pursuant to this Article 2 with respect to the Registrable Securities of any selling Holder that such Holder will furnish to Newco such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as will be reasonably required to effect the registration of such Holder's Registrable Securities.

        2.04    Expenses of Newco Registration.    Newco will bear and pay all expenses incurred in connection with any registration, filing or qualification of the Newco Voting Common Stock (in the case of an IPO) and/or the Registrable Securities with respect to the Mandatory Registration Statement required pursuant to this Article 2, including all registration, filing, and qualification fees, printers and

E-9


Table of Contents

accounting fees relating or apportionable thereto and the fees and disbursements of one counsel for the selling Holders selected by them not to exceed $50,000, but excluding underwriting discounts and commissions relating to Registrable Securities.

        2.05    Underwriting Requirements.    In connection with any offering involving an underwriting pursuant to Article 2, Newco will not be required to include any Holder's Registrable Securities in such underwriting unless such Holder accepts the terms of the underwriting as agreed upon between Newco and its underwriters. In the event that the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such primary offering by Newco (in the case of an IPO or follow-on primary public offering by Newco), then the Registrable Securities that are included in such offering will be apportioned pro rata among the selling Holders based on the aggregate number of Registrable Securities requested to be registered by all selling Holders or in such other proportions as is mutually agreed to by all such selling Holders; provided, that in any event the holders of Registrable Securities will be entitled to register the offer and sale or distribute at least 50% of the securities to be included in such primary offering; and provided, further, that any such determination will not affect Newco's obligation to provide for an IPO of the Newco Voting Common Stock and/or for the registration and resale of all of the Registrable Securities prior to the third anniversary of the Closing Date. For the purposes of this Section 2.05 concerning apportionment, for any selling Holder or equity holder, the controlled Affiliates of such selling Holder or equity holder, or the estates, Immediate Family Members and any trusts for the benefit of any of the foregoing Persons will be deemed to be a single "selling Holder" or "equity holder," as applicable, and any pro-rata reduction with respect to such Person will be based upon the aggregate amount of Newco Shares of all Persons included in such selling Person, as provided in this Section 2.05.

        2.06    Indemnification.    With respect to the Mandatory Registration Statement required under this Article 2:

E-10


Table of Contents

        2.07    Assignment of Registration Rights.    The rights to cause Newco to file a Mandatory Registration Statement to register Newco Voting Common Stock (in the case of an IPO) and/or Registrable Securities pursuant to this Article 2 are not assignable or transferable, except in connection with a Permitted Transfer, Approved Transfer or a Transfer complying with Section 4.01, provided that: (a) Newco is, within a reasonable time after such Transfer, furnished with written notice of the name and address of such transferee or assignee with respect to which such registration rights are being assigned; and (b) such transferee or assignee by joinder becomes a party to, and bound by and subject to the terms and conditions of, this Agreement.


ARTICLE 3
Approval Rights and Non-Competition

        3.01    Approval Rights.    

E-11


Table of Contents

        3.02    Non-Competition; Non-Solicitation.    As an integral part of the transactions contemplated by the Acquisition Agreement, this Agreement and the Remington Limited Partnership Agreement, each of the Remington Holders covenant and agree to the following:

E-12


Table of Contents

E-13


Table of Contents


ARTICLE 4
Restrictions on Transfer of Shares and Retained Target Interests; Call and Put Options

        4.01    Restrictions on Transfer.    

E-14


Table of Contents


        4.02
    Call Options.     

E-15


Table of Contents


        4.03
    Put Following a Change in Control.     

E-16


Table of Contents


        4.04
    Determination of the Retained Target Interests Purchase Price.     

E-17


Table of Contents

E-18


Table of Contents


        4.05    Adjustment to Conversion Price.     If Newco, at any time or from time to time after the Closing Date, (a) pays a dividend or makes any other distribution for no consideration to holders of the Newco Common Stock in any other capital stock of Newco or in shares of Newco Common Stock or securities directly or indirectly convertible into or exchangeable for shares of Newco Common Stock, or (b) subdivides (by any stock split, recapitalization or otherwise) its outstanding shares of Newco Common Stock into a greater number of shares, the Conversion Price applicable to the Preferred Call Option in effect immediately prior to any such dividend, distribution or subdivision will be proportionately reduced. If Newco at any time combines (by combination, reverse stock split or otherwise) its outstanding shares of Newco Common Stock into a smaller number of shares, the Conversion Price applicable to the Preferred Call Option in effect immediately prior to such combination will be proportionately increased. Any adjustment under this Section 4.05 shall become effective at the close of business on the date the dividend, distribution, subdivision or combination becomes effective.


        4.06
    References to Newco Nonvoting Common Stock.     At such time that the shares of Newco Nonvoting Common Stock are automatically converted into shares of Newco Voting Common Stock, in accordance with the terms of the Charter, all references to "Newco Nonvoting Common Stock" in Sections 4.02(a) and (b) and Sections 4.03(a)(i) and (ii) shall be deemed to refer to "Newco Voting Common Stock".


ARTICLE 5
Additional Covenants

        5.01    Company Board Nomination Rights.     For so long as the Holder Group Investors are Major Investors, a Majority in Interest of the Holder Group Investors will be entitled to nominate one individual (such individual, and any successor to such individual as contemplated by this Section 5.01, the "Seller Nominee") for election as a member of the Company Board; provided that, in the event that Newco fails to pay dividends as required pursuant to the Preferred Stock Certificate of Designations for two consecutive payment dates, the number of Seller Nominees shall be increased from one individual to three individuals and the term "Seller Nominee" as set forth below will be deemed to refer to all such Seller Nominees. The owners of the Newco Preferred Stock shall also have the rights set forth in the Preferred Stock Certificate of Designation concerning the election of directors to Newco for so long as shares of Newco Preferred Stock remain outstanding. Until a Majority in Interest of the Holder Group Investors otherwise determine, Monty J. Bennett shall serve as the Seller Nominee.

E-19


Table of Contents


        5.02
    Newco Sub Board Nomination Rights.     For so long as the Holder Group Investors hold any Retained Target Interests: (i) a Majority in Interest of the Holder Group Investors will be entitled to nominate one individual (such individual, and any successor to such individual as contemplated by this Section 5.02, the "Seller Newco Sub Nominee") for election as a member of the Newco Sub Board; and (ii) the independent directors of Newco will be entitled to nominate two individuals (such individuals, and any successors to such individuals as contemplated by this Section 5.02, the "Independent Newco Sub Nominees") for election as members of the Newco Sub Board. Until a Majority in Interest of the Holder Group Investors otherwise determine, Monty J. Bennett shall serve as the Seller Newco Sub Nominee.


        5.03
    Voting Rights.     The Covered Investors agree that:

E-20


Table of Contents

E-21


Table of Contents


        5.04
    Newco Approvals.     The Company and Newco agree that Newco will not take, and the Company will not cause or permit Newco to take, any corporate action that, if taken by the Company, would require the approval of the stockholders of the Company under the Delaware General Corporation Law or the rules and regulations of any stock exchange on which the voting securities of the Company are then listed, unless such corporate action has been approved by the stockholders of the Company by the same vote as would be required if the Company were taking such corporate action.


        5.05
    Anti-Dilutive Issuances.     If after the date of this Agreement, the Company determines to sell for cash any shares of Company Common Stock to any Person or issue any debt securities, the Company will promptly contribute the net proceeds of such sale or issuance to the capital of Newco in exchange for a number of newly issued shares of Newco Voting Common Stock determined, (a) with respect to sales of shares of Company Common Stock, by dividing the net proceeds of such offering by the price at which the shares of Company Common Stock were sold in such offering, as such number may be adjusted equitably for any stock split, stock dividend or reverse stock split of Company Common Stock and, (b) with respect to issuances of debt securities, by dividing the net proceeds of such issuance by the VWAP of the Company Common Stock on the Business Day immediately preceding the contribution to Newco. Newco will at all times reserve and keep available out of its authorized but unissued shares (or shares held in the treasury of Newco) the number of shares of Newco Common Stock as may from time to time be required for the exchange of all of the authorized but unissued shares of Company Common Stock.


        5.06
    Authorized Capital.     Newco will at all times reserve and keep available out of its authorized but unissued shares (or shares held in the treasury of Newco) the number of shares of Newco Common Stock as may from time to time be required to comply with the provisions of this Agreement, the Certificate of Designation and the Charter.


        5.07
    Private Letter Ruling.     Newco Sub will at all times operate in a manner that complies with the private letter ruling that may be issued by the Internal Revenue Service to the Company, Ashford Hospitality Trust, Inc., Ashford Hospitality Prime, Inc., Ashford Hospitality Select, Inc. or other parties in connection with, and that permits the transactions contemplated by, this Agreement and the Acquisition Agreement (the "Private Letter Ruling").


        5.08
    Classes Outstanding.     The Newco Common Stock and Newco Preferred Stock will be the only outstanding classes of capital stock of Newco.


        5.09
    Stock Dividends; Reporting.     Until the occurrence of an IPO, except with the prior written consent of a Majority in Interest of the Holder Group Investors, Newco shall neither:


        5.10
    Archie Bennett, Jr. Rights.     Archie Bennett, Jr. shall have the following rights and privileges: (a) the title of Chairman of Target; (b) the right to continue his current level of involvement with Target (e.g., first class travel to the hotels, visit with hotel staff, report back (verbally) to Target's

E-22


Table of Contents

President with his observations and advice for changes or improvements); (c) reimbursement of the actual out-of-pocket costs (including first class air travel) incurred by him in connection with the foregoing activities; and (d) availability to the directors of the Company and Newco for the purpose of attending board meetings thereof and offering his insight and advice on Target's operational and financial performance.


        5.11
    Prorated Remington Incentive Fees.     Pursuant to the terms and conditions of certain hotel management agreements to which Target is a party, Target receives an annual incentive management fee based on the preceding year's hotel operations subject to such hotel management agreements (collectively, the "Incentive Fees"), which Incentive Fees are calculated and paid in the first quarter of each calendar year. For the calendar year in which the Closing occurs, the net amount of the aggregate Incentive Fees less the aggregate amount of officer and executive employee bonuses paid by Target (collectively, the "Incentive Liabilities"), shall be prorated as of the Closing Date based upon the actual number of days elapsed from January 1 through the Closing Date. Pursuant to the Remington Limited Partnership Agreement, such net prorated amounts shall be paid by Target to Archie Bennett, Jr. and Monty J. Bennett (or MJB Investments, as applicable) in cash with respect to the period of time prior to the Closing Date, and Target shall retain such net prorated amounts for the period of time after the Closing Date. Each of Archie Bennett, Jr. and Monty J. Bennett (or MJB Investments, applicable) shall receive 50% of the aggregate prorated net amount payable pursuant to the immediately preceding sentence. Such payments shall be made by Target within fifteen days after both (a) all of the Incentive Fees have been received and (b) the amounts of all of the Incentive Liabilities determined. Target shall calculate, collect, disburse and pay, as applicable, the Incentive Fees and Incentive Liabilities consistent in all material respects with past practices and the terms of the applicable hotel management agreements, employee agreements and other related agreements. Target shall provide the Remington Holders full access to the books and records and personnel of Target to the extent that they relate to the calculation and determination of the Incentive Fees or the Incentive Liabilities. In addition to the foregoing, in the event that the Closing Date occurs after the conclusion of a calendar year and before the ordinary course determination and payment of the Incentive Fees in respect of such calendar year, then the Incentive Fees less the Incentive Liabilities for such calendar year shall be paid by Target to Archie Bennett, Jr. and Monty J. Bennett (or MJB Investments, as applicable) during the first quarter of the next following calendar year in accordance with the procedures set forth above.


        5.12
    Preemptive Rights.     Neither the Company, Newco nor Newco Sub will issue any equity securities, rights to acquire equity securities of the Company, Newco or Newco Sub or debt convertible into equity securities of the Company, Newco or Newco Sub ("New Securities") unless the Company, Newco or Newco Sub, as the case may be, complies with the provisions of this Section 5.12, except for (A) the issuance of Newco Voting Common Stock to the Company as contemplated by Section 5.05, (B) the conversion of Newco Preferred Stock as provided by the Preferred Stock Certificate of Designation, (C) the conversion of the Newco Nonvoting Common Stock as provided in the Charter, or (D) the issuance of Company Common Stock or Newco Common Stock pursuant to Article IV of this Agreement, respectively.

E-23


Table of Contents


ARTICLE 6
Miscellaneous

        6.01    Legends on Certificates.    During the term of this Agreement, each certificate or other instrument representing Newco Shares will bear legends in substantially the following form:

Newco will make a notation on its records and give instructions to any transfer agent of its equity securities to implement the restrictions on transfer established in this Agreement.

        6.02    Assignment.    The rights and obligations of the Remington Holders, Holder Group Investors and Covered Investors pursuant to this Agreement, other than with respect Article 2, are assignable and transferable only in connection with a Transfer complying with this Agreement. The rights and obligations granted pursuant to Article 2 are not assignable or transferable, by operation of law or

E-24


Table of Contents

otherwise, except as provided in Section 2.07. Newco's rights with respect to the Preferred Call Option are not assignable or transferable.

        6.03    Binding Effect.    Except as otherwise provided in this Agreement, every covenant, term and provision of this Agreement will be binding upon and inure to the benefit of the parties and their respective heirs, legatees, legal representatives and permitted successors, transferees and assigns.

        6.04    Termination.    

        6.05    Notices.    Whenever this Agreement provides that any notice, demand, request, consent, approval, declaration, or other communication be given to or served upon any of the parties or any other Person, such notice, demand, request, consent, approval, declaration, or other communication will be in writing and will be deemed to have been validly served, given, or delivered (and "the date of such notice" or words of similar effect will mean the date) upon actual, confirmed receipt thereof (whether by non-certified mail, telecopy, telegram, express delivery, or otherwise), addressed to Newco and the Covered Investors at the street or post office addresses, facsimile numbers or e-mail addresses set forth on the signature pages to this Agreement (or to such other addresses or facsimile number as such party may have specified by notice given pursuant to this provision) and to any other equity holders in Newco at the addresses or facsimile numbers set forth on the books and records of Newco. No notice, demand, request, consent, approval, declaration, or other communication will be deemed to have been given or received unless and until it sets forth all items of information required to be set forth therein pursuant to the terms of this Agreement.

        6.06    Choice of Law; Forum; Waiver of Jury Trial.    

E-25


Table of Contents

        6.07    Integration; Amendment; Waivers.    This Agreement, together with the other Transaction Documents (as defined in the Acquisition Agreement), constitute the entire agreement among the parties with respect to the subject matter of this Agreement and the other Transaction Documents and supersede all previous written, and all previous or contemporaneous oral, negotiations, understandings, arrangements, understandings, or agreements. Except for the addition of Covered Investors as parties to this Agreement as provided for herein, this Agreement may not be amended, modified, or supplemented, or any provision of this Agreement waived, except by the written agreement of the Company, Newco, and a Majority in Interest of the Holder Group Investors, it being agreed that any such amendment, modification or supplement shall be binding on all Covered Investors. The parties agree that no custom, practice, course of dealing, or similar conduct will be deemed to amend, modify, or supplement any term of this Agreement. The failure of any party to enforce any right or remedy under this Agreement, or to enforce any such right or remedy promptly, will not constitute a waiver thereof, nor give rise to any estoppel against such party, nor excuse any other party from its obligations under this Agreement. Any waiver of any such right or remedy by any party must be in writing and signed by the party against which such waiver is sought to be enforced. No waiver will be deemed a continuing waiver or a waiver of any right beyond the specific right waived in such waiver.

        6.08    Further Assurances.    Each party to this Agreement hereby covenants and agrees, without the necessity of any further consideration, to execute and deliver any and all such further documents and take any and all such other actions as may be reasonably necessary or appropriate to carry out the intent and purposes of this Agreement and to consummate the transactions contemplated hereby.

        6.09    Construction of Agreement.    

E-26


Table of Contents

        6.10    Counterparts.    This Agreement may be executed in any number of counterparts, by means of facsimile or portable document format (pdf), which will individually and collectively constitute one agreement.

        6.11    Specific Performance.    The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms of this Agreement and that the Parties will be entitled to specific performance of the terms of this Agreement, in addition to any other remedy to which they are entitled at law or in equity without the need to demonstrate irreparable harm or to post any bond or surety.

[Signature pages follow]

E-27


Table of Contents

        IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the date first above written.

    THE COMPANY:

 

 

ASHFORD, INC.

 

 

By:

 

 

        Name:   David A. Brooks
        Title:   Chief Operating Officer

 

    Address:   14185 Dallas Parkway,
Suite 1100, Dallas, Texas 75254

 

 

with copies to:

 

 

Norton Rose Fulbright US LLP
2200 Ross Avenue, Suite 3600
Dallas, Texas 75201
Attn: Head of Corporate Group

 

 

and

 

 

Baker Botts LLP
2001 Ross Avenue
Dallas, Texas 75201
Attn: Neel Lemon

 

 

and

 

 

Robert G. Haiman
SVP—Business Development
Chief Legal Officer
14185 Dallas Parkway, Suite 1150
Dallas, Texas 75254

[Signature Page to Investor Rights Agreement]


Table of Contents

    NEWCO:

 

 

ASHFORD ADVISORS, INC.

 

 

By:

 

 

        Name:   David A. Brooks
        Title:   Chief Operating Officer

    Address:   14185 Dallas Parkway,
Suite 1100
Dallas, Texas 75254

 

 

with copies to:

 

 

Norton Rose Fulbright US LLP
2200 Ross Avenue, Suite 3600
Dallas, Texas 75201
Attn: Head of Corporate Group

 

 

and

 

 

Baker Botts LLP
2001 Ross Avenue
Dallas, Texas 75201
Attn: Neel Lemon

 

 

and

 

 

Robert G. Haiman
SVP—Business Development
Chief Legal Officer
14185 Dallas Parkway, Suite 1150
Dallas, Texas 75254

[Signature Page to Investor Rights Agreement]


Table of Contents

    NEWCO SUB:

 

 

REMINGTON HOSPITALITY MANAGEMENT, INC.

 

 

By:

 

 

        Name:
        Title:

 

 

Address:

 

14185 Dallas Parkway, Suite 1150
Dallas, Texas 75254

 

 

with copies to:

 

 

Norton Rose Fulbright US LLP
2200 Ross Avenue, Suite 3600
Dallas, Texas 75201
Attn: Head of Corporate Group

 

 

and

 

 

Baker Botts LLP
2001 Ross Avenue
Dallas, Texas 75201
Attn: Neel Lemon

 

 

and

 

 

Robert G. Haiman
SVP—Business Development
Chief Legal Officer
14185 Dallas Parkway, Suite 1150
Dallas, Texas 75254

[Signature Page to Investor Rights Agreement]


Table of Contents

    THE REMINGTON HOLDERS:

 

 

  

Archie Bennett, Jr.

 

 

Address:

 

14185 Dallas Parkway, Suite 1150
Dallas, Texas 75254

 

 

  

Monty J. Bennett

 

 

Address:

 

14185 Dallas Parkway, Suite 1150
Dallas, Texas 75254

 

 

MJB INVESTMENTS, LP

 

 

By MJB Investments GP, LLC, its general partner

 

 

By:

 

  

Monty J. Bennett, Sole Member

 

 

Address:

 

14185 Dallas Parkway, Suite 1150
Dallas, Texas 75254

 

 

  

Mark A. Sharkey

 

 

Address:

 

14185 Dallas Parkway, Suite 1150
Dallas, Texas 75254

 

 

with copies to:

 

 

Norton Rose Fulbright US LLP
2200 Ross Avenue, Suite 3600
Dallas, Texas 75201
Attn: Head of Corporate Group

 

 

and

 

 

Baker Botts LLP
2001 Ross Avenue
Dallas, Texas 75201
Attn: Neel Lemon

 

 

and

 

 

Robert G. Haiman
SVP—Business Development
Chief Legal Officer
14185 Dallas Parkway, Suite 1150
Dallas, Texas 75254

[Signature Page to Investor Rights Agreement]


Table of Contents

    TARGET:

 

 

REMINGTON HOLDINGS, L.P.

 

 

By Remington Holdings GP, LLC, its general partner

 

 

By:

 

  

        Name:   Archie Bennett, Jr.
        Title:   Member

 

 

By:

 

 

        Name:   Monty J. Bennett
        Title:   Member

 

    Address:   14185 Dallas Parkway,
Suite 1150, Dallas, Texas 75254

 

 

with copies to:

 

 

Norton Rose Fulbright US LLP
2200 Ross Avenue, Suite 3600
Dallas, Texas 75201
Attn: Head of Corporate Group

 

 

and

 

 

Baker Botts LLP
2001 Ross Avenue
Dallas, Texas 75201
Attn: Neel Lemon

 

 

and

 

 

Robert G. Haiman
SVP—Business Development
Chief Legal Officer
14185 Dallas Parkway, Suite 1150
Dallas, Texas 75254

[Signature Page to Investor Rights Agreement]


Table of Contents


Exhibit A

See attached.


Table of Contents

ANNEX F

AGREEMENT OF LIMITED PARTNERSHIP
OF
REMINGTON HOLDINGS, L.P.

DATED AS OF                        , 2015

        THE LIMITED PARTNERSHIP INTERESTS (THE "INTERESTS") OF REMINGTON HOLDINGS L.P. (THE "PARTNERSHIP") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY COUNTRY, STATE OR OTHER JURISDICTION IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR INVESTMENT ONLY AND NEITHER THE INTERESTS NOR ANY PART THEREOF MAY BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAWS AND (II) THE TERMS AND CONDITIONS OF THIS PARTNERSHIP AGREEMENT, INCLUDING SECTION 7.3 HEREOF. THEREFORE, PURCHASERS OF SUCH INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.


Table of Contents


TABLE OF CONTENTS

 
   
  Page  

ARTICLE I DEFINITIONS; INTERPRETATION

    F-1  

1.1

 

Definitions

   
F-1
 

1.2

 

Rules of Interpretation

    F-6  

ARTICLE II GENERAL PROVISIONS

   
F-7
 

2.1

 

Continuation

   
F-7
 

2.2

 

Name

    F-7  

2.3

 

Purposes

    F-7  

2.4

 

Principal Office

    F-7  

2.5

 

Registered Office and Registered Agent

    F-7  

2.6

 

Term

    F-8  

2.7

 

Partners

    F-8  

2.8

 

Organizational Certificates and Other Filings

    F-8  

2.9

 

Fiscal Year

    F-8  

ARTICLE III CAPITAL OF THE PARTNERSHIP

   
F-8
 

3.1

 

Capital Contributions

   
F-8
 

3.2

 

Working Capital Reserves

    F-9  

ARTICLE IV DISTRIBUTIONS AND BACK OFFICE SERVICES

   
F-9
 

4.1

 

Distribution Policy

   
F-9
 

4.2

 

Back Office Services

    F-9  

4.3

 

Distributions of Distributable Cash

    F-9  

4.4

 

Distributions in Kind

    F-10  

4.5

 

Tax Advances

    F-10  

4.6

 

Restricted Distributions

    F-11  

ARTICLE V EXPENSES

   
F-11
 

5.1

 

Partnership Expenses

   
F-11
 

ARTICLE VI OPERATION AND MANAGEMENT OF THE PARTNERSHIP

   
F-11
 

6.1

 

Management Authority

   
F-11
 

6.2

 

Limits on General Partner's Powers

    F-13  

6.3

 

Private Letter Ruling

    F-14  

6.4

 

Transfer of the General Partner's Interest

    F-14  

6.5

 

Interest of the General Partner or its Affiliates as a Limited Partner

    F-14  

6.6

 

Other Activities

    F-15  

ARTICLE VII LIMITED PARTNERS

   
F-15
 

7.1

 

No Participation in Management; Determinations

   
F-15
 

7.2

 

Limited Liability

    F-15  

7.3

 

Transfer of Limited Partnership Interests

    F-15  

7.4

 

No Withdrawal or Loans

    F-17  

7.5

 

No Termination

    F-17  

7.6

 

Confidentiality

    F-17  

ARTICLE VIII RESERVED

   
F-18
 

F-i


Table of Contents

 
   
  Page  

ARTICLE IX DISSOLUTION AND TERMINATION

    F-18  

9.1

 

Duration

   
F-18
 

9.2

 

Liquidation of the Partnership

    F-18  

9.3

 

Termination

    F-19  

ARTICLE X RESERVED

   
F-19
 

ARTICLE XI BOOKS AND RECORDS; REPORTS

   
F-19
 

11.1

 

Books and Records

   
F-19
 

11.2

 

Reports

    F-19  

11.3

 

Budget Consultation

    F-20  

ARTICLE XII CAPITAL ACCOUNT ALLOCATIONS AND TAX MATTERS

   
F-20
 

12.1

 

Capital Accounts

   
F-20
 

12.2

 

Allocations of Profits and Losses

    F-21  

12.3

 

Special Allocation Provisions

    F-21  

12.4

 

Tax Allocations

    F-22  

12.5

 

Other Allocation Provisions

    F-23  

12.6

 

Tax Elections

    F-23  

12.7

 

Tax Classification of the Partnership

    F-23  

12.8

 

Tax Matters Partner; Tax Reporting and Audits

    F-23  

ARTICLE XIII LIABILITY AND INDEMNIFICATION

   
F-26
 

13.1

 

Liability of the General Partner and other Covered Persons

   
F-26
 

13.2

 

Indemnification of Covered Persons

    F-27  

ARTICLE XIV MISCELLANEOUS

   
F-27
 

14.1

 

Amendments

   
F-27
 

14.2

 

Successors and Assigns

    F-28  

14.3

 

Governing Law; Submission to Jurisdiction; Waiver of Jury Trial

    F-28  

14.4

 

Severability

    F-28  

14.5

 

Notices

    F-29  

14.6

 

Entire Agreement

    F-29  

14.7

 

Counterparts

    F-29  

14.8

 

Waiver of Partition and Accounting

    F-29  

14.9

 

Other Instruments and Acts

    F-29  

14.10

 

Force Majeure

    F-29  

14.11

 

No Third Party Beneficiaries

    F-29  

SCHEDULE A NAMES, ADDRESSES AND PERCENTAGE INTERESTS OF THE PARTNERS

   
 
 

F-ii


Table of Contents


AGREEMENT OF LIMITED PARTNERSHIP
OF
REMINGTON HOLDINGS, L.P.

        THIS AGREEMENT OF LIMITED PARTNERSHIP of REMINGTON HOLDINGS, L.P., a Delaware limited partnership (the "Partnership"), is made as of                        , 2015, by and among Remington GP Holdings, LLC, a Delaware limited liability company, as the general partner (the "General Partner") and those persons listed on Schedule A hereto (as supplemented or amended from time to time), as limited partners (the "Limited Partners"). Capitalized terms used herein without definition have the meanings specified in Section 1.1.

        WHEREAS, the Partnership was formed pursuant to a Certificate of Limited Partnership, which was filed for recordation in the office of the Secretary of State of the State of Delaware on December 30, 2008 (the "Certificate");

        WHEREAS, the General Partner and the Ashford Limited Partner acquired their respective Interests in the Partnership in connection with transactions described in and contemplated by the Transaction Documents; and

        WHEREAS, the parties hereto desire to continue the Partnership on the terms set forth herein.

        NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the parties hereto agree as follows:


ARTICLE I

DEFINITIONS; INTERPRETATION

        1.1    Definitions.     Capitalized terms used in this Agreement shall have the meanings set forth below or as otherwise specified herein:

        "AA" means Ashford Advisors, Inc., a Delaware corporation.

        "Acquisition Agreement" has the meaning specified in the defined term Transaction Documents herein.

        "Adjusted Capital Account Deficit" means, with respect to any Partner, the deficit balance, if any, in such Partner's Capital Account as of the end of the relevant tax period, after giving effect to the following adjustments:

        "Affiliate" means, with respect to any Person, any Person directly or indirectly Controlling, Controlled by or under common Control with such Person.

        "Agreement" means this Agreement of Limited Partnership of Remington Holdings, L.P., including the Schedules hereto, as the same may be amended or modified from time to time.

        "Apportioned Bennett Incentive Fees" means the net amount, if any, of the aggregate Incentive Fees less the aggregate amount of the Incentive Liabilities (each as defined in the IRA), allocated to Archie Bennett, Jr. and Monty J. Bennett (or MJB Investments, LP, as applicable) pursuant to Section 5.11 of the IRA (including pursuant to the last sentence thereof).

F-1


Table of Contents

        "Ashford Limited Partner" means Remington Hospitality Management, Inc., a Delaware corporation.

        "Assignee" has the meaning set forth in Section 7.3(b).

        "Back Office Services" has the meaning set forth in Section 4.2.

        "Bennett Limited Partners" means Monty J. Bennett and Archie Bennett, Jr., and each Person that succeeds to the Interests of either of Monty J. Bennett and Archie Bennett, Jr. as a result of a Transfer to (a) an Immediate Family Member of either of Monty J. Bennett or Archie Bennett, Jr., or a trust established for the benefit of one or more such Immediate Family Members, in each case, without consideration and for bona fide estate, succession or tax planning purposes or (b) a Person that is majority beneficially owned and is controlled by either of Monty J. Bennett or Archie Bennett, Jr., in each of the foregoing cases where the transferee becomes a party to this Agreement as a Limited Partner.

        "Bennett Transferee Limited Partners" means the Bennett Limited Partners, and each Person that is not a Bennett Limited Partner that succeeds to the Interests of a Bennett Limited Partner as a result of a Transfer.

        "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in Dallas, Texas are authorized or required by law to close.

        "Capital Account" has the meaning set forth in Section 12.1(a).

        "Capital Contribution" means, as to any Partner at any time, the aggregate amount of capital contributed to the Partnership by such Partner on or prior to such time.

        "Carrying Value" means, with respect to any Partnership asset, the asset's adjusted basis for Federal income tax purposes, except that the initial Carrying Value of any asset contributed by a Partner to the Partnership shall be the fair market value of such asset at the time of such contribution (as reasonably determined in good faith by the General Partner) and the Carrying Values of all Partnership assets shall be adjusted to equal their respective fair market values, in accordance with the rules set forth in Treasury Regulations Section 1.704-1(b)(2)(iv)(f), except as otherwise provided herein, immediately prior to: (a) the date of the acquisition of any additional Interest by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (b) the date of the distribution of more than a de minimis amount of Partnership property (other than a pro rata distribution) to a Partner; (c) the grant of an interest in the Partnership (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Partnership by an existing or new Partner; or (d) the date of the termination of the Partnership within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g); provided that adjustments pursuant to clauses (a), (b) and (c) above shall be made only if the General Partner reasonably determines in good faith that such adjustments are necessary or appropriate to reflect the relative economic interests of the Partners. For clarity, the Carrying Value of Partnership assets will not be adjusted pursuant to any of clauses (a) through (d) above by reason of the transactions contemplated by the Acquisition Agreement. The Carrying Value of any Partnership asset distributed to any Partner shall be adjusted immediately prior to such distribution to equal its fair market value, as reasonably determined in good faith by the General Partner. In the case of any asset that has a Carrying Value that differs from its adjusted tax basis, Carrying Value shall be adjusted by the amount of depreciation calculated for purposes of the definition of "Profits and Losses" rather than the amount of depreciation determined for U.S. Federal income tax purposes. The Carrying Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 734(b) or Section 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining capital accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Carrying Values shall not be adjusted pursuant to this sentence to the extent the General Partner reasonably determines in good

F-2


Table of Contents

faith that an adjustment pursuant to clauses (a) through (d) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this sentence.

        "Certificate" has the meaning set forth in the preamble to this Agreement.

        "Code" means the United States Internal Revenue Code of 1986, as amended from time to time.

        "Control" (and the correlative terms "controlled by" and "controlling") means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of the business and affairs of the entity in question by reason of the ownership of beneficial interests, by voting rights, by contract or otherwise.

        "Correspondence" has the meaning set forth in Section 14.5.

        "Covered Person" means (a) the General Partner and its direct or indirect Affiliates, (b) each Limited Partner and its direct or indirect Affiliates, and (c) each of the current and former employees and officers of the Partnership and any of the Persons described in clauses (a) and (b).

        "Disposition Transaction" means any Transfer of a Bennett Limited Partner's Interest that, following the consummation of such Transfer, results in the Bennett Limited Partners beneficially owning in the aggregate less than 5% in Interest.

        "Distributable Cash" as of any month-end date of determination, means the excess, if any, of (a) the total amount of current assets of the Partnership less the total amount of current liabilities of the Partnership, less (b) the Reserved Working Capital Amount, calculated after taking into account the requirement to make any distribution pursuant to Section 4.3(b).

        "Established Securities Market" means (i) a United States national securities exchange, (ii) a non-United States securities exchange (including but not limited to the London International Financial Futures and Options Exchange, the Marché à Terme Internationale de France, the London Stock Exchange, the Frankfurt Stock Exchange and the Tokyo Stock Exchange), (iii) a regional or local exchange or (iv) an interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers by electronic means or otherwise (including but not limited to NASDAQ).

        "Fiscal Year" has the meaning set forth in Section 2.9.

        "Fiscal Quarter" has the meaning set forth in Section 11.2.

        "GAAP" means generally accepted accounting principles in the United States consistently applied.

        "General Partner" means Remington GP Holdings, LLC, a Delaware limited liability company, in its capacity as general partner of the Partnership, and any successor general partner of the Partnership pursuant to the terms of this Agreement.

        "Governmental Authority" means any nation or government, any state or other political subdivision thereof and any other Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

        "Immediate Family Member" means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, step-siblings, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of a referenced natural person.

        "Incentive Fee Capital" has the meaning set forth in Section 12.1(a).

        "Interest" means the entire partnership interest owned by a Partner in the Partnership at any particular time, including the right of such Partner to any and all benefits to which such Partner may be entitled as provided in this Agreement, together with the obligations of such Partner to comply with all the terms and provisions of this Agreement.

F-3


Table of Contents

        "IRA" means that certain Investor Rights Agreement dated as of the date hereof, by and among Ashford, Inc., a Delaware corporation; AA; Remington Hospitality Management, Inc., a Delaware corporation; Archie Bennett, Jr., Monty J. Bennett, MJB Investments, LP, Remington GP Holdings, LLC, a Delaware limited liability company, and the Partnership.

        "LIBOR" shall mean the rate per annum equal to the one-day London Interbank Offered Rate fixed by the British Bankers Association for United States dollar deposits in the London interbank marked at approximately 11:00 a.m., London, England time (or as soon thereafter as practicable) as determined by Ashford, Inc. from any broker, quoting service or commonly available source utilized by Ashford, Inc.

        "Limited Partners" means the Persons admitted as limited partners of the Partnership, which limited partners shall be listed on Schedule A hereto, and shall include their successors and permitted assigns to the extent admitted to the Partnership as limited partners in accordance with the terms hereof, in their capacities as limited partners of the Partnership, and shall exclude any Person that ceases to be a Partner in accordance with the terms hereof. For purposes of the Partnership Act, the Limited Partners shall constitute a single class, series and group of limited partners.

        "Majority (or other specified percentage) in Interest" of the Limited Partners (or Bennett Limited Partners or Bennett Transferee Limited Partners, as applicable) means, at any time, the Limited Partners (or Bennett Limited Partners or Bennett Transferee Limited Partners, as applicable) holding a majority (or other specified percentage) of the total limited partnership interests then entitled to vote in the Partnership as determined on the basis of the Percentage Interests of the Limited Partners (or Bennett Limited Partners or Bennett Transferee Limited Partners, as applicable).

        "Nonrecourse Deductions" has the meaning set forth in Treasury Regulations Section 1.704-2(b).

        "Objection Notice" has the meaning set forth in Section 12.8(k).

        "Partner" means the General Partner or any of the Limited Partners and "Partners" means the General Partner and all of the Limited Partners.

        "Partner Loan" has the meaning set forth in Section 3.1(a).

        "Partner Nonrecourse Debt Minimum Gain" means an amount with respect to each partner nonrecourse debt (as defined in Treasury Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt were treated as a nonrecourse liability (as defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with Treasury Regulations Section 1.704-2(i)(3).

        "Partner Nonrecourse Deductions" has the meaning set forth in Treasury Regulations Section 1.704-2(i)(2).

        "Partnership" has the meaning set forth in the introductory paragraph.

        "Partnership Act" means the Delaware Revised Uniform Limited Partnership Act, 6 Del. Code §17-101 et seq., as the same may be amended from time to time, and any successor to such statute.

        "Partnership Expenses" has the meaning set forth in Section 5.1.

        "Partnership Minimum Gain" has the meaning set forth in Treasury Regulations Section 1.704-2(b)(2) and 1.704-2(d).

        "Percentage Interest" means, with respect to any Partner, the percentage set forth opposite such Partner's name on Schedule A hereto.

        "Permitted Indebtedness" means all aggregate obligations of the Partnership (including all obligations in respect of principal, accrued interest and fees), solely to the extent relating to the

F-4


Table of Contents

ordinary course acquisition of furniture, fixtures and equipment, (a) for the deferred purchase price of property (including any deferred purchase price liabilities, earn-outs, contingency payments, installment payments, seller notes or similar liabilities), and (b) under capital leases (in accordance with GAAP).

        "Person" means an individual, a partnership (general, limited or limited liability), a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental, quasi-governmental, judicial or regulatory entity or any department, agency or political subdivision thereof.

        "Prior Capital Account" means, with respect to Monty J. Bennett (or MJB Investments, LP) or Archie Bennett, Jr., the Capital Account of Monty J. Bennett (or MJB Investments, LP) or Archie Bennett, Jr., as applicable, immediately prior to the Transfer of a portion of their Interests pursuant to the Acquisition Agreement (but taking into account Capital Account allocations of Profits, income or gain (or similar amounts) for the period ending on the date of such Transfer, based on the ownership interests in effect immediately prior to such Transfer).

        "Profits" and "Losses" means, for each Fiscal Year or other period, the taxable income or loss of the Partnership, or particular items thereof, determined in accordance with the accounting method used by the Partnership for Federal income tax purposes and Section 703(a) of the Code with the following adjustments: (a) all items of income, gain, loss or deduction allocated pursuant to Section 12.3 shall not be taken into account in computing such taxable income or loss; (b) any income of the Partnership that is exempt from Federal income taxation and not otherwise taken into account in computing Profits and Losses shall be added to such taxable income or loss; (c) if the Carrying Value of any asset differs from its adjusted tax basis for Federal income tax purposes, any gain or loss resulting from a disposition of such asset shall be calculated with reference to such Carrying Value; (d) upon an adjustment to the Carrying Value (other than an adjustment in respect of depreciation) of any asset, pursuant to the definition of Carrying Value, the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (e) if the Carrying Value of any asset differs from its adjusted tax basis for Federal income tax purposes at the beginning of an applicable period the amount of depreciation, amortization or cost recovery deductions with respect to such asset for purposes of determining Profits and Losses, if any, shall be an amount which bears the same ratio to such Carrying Value as the Federal income tax depreciation, amortization or other cost recovery deductions bears to such adjusted tax basis (provided that if the Federal income tax depreciation, amortization or other cost recovery deduction is zero, the General Partner may use any reasonable method for purposes of determining depreciation, amortization or other cost recovery deductions in calculating Profits and Losses); and (f) except for items in (a) above, any expenditures of the Partnership described in Code section 705(a)(2)(B) or treated as Code section 705(a)(2)(B) expenditures pursuant to Treasury Regulations section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits and Losses, shall be treated as current expenses.

        "Regulatory Allocations" has the meaning set forth in Section 12.3(g).

        "Reserved Working Capital Amount" has the meaning set forth in Section 3.2(a) hereof.

        "Secondary Market" means a market for interests in the Partnership (whether maintained by the Partnership or any other Person) in which (i) Interests in the Partnership are regularly quoted by any Person, such as a broker or dealer, making a market in the Interests, (ii) any Person regularly makes available to the public (including customers or subscribers) bid or offer quotes with respect to Interests in the Partnership and stands ready to effect buy or sell transactions at the quoted prices for itself or on behalf of others, (iii) the holder of an Interest in the Partnership has a readily available, regular and ongoing opportunity to sell or exchange the interest through a public means of obtaining or providing information of offers to buy, sell, or exchange Interests in the Partnership, or (iv) prospective buyers and sellers otherwise have the opportunity to buy, sell, or exchange Interests in the Partnership in a

F-5


Table of Contents

time frame and with the regularity and continuity that is comparable to that described in any of the preceding clauses (i), (ii) and (iii).

        "Securities Act" means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder.

        "Subsidiary" shall mean, with respect to any Person, (i) any corporation more than fifty percent (50%) of the stock of any class or classes of which having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is owned by such Person directly or indirectly through one or more subsidiaries of such Person and (ii) any Company, association, joint venture, limited liability company or other entity in which such Person directly or indirectly through one or more subsidiaries of such Person has more than a fifty percent (50%) equity interest.

        "Tax Advance" has the meaning set forth in Section 4.5(a).

        "Tax Matters Partner" has the meaning set forth in Section 12.8(a).

        "Transaction Documents" means this Agreement, the Acquisition Agreement, dated as of September 17, 2015, among the Partnership, the Limited Partners and certain other Persons (the "Acquisition Agreement"), the Newco Certificate of Incorporation, the Newco Preferred Stock Certificate of Designation, the GP Holdings I Certificate of Formation, the Newco Sub Certificate of Incorporation, the GP Holdings Certificate of Formation, the Company Contribution Agreement, the Newco Contribution Agreement, the Newco Sub Contribution Agreement, the Investor Rights Agreement, the Management Agreement, and the Registration Rights Agreement (as such terms are defined in the Acquisition Agreement).

        "Transactions" has the meaning specified in the Acquisition Agreement.

        "Transfer" means a direct or indirect transfer in any form, including a sale, assignment, conveyance, pledge, mortgage, encumbrance, securitization, hypothecation or other disposition, any purported severance or alienation of any beneficial interest (including the creation of any derivative or synthetic interest), or the act of so doing, as the context requires.

        "Treasury Regulations" means the United States Treasury regulations promulgated under the Code.


        1.2
    Rules of Interpretation.     

F-6


Table of Contents


ARTICLE II

GENERAL PROVISIONS

        2.1    Continuation.     The Partners hereby agree to continue the Partnership pursuant to the terms of this Agreement as set forth herein.


        2.2
    Name.     The name of the Partnership is "Remington Holdings, L.P." The business of the Partnership may be conducted, upon compliance with all applicable laws, under any other name designated by the General Partner from time to time; provided that such name (a) contains the words "Limited Partnership" or the abbreviation "LP" or "L.P.", and (b) shall not contain the name of any Limited Partner or its Affiliates without the consent of such Limited Partner. The General Partner shall give the Limited Partners reasonable notice of such other name promptly following commencement of the conduct of Partnership business under such name. The Partnership's name and goodwill shall, as among the Partners, be deemed to have no value and shall belong to the Partnership, and no Partner shall have any right or claim individually to the use thereof.


        2.3
    Purposes.     Subject to the terms and conditions of this Agreement, the purposes of the Partnership are to conduct, directly or indirectly through Subsidiaries, a hotel and hospitality management and development business, including the development and/or operation of hotels and the performance of asset management services, and to carry on any other activity which may be lawfully carried on by a partnership formed under the Partnership Act, and to take any and all actions necessary, appropriate, desirable, incidental or convenient to or for the furtherance or accomplishment of the above purposes.


        2.4
    Principal Office.     The Partnership shall maintain its principal office at, and its affairs shall be conducted from, 14185 Dallas Parkway, Dallas, Texas 75254, or such other or additional place or places as the General Partner may decide.


        2.5
    Registered Office and Registered Agent.     The address of the Partnership's registered office in the State of Delaware is c/o Corporation Services Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. The name and address of the Partnership's registered agent for service of process at such address in the State of Delaware is Corporation Services Company. The General Partner may designate another registered agent and/or registered office located in the State of

F-7


Table of Contents

Delaware at any time, and may maintain such other office or offices at such location or locations within or without the State of Delaware as the General Partner may from time to time select.

        2.6    Term.    The Partnership commenced upon the filing of the Certificate in the office of the Secretary of State of the State of Delaware and shall continue until dissolved and terminated pursuant to Section 9.1.


        2.7
    Partners.     The names, addresses, initial Capital Accounts and Percentage Interests of each Partner shall be set forth on Schedule A hereto. In the event of a Transfer or other change in the ownership of Interests in accordance with this Agreement, Schedule A shall be adjusted accordingly. Other than as expressly provided herein, the Partnership shall not issue any additional Interests without the prior written consent of a Majority in Interest of the Bennett Limited Partners; provided, that such consent shall be required only if a Disposition Transaction has not occurred.


        2.8
    Organizational Certificates and Other Filings.     If requested by the General Partner, the Limited Partners shall promptly execute all certificates and other documents consistent with the terms of this Agreement necessary for the General Partner to accomplish all filing, recording, publishing and other acts as may be appropriate to comply with all requirements for (a) the formation and operation of a limited partnership under the laws of the State of Delaware, (b) if the General Partner deems it advisable, the operation of the Partnership as a limited partnership, or partnership in which the Limited Partners have limited liability, in all jurisdictions where the Partnership proposes to operate, and (c) all other filings required to be made by the Partnership.


        2.9
    Fiscal Year.     The fiscal year ("Fiscal Year") of the Partnership shall be the calendar year or, in the case of the first and last Fiscal Years of the Partnership, the fraction thereof commencing on the Initial Closing Date or ending on the date on which the winding up of the Partnership is completed, as the case may be. The General Partner shall have the authority to change the ending date of the Fiscal Year if the General Partner shall determine in good faith that such change is necessary or appropriate, provided, that the General Partner shall promptly give notice of any such change to the Limited Partners.


ARTICLE III

CAPITAL OF THE PARTNERSHIP

        3.1    Capital Contributions.     

F-8


Table of Contents


        3.2
    Working Capital Reserves.     


ARTICLE IV

DISTRIBUTIONS AND BACK OFFICE SERVICES

        4.1    Distribution Policy.     


        4.2
    Back Office Services.     In consideration for agreeing to enter into the Transactions contemplated by the Acquisition Agreement, for ten years from the date of this Agreement, the Partnership shall provide to Monty J. Bennett, Archie Bennett, Jr. and/or their respective heirs or estates, the administrative services, legal services, accounting services, financial advisory services and tax preparation and advisory services that have been historically provided to Monty J. Bennett and/or Archie Bennett, Jr. (the "Back Office Services"), and such services shall not be subject to liquidation or exchange for another benefit. During such ten-year period, the extent to which Monty J. Bennett, Archie Bennett, Jr. and/or their respective heirs or estates receives such services in a taxable year of Monty J. Bennett, Archie Bennett, Jr. and/or their respective heirs or estates, respectively, shall not affect the extent to which such services may be provided in any other taxable year of Monty J. Bennett, Archie Bennett, Jr. and/or their respective heirs or estates, respectively.

        4.3    Distributions.    

F-9


Table of Contents


        4.4
    Distributions in Kind.     Except to the extent otherwise provided in this Agreement, no in-kind distribution will be made to the Partners prior to the winding-up and liquidation of the Partnership. For purposes of maintaining the Capital Accounts, any assets to be distributed in kind to the Partners shall be deemed to have been sold for its fair market value, as determined by the General Partner in its reasonable discretion, on the date of distribution and the proceeds of such sale shall be deemed to have been distributed to the Partners for purposes of this Agreement.


        4.5
    Tax Advances.     

F-10


Table of Contents


        4.6
    Restricted Distributions.     Notwithstanding any provision to the contrary contained in this Agreement, the Partnership and the General Partner on behalf of the Partnership shall not make a distribution to any Partner on account of its Interest in the Partnership if such distribution would violate the Partnership Act.


ARTICLE V

EXPENSES

        5.1    Partnership Expenses.     The Partnership shall bear and be charged with all costs, expenses, liabilities and obligations relating to the Partnership's activities and business ("Partnership Expenses") and shall promptly reimburse the General Partner or its Affiliates to the extent any such costs, expenses, liabilities and obligations are paid by such Persons, including the following:


ARTICLE VI

OPERATION AND MANAGEMENT OF THE PARTNERSHIP

        6.1    Management Authority.     

F-11


Table of Contents

F-12


Table of Contents


        6.2
    Limits on General Partner's Powers.     Anything in this Agreement to the contrary notwithstanding, the General Partner shall not, without the prior consent of, as applicable, (i) a Majority in Interest of the Bennett Limited Partners; provided that a Disposition Transaction has not occurred and (ii) a Majority in Interest of the Bennett Transferee Limited Partners, cause or permit the Partnership to:

F-13


Table of Contents


        6.3
    Private Letter Ruling.     The General Partner shall cause the Partnership to operate its business in a manner that complies with any private letter ruling that may be issued by the Internal Revenue Service to the Partnership and its Affiliates regarding treatment of the Partnership as an "eligible independent contractor," within the meaning of section 856 of the Code, with respect to certain of the properties which are managed by the Partnership.


        6.4
    Transfer of the General Partner's Interest.     


        6.5
    Interest of the General Partner or its Affiliates as a Limited Partner.     The General Partner shall also be a Limited Partner to the extent that it purchases or becomes a transferee of all or any part of the Interest of a Limited Partner and to such extent shall be treated as a Limited Partner in all respects.

F-14


Table of Contents


        6.6    Other Activities.     


ARTICLE VII

LIMITED PARTNERS

        7.1    No Participation in Management; Determinations.     Except to the extent explicitly provided in this Agreement, the Limited Partners (in their capacity as such) shall not participate in the control, management, direction or operation of the affairs of the Partnership and shall have no power to bind the Partnership or to take part or in any way interfere in the conduct of the management of the Partnership or to vote on matters relating to the Partnership other than as provided in the Partnership Act or as set forth in this Agreement. The exercise by any Limited Partner of any right conferred herein shall not be construed to constitute participation by such Limited Partner in the control of the business or other activities of the Partnership so as to make such Limited Partner liable as a general partner for the debts and obligations of the Partnership for purposes of the Partnership Act or otherwise.


        7.2
    Limited Liability.     The Limited Partners shall not be personally liable for any obligations of the Partnership and shall have no obligation to make contributions to the Partnership, except to the extent expressly required by this Agreement (including as provided in Sections 3.1 and 4.5) or by the Partnership Act or other applicable law; provided that a Limited Partner shall be required to return any distribution made to it in error.


        7.3
    Transfer of Limited Partnership Interests.     

F-15


Table of Contents

F-16


Table of Contents


        7.4
    No Withdrawal or Loans.     Except as expressly provided in this Agreement, no Limited Partner may withdraw as a Partner of the Partnership, nor shall any Limited Partner be required to withdraw from the Partnership, nor may a Limited Partner borrow or withdraw any portion of its Capital Account from the Partnership, and no Partner shall have any right to receive property other than cash in return for such Partner's Capital Contributions.


        7.5
    No Termination.     Neither the substitution, death, incompetency, dissolution (whether voluntary or involuntary) nor bankruptcy of a Limited Partner shall affect the existence of the Partnership, and the Partnership shall continue for the term set forth in this Agreement until its existence is terminated as provided herein.

        7.6    Confidentiality.    

F-17


Table of Contents


        7.7
    MJB Investments, LP.     It is understood and acknowledged that Monty J. Bennett has assigned the economics of his Interest to MJB Investments, LP, which is disregarded as an entity separate from Monty J. Bennett for U.S. federal income tax purposes. Any distribution for Monty J. Bennett pursuant to this Agreement will be paid to MJB Investments, LP.


ARTICLE VIII

RESERVED


ARTICLE IX

DISSOLUTION AND TERMINATION

        9.1    Duration.     The Partnership shall be dissolved on the first to occur of the following events:


        9.2
    Liquidation of the Partnership.     

F-18


Table of Contents


        9.3
    Termination.     Following completion of the winding up of Partnership affairs as contemplated by this Article IX, the Partnership shall terminate upon the filing of a Certificate of Cancellation of the Certificate in accordance with the applicable provisions of the Partnership Act.


ARTICLE X

RESERVED


ARTICLE XI

BOOKS AND RECORDS; REPORTS

        11.1    Books and Records.     The General Partner shall keep or cause to be kept complete and appropriate records and books of account. Except as otherwise expressly provided herein, such books and records shall be maintained on a basis which allows for the proper preparation of the Partnership's financial statements and tax returns. The books and records shall be maintained at the principal office of the Partnership. Any Limited Partner or its duly authorized representatives shall be permitted, upon five (5) Business Days' written notice to the General Partner, to inspect the books and records of the Partnership for any purpose reasonably related to such Limited Partner's interest as a limited partner in the Partnership consistent with reasonable confidentiality restrictions imposed by the General Partner, at any reasonable time during normal business hours. Except as provided herein or as required by law, the Limited Partners shall have no further rights to information about the Partnership.


        11.2
    Reports.     The General Partner shall furnish to each Partner:

F-19


Table of Contents


        11.3
    Budget Consultation.     Prior to the occurrence of a Disposition Transaction, the General Partner shall:


ARTICLE XII

CAPITAL ACCOUNT ALLOCATIONS AND TAX MATTERS

        12.1    Capital Accounts.     

F-20


Table of Contents


        12.2
    Allocations of Profits and Losses.     Except as otherwise provided in this Agreement, Profits, Losses and, to the extent necessary, individual items of income, gain, loss or deduction, of the Partnership for each tax period shall be allocated among the Partners, as of the end of such tax period, in a manner such that, after giving effect to the special allocations set forth herein and all prior distributions, the Capital Account of each Partner, immediately after making such allocation, is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made to such Partner pursuant to Section 4.3 if the Partnership were dissolved, its affairs wound up and its assets sold for cash equal to their Carrying Value, all Partnership liabilities were satisfied (limited with respect to each nonrecourse liability to the Carrying Value of the assets securing such liability), and the resulting net assets of the Partnership were distributed in accordance with Section 4.3 to the Partners immediately after making such allocation, minus (ii) such Partner's share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain.


        12.3
    Special Allocation Provisions.     Notwithstanding any other provision in this Article XII:

F-21


Table of Contents


        12.4
    Tax Allocations.     For income tax purposes only (and not for Capital Account purposes), each item of income, gain, loss and deduction of the Partnership shall be allocated among the Partners in the same manner as the corresponding items of Profits and Losses and specially allocated items are allocated for Capital Account purposes; provided, that in the case of any Partnership asset the Carrying Value of which differs from its adjusted tax basis for Federal income tax purposes, income, gain, loss and deduction with respect to such asset shall be allocated solely for income tax purposes in

F-22


Table of Contents

accordance with the principles of Code Sections 704(b) and (c) (subject to Section 12.8(h)(vi), in any manner reasonably determined by the General Partner in good faith in consultation with the Partnership's tax advisor) so as to take account of the difference between Carrying Value and adjusted basis of such asset. Tax credits and tax credit recapture shall be allocated in accordance with the Partners' interests in the Partnership as provided in Treasury Regulations Section 1.704-1(b)(4)(ii).


        12.5
    Other Allocation Provisions.     The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulations. Allocations of items of income, gain, loss and deduction for purposes of determining the Partners' Capital Accounts generally will be made in a manner consistent with the economic intent of the provisions of this Agreement. Subject to the other provisions of this Agreement and the Acquisition Agreement, the General Partner shall have the authority in its reasonable good faith discretion to choose from all available accounting methodologies, and the General Partner may allocate specific items of income, gain, loss or deduction using any reasonable method it determines in good faith. To the extent consistent with applicable law, the General Partner in its reasonable good faith discretion may specially allocate income, gain, loss or deductions to any Partner the status of which resulted in recognition of such income, gain, loss or deduction or otherwise alter the distribution or allocation provisions herein so that such Partner bears the consequences of such recognition.


        12.6
    Tax Elections.     Except as provided in Section 12.7(a) or otherwise provided in this Agreement or the Transaction Documents, the General Partner may, in its reasonable discretion, make any and all tax elections, and the General Partner shall be absolved from all liability for any and all consequences to any previously admitted or subsequently admitted Partners resulting from its making or its failure to make any election.


        12.7
    Tax Classification of the Partnership.     


        12.8
    Tax Matters Partner; Tax Reporting and Audits.     

F-23


Table of Contents

F-24


Table of Contents

F-25


Table of Contents


ARTICLE XIII

LIABILITY AND INDEMNIFICATION

        13.1    Liability of the General Partner and other Covered Persons.     

F-26


Table of Contents


        13.2
    Indemnification of Covered Persons.     


ARTICLE XIV

MISCELLANEOUS

        

        14.1    Amendments.    

F-27


Table of Contents


        14.2
    Successors and Assigns.     The provisions of this Agreement shall be binding upon the successors and permitted assigns of the parties hereto.


        14.3
    Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.     This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the provisions, policies or principles thereof relating to choice or conflict of laws. In particular, the Partnership is formed pursuant to the Partnership Act, and the rights and liabilities of the Partners shall be as provided therein, except as herein otherwise expressly provided. The Partners hereby submit to the nonexclusive jurisdiction of the state and federal courts in Dallas, Texas in any proceeding based on or arising under this Agreement. The Limited Partners hereby waive as a defense that any such proceeding brought in such courts has been brought in an inconvenient forum or that the venue thereof may not be appropriate and, furthermore, agree that venue in Dallas, Texas for any such proceeding is appropriate. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT.


        14.4
    Severability.     Each provision of this Agreement shall be considered severable and if for any reason any provision that is not essential to the effectuation of the basic purposes of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable and contrary to the Partnership Act or existing or future applicable law, such invalidity shall not impair the operation of or affect those provisions of this Agreement which are valid. In that case, this Agreement shall be construed so as to limit any term or provision so as to make it enforceable or valid within the requirements of any applicable law, and in the event such term or provision cannot be so limited, this Agreement shall be construed to omit such invalid or unenforceable provisions.

F-28


Table of Contents


        14.5
    Notices.     All notices, reports, requests, demands, consents and other communications hereunder (collectively, "Correspondence") shall be in writing and shall be deemed to have been duly given if (i) mailed, registered mail, first-class postage paid, (ii) sent by overnight mail or courier, (iii) transmitted via facsimile, (iv) by e-mail or (v) delivered by hand, if to any Limited Partner, at such Limited Partner's address, or to such Limited Partner's facsimile number or e-mail address, as set forth on Schedule A hereto, and if to the Partnership or to the General Partner, to the General Partner at the principal office of the Partnership, or to such other Person or address as any Partner shall have last designated by notice to the Partnership, and in the case of a change in address by the General Partner, by notice to the Limited Partners. Any Correspondence will be deemed received (i) if sent by certified or registered mail, return receipt requested, when actually received, (ii) if sent by overnight mail or courier, when actually received, (iii) if sent by facsimile transmission, on the date sent provided confirmatory notice is sent by first-class mail, postage prepaid, (iv) if delivered by hand, on the date of receipt and (v) if sent by e-mail, on the day the email is sent; provided, that if such e-mail is sent after 5:00 pm Central Time or on a day that is not a Business Day, such notice shall be deemed received on the next succeeding Business Day.


        14.6
    Entire Agreement.     This Agreement and the Transaction Documents constitute the entire agreement among the Partners and between the Partners with respect to the subject matter hereof and supersede any prior agreement or understanding among or between them with respect to such subject matter.


        14.7
    Counterparts.     This Agreement may be executed in any number of counterparts, any one of which need not contain the signatures of more than one party, but all of such counterparts together shall constitute one agreement.


        14.8
    Waiver of Partition and Accounting.     Except as may be otherwise required by law in connection with the winding-up, liquidation and dissolution of the Partnership, each Partner hereby irrevocably waives any and all rights that it may have to maintain an action for an accounting or for partition or similar action of any of the Partnership's property.


        14.9
    Other Instruments and Acts.     The Partners agree to execute any other instruments or perform any other acts that are or may be necessary to effectuate and carry on the Partnership created by this Agreement


        14.10
    Force Majeure.     Whenever any act or thing, other than the payment of money, is required of the Partnership or the General Partner hereunder to be done within any specified period of time, the Partnership or the General Partner, as the case may be, shall be entitled to such additional period of time to do such act or thing as shall equal any period of delay resulting from causes beyond the reasonable control of the Partnership or the General Partner, as the case may be, including bank holidays, actions of governmental agencies, acts of God and terrorist acts; provided, that this provision shall not have the effect of relieving the Partnership or the General Partner from the obligation to perform any such act or thing.


        14.11
    No Third Party Beneficiaries.     It is understood and agreed among the parties that, expressly set forth in this Agreement and the Transaction Documents, this Agreement and the covenants made herein are made expressly and solely for the benefit of the parties hereto, and that no other Person, other than a Covered Person pursuant to Article XIII hereof, shall be entitled or be deemed to be entitled to any benefits or rights hereunder, nor be authorized or entitled to enforce any rights, claims or remedies hereunder or by reason hereof.

* * * * *

F-29


Table of Contents

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

    GENERAL PARTNER:

 

 

REMINGTON GP HOLDINGS, LLC

 

 

By:

 

Remington Hospitality Management, Inc., its sole member

 

 

By:

 

  

        Name    
        Title:    

 

 

LIMITED PARTNERS:

 

 

REMINGTON HOSPITALITY MANAGEMENT, INC.

 

 

By:

 

  

        Name    
        Title:    

 

 

 

Monty J. Bennett

 

 

  

Archie Bennett, Jr.

[Signature Page to Limited Partnership Agreement]


Table of Contents


SCHEDULE A

Names, Addresses and Percentage Interests of Partners

General Partner
  Percentage Interests   Initial
Capital
Account
 

Remington GP Holdings, LLC
14185 Dallas Parkway
Suite 1100
Dallas, Texas 75254
Attention:
Telephone:
Email:
Fax:

  0.0% (representing
a non-economic
interest in the
Partnership)
  $    

Limited Partners
       
 
 

Remington Hospitality Management, Inc.
14185 Dallas Parkway
Suite 1100
Dallas, Texas 75254
Attention:
Telephone:
Email:
Fax:

  80.0%   $    

Monty J. Bennett
14185 Dallas Parkway
Suite 1150
Dallas, Texas 75254
Telephone:
Email:
Fax:

 

10.0%

 
$
 

Archie Bennett, Jr.
14185 Dallas Parkway
Suite 1150
Dallas, Texas 75254
Telephone:
Email:
Fax:

 

10.0%

 
$
 

  100%        

Table of Contents


Exhibit A

Business Practices


Table of Contents

ANNEX G

LOGO

September 14, 2015

CONFIDENTIAL

Special Committee of the Board of Directors
Ashford Inc.
14185 Dallas Parkway
Suite 1100
Dallas, TX 75254

Members of the Special Committee of the Board Directors of Ashford Inc.:

        BMO Capital Markets Corp. ("BMOCM" or "we") has been advised that Ashford Inc., a Delaware corporation ("Ashford" or the "Company"), is considering entering into an acquisition agreement (the "Acquisition Agreement") with Archie Bennett, Jr. and Monty J. Bennett (collectively, the "LP Transferors"); Remington Holdings GP LLC, a Delaware limited liability company and the general partner of the Target (the "General Partner") (each of the LP Transferors and the General Partner individually, a "Remington Holder" and collectively, the "Remington Holders"); solely for the purpose of conveying its economic interest in the Target (the "Economic Interest"), MJB Investments, LP ("MJB Investments"); solely for the purpose of conveying his profits interest in the Target (the "Profits Interest"), Mark A. Sharkey ("Sharkey"); and Remington Holdings, LP, a Delaware limited partnership (the "Target"); Ashford Advisors, Inc., a Delaware corporation and wholly owned subsidiary of the Company ("Newco"); Remington Hospitality Management, Inc., a Delaware corporation and wholly owned subsidiary of Newco ("Newco Sub"); Ashford GP Holdings I, LLC, a Delaware limited liability company and wholly owned subsidiary of Newco ("GP Holdings I"); and Remington GP Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of Newco Sub ("GP Holdings"). Pursuant to the Acquisition Agreement the Company, through Newco, will acquire 80% of the outstanding limited partnership interests in the Target (the "LP Interests"), 80% of the Economic Interest, 100% of the Profits Interests owned by Sharkey, 100% of the outstanding general partnership interests in the Target (the "GP Interests"), 100% of the Class A and Class B limited partnership interests in Marietta Leasehold, LP (the "Marietta LP Interests") and 100% of the issued and outstanding general partnership interests in Marietta Leasehold, LP (the "Marietta GP Interests" and together with the Marietta LP Interests, the "Marietta Interests") from the Remington Holders for a total purchase price to be paid of $331.7 million (the "Proposed Consideration"). In connection with the Transaction (as defined below), Ashford will contribute substantially all of its assets to Newco. The Proposed Consideration will consist of $10.0 million in interest-free notes payable by Newco Sub in 16 equal quarterly installments of $625 thousand, 0.917 million shares of nonvoting common stock to be issued by Newco, and $230.0 million face amount of convertible preferred equity to be issued by Newco. All of the foregoing are collectively referred to as the "Transaction".

        The Special Committee of the Board of Directors of Ashford (the "Special Committee") has requested that we render an opinion, as investment bankers, as to the fairness, from a financial point of view, to the Company as of the date hereof of the Proposed Consideration to be paid in the Transaction (the "Opinion").

        For purposes of this Opinion, we have reviewed the proposed final draft of the Acquisition Agreement provided to us by the Company on September 9, 2015, as supplemented on September 11, 2015 (as so supplemented, the "Draft Acquisition Agreement"). We have assumed that the final Acquisition Agreement will not differ in any material respect from the Draft Acquisition Agreement, and will reflect the terms of the Draft Acquisition Agreement.


Table of Contents

        In arriving at our Opinion set forth below, we have reviewed, among other things:

        In addition, we have,

2


Table of Contents

        In rendering our Opinion, we have assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to us by Ashford or their representatives or advisors, the Target or their representatives or advisors, or obtained by us from other sources. We have not independently verified (nor assumed any obligation to verify) any such information, undertaken an independent valuation or appraisal of the assets or liabilities (contingent or otherwise) of the Company or Target, nor have we been furnished with any such valuation or appraisal. We have not evaluated the solvency or fair value of the Company or Target under any state or federal laws relating to bankruptcy, insolvency or similar matters. We also have assumed that all material governmental, regulatory or other approvals and consents required in connection with the consummation of the Transaction will be obtained and that in connection with obtaining any necessary governmental, regulatory or other approvals and consents, no restrictions, terms, or conditions will be imposed that would be material to our analysis. We have has also assumed that the Transaction will be consummated in accordance with the terms of the Acquisition Agreement, without any waiver, modification or amendment of any terms, condition or agreement that would be material to our analysis, that the representations and warranties of each party contained in the Acquisition Agreement would be true and correct, that each party would perform all of the covenants and agreements required to be performed by it under the Acquisition Agreement and that all conditions to the consummation of the Transaction would be satisfied without waiver or modification. With respect to financial projections for the Company and the Target (including, without limitation, the Projection Model), we have been advised by Ashford, and we have assumed, without independent investigation, that they have been reasonably prepared and reflect the best currently available estimates and good faith judgment of Ashford of the expected future competitive, operating and regulatory environments and related financial performance of the Company and the Target. We express no opinion with respect to such projections, including the assumptions on which they are based. Furthermore, we have not assumed any obligation to conduct, and have not conducted, any physical inspection of the properties or facilities of the Company or the Target.

        Our Opinion is necessarily based upon financial, economic, market and other conditions and circumstances as they exist and can be evaluated, and the information made available to us, as of the date hereof. We disclaim any undertakings or obligations to advise any person of any change in any fact or matter affecting the Opinion which may come or be brought to our attention after the date of the Opinion.

        Our Opinion does not constitute a recommendation as to any action the Special Committee or the Board of Directors of Ashford should take in connection with the Transaction or the other transactions contemplated by the Draft Acquisition Agreement or any aspect thereof and is not a recommendation to any director of Ashford or stockholder on how such person should vote with respect to the Transaction or related transactions and proposals. Our Opinion relates solely to the fairness, from a financial point of view, to the Company as of the date hereof, of the Proposed Consideration to be paid in the Transaction. We express no opinion herein as to the relative merits of the Transaction and any other transactions or business strategies discussed by the Special Committee as alternatives to the Transaction or the decision of the Special Committee to recommend the Transaction, nor do we express any opinion on the structure, terms or effect of any other aspect of the Transaction or the other transactions contemplated by the Draft Acquisition Agreement. Our Opinion does not in any manner address the prices at which Ashford's common stock or other securities will trade following the announcement or consummation of the Transaction. We are not experts in, and this Opinion does not address, any of the legal, tax or accounting aspects of the Transaction, including, without limitation, whether or not the Transaction or the other transactions contemplated by the Draft Acquisition Agreement constitute a change of control under any contract or agreement to which the Company or any of their respective subsidiaries is a party. In addition, we express no view or opinion as to the

3


Table of Contents

fairness of the amount or nature of, or any other aspects relating to, the compensation to any officers, directors or employees of any parties to the Transaction, or class of such persons, relative to the Proposed Consideration or otherwise.

        BMOCM has acted as financial advisor to the Special Committee with respect to the transactions contemplated by the Draft Acquisition Agreement, will receive a fee for our services, a substantial portion of which is contingent upon the completion of the Transaction and will receive a fee for rendering this Opinion. In addition, Ashford has agreed to reimburse us for out-of-pocket expenses and to indemnify us against certain liabilities arising out of our engagement.

        BMOCM, as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. We or our affiliates may provide investment and corporate banking services to Ashford, the Target and the Remington Holders and their respective affiliates in the future, for which we or they may receive customary fees. BMOCM provides a full range of financial advisory and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold securities, including, without limitation, derivative securities, of Ashford or its affiliates for its own account and for the accounts of customers.

        Our Opinion has been approved by a fairness opinion committee of BMOCM. Our Opinion has been prepared at the request and solely for the benefit and use of the Special Committee in its evaluation of the fairness, from a financial point of view, to the Company of the Proposed Consideration to be paid by the Company in the Transaction. Our Opinion may not be disclosed, in whole or in part, or summarized, excerpted from or otherwise referred to without our prior written consent except that our Opinion may be reproduced in full or summarized in any disclosure document filed by Ashford with the Securities and Exchange Commission with respect to the Transaction, provided that any summary of this Opinion is in a form acceptable to BMOCM and its counsel.

        Based upon and subject to the foregoing, it is our opinion, as investment bankers, that as of the date hereof, the Proposed Consideration to be paid by Ashford in the Transaction is fair, from a financial point of view, to Ashford.

Very truly yours,

BMO Capital Markets

/s/ BMO Capital Markets Corp.

4


 

 

 

 

 

ASHFORD INC.

ATTN: MR. DAVID A. BROOKS, SECRETARY

14185 DALLAS PARKWAY

SUITE 1100

DALLAS, TX 75254

VOTE BY INTERNET - www.proxyvote.com

 

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date.  Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

 

VOTE BY PHONE - 1-800-690-6903

 

Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

 

VOTE BY MAIL

 

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

 

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

 

 

[M88384-P62468]

KEEP THIS PORTION FOR YOUR RECORDS

 

DETACH AND RETURN THIS PORTION ONLY

 

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

 

ASHFORD INC.

 

 

 

 

 

 

 

 

 

The Board of Directors unanimously (with Monty Bennett and J. Robison Hay, III recusing themselves) recommends you vote FOR the following proposals:

 

For

Against

Abstain

 

 

 

 

 

 

 

1.              To approve the contribution of substantially all of the Company’s assets and all of the Company’s business operations to Newco pursuant to the Transaction Documents.

 

o

o

o

 

 

 

 

 

 

 

2.              To approve the potential issuance of shares of the Company’s common stock that may occur pursuant to the Transaction Documents, in one or more of the following events:  (a) as consideration for the potential future purchase of the 20% limited partnership interest in Remington retained by the Bennetts; (b) as consideration for the potential future acquisition of the Newco common stock issued to the Bennetts; (c) as consideration for the potential future acquisition of the Newco preferred stock issued to the Remington Sellers; or (d) upon the conversion of preferred stock of the Company that potentially may be issued in exchange for the Newco preferred stock issued to the Remington Sellers.

 

o

o

o

 

 

 

 

 

 

 

3.              To approve an adjournment or postponement of the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the foregoing proposals.

 

o

o

o

 

 

 

 

 

 

 

For address changes and/or comments, please check this box and write them on the back where indicated.

 

o

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Please indicate if you plan to attend this meeting.

 

o

o

 

 

 

 

 

 

 

 

Yes

No

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Please sign exactly as your name(s) appear(s) hereon.  When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

 

 

 

 

 

 

 

 

 

 

 

Signature [PLEASE SIGN WITHIN BOX]

 

Date

 

Signature (Joint Owners)

 

Date

 

 



 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Notice, the Proxy Statement, the 2015 Annual Report, the March Quarterly Report and the June Quarterly Report are available at www.proxyvote.com.

 

[M88385-P62468]

 

ASHFORD INC.

SPECIAL MEETING OF STOCKHOLDERS - [      ], 2016

This Proxy is solicited by the Board of Directors of the Company

 

The undersigned, having received notice of the Proxy Statement for the Special Meeting therefor, and revoking all prior proxies, hereby appoint(s) Mr. David A. Brooks and Mr. Deric S. Eubanks (with full power of substitution), as proxies of the undersigned to attend the Special Meeting of Stockholders of ASHFORD INC. (the “Company”) to be held on [    ], [      ], 2016 and any adjourned sessions thereof, and there to vote and act upon the matters listed on the reverse side in respect of all shares of Common Stock of the Company which the undersigned would be entitled to vote or act upon, with all powers the undersigned would possess if personally present.

 

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S).  IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.

 

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.

 

Address Changes/Comments:

 

 

(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)

 

CONTINUED AND TO BE SIGNED ON REVERSE SIDE