LUXHP LuxUrban Hotels Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): June 7, 2024

 

LuxUrban Hotels Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware		001-41473		82-3334945
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

212 Biscayne Blvd, Suite 253, Miami, Florida		33137
(Address of Principal Executive Offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (833) 723-7368

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Ticker symbol(s)		Name of each exchange on which registered
Common Stock, $0.00001 par value per share		LUXH		The Nasdaq Stock Market LLC
13.00% Series A Cumulative Redeemable Preferred Stock, $0.00001 par value per share		LUXHP		The Nasdaq Stock Market LLC

 

 

 

Item 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Mr. Arigo Succeeds Mr. Kothari as CEO

 

Effective June 10, 2024, Robert Arigo became our Chief Executive Officer. Mr. Arigo shall assume the role of Chief Executive Officer, succeeding, Shanoop Kothari. Mr. Arigo has served as of Chief Operating Officer since March 2024. The appointment of Mr. Arigo as our Chief Executive Officer is part of our company’s dedicated effort to enhance our management and operations teams through the recruitment of talented directors and officers who possess meaningful and broad experience in the hotel and online travel services industries, as well as business development expertise.

 

Mr. Arigo brings to us more than 35 years of key leadership experience garnered through his positions with leading hotel management companies. From July 2018 to February 2024, Mr. Arigo served as Vice President for M&R Hotel Management, a company that provides hospitality development, turnaround, and management services to a portfolio of hotels throughout the United States. Mr. Arigo served from August 2012 to March 2018 as Senior Director of Operations for Hersha Hospitality Management, a hotel management company with a portfolio of 240 properties, including luxury and lifestyle properties, across the U.S. and Canada. From September 2010 to August 2012, Mr. Arigo served as the Chief Operating Officer of Widewaters Hotels, a leading developer and owner of branded and independent hotels and extended stay properties, in which position he was integral in shaping that company’s growth and operational efficiency. Mr. Arigo served as General Manager, on an independent consulting basis, for numerous upscale boutique hotels from January 2008 to August 2010. From February 2005 to December 2007, Mr. Arigo was Regional Vice President of Operations for Highgate Hotels, a leading hotel management, investment, technology, and development firm, with a diverse portfolio of hotels across North America. Mr. Arigo served as the General Manager for the Belleview Biltmore Resort & Spa from November 2003 to February 2005. Prior to that time, Mr. Arigo was the Vice President of Operations and Finance for Capital Hotel Management, a privately held hotel asset management and investment advisory company, in which position he served until November 2003. From October 1994 to November 1996, Mr. Arigo was Director of Finance for Crestline Hotels, a hospitality management company focused on customer service, and from October 1994 to November 1996, he was Director of Finance for Interstate Hotels Corporation (now part of Aimbridge Hospitality), a leading, global hotel management company. Mr. Arigo commenced his career in the hotel and hospitality industry in July 1989 at Marriott International, where he played integral roles in operations and finance until October 1994. Mr. Arigo received his bachelor finance degree from Bentley University in 1989.

 

On June 10, 2024, our company and Mr. Arigo entered into a three-year employment agreement (the “Agreement”) that provides for his full-time service to our company at an annual base salary of $450,000. Mr. Arigo is also entitled to earn up to a $100,000 annual bonus based on criteria established by the compensation committee of our board of directors and in such committee’s discretion. He also is entitled to receive an annual grant of 500,000 restricted shares of our common stock each year during his term of employment, each grant vesting in three equal annual instalments on the first, second, and third anniversaries of the date of grant.

 

Mr. Arigo follows Shanoop Kothari as Chief Executive Officer of the Company, with Mr. Kothari’s employment being terminated by the Company without cause and principally based on the Company’s desire to bring significant hotel operations and field experience to the role of Chief Executive Officer.

 

Grant of Shares to Certain Officers in Lieu of Cash Compensation

 

In connection with the Company’s management of cash flow and capital resources, the board of directors determined to grants restricted shares to certain officers in lieu of cash compensation for services, including shares issued in exchanged for accrued and unpaid salaries and fees.

 

 

Effective as of June 7, 2024, our company granted to Elan Blutinger, our Nonexecutive Chairman of the Board, a one-time grant to 1,000,000 restricted shares of our common stock related to his current and future provision of services related to the evaluation of strategic initiatives, financings, and going-forward operating and strategic plans. The grant is subject to the terms and conditions and subject to the restrictions set forth in the Company’s 2022 incentive equity plan (the “Plan”). The grant shall not be effective until the Charter Amendment and Plan Amendment (as defined and described in the preliminary information statement on Schedule 14C filed with the SEC on May 29, 2024) is effective under the Exchange Act and the Delaware General Corporation Law). The shares shall vest as follows: (a) 75% shall be deemed vested immediately upon effectiveness of the Charter and Plan Amendments (as described above), and (b) the remaining 25% shall vest on the date the Company consummates a third-party financing of equity or debt which, collectively with the underwritten offering of common stock consummated by the Company on May 23, 2024 and any subsequent financings, results in our company having raised aggregate gross proceeds from equity and debt financings during 2024 of at least $12 million.

 

In June 2024, we entered into agreements with certain officers pursuant to which they have agreed to accept grants of restricted shares of our common stock in lieu of and in exchange for accrued salaries. The grants are subject to the terms and conditions and subject to the restrictions set forth in the Plan. While the exchange of accrued salaries for shares is irrevocable, the grants shall not be effective until the Charter Amendment and Plan Amendment (as described above) are effective under the Exchange Act and the Delaware General Corporation Law. The number of shares issued were based on the accrued salary divided by the average last sale price as reported by the Nasdaq Capital Market for the five consecutive trading days prior to the board’s approval of the grant ($0.3162 per share). The aggregate number of shares subject to the restricted grant awards as of the date hereof is up to an aggregate of 2,471,726 shares.

 

In June 2024, we modified our consulting agreement with Brian Ferdinand, our founder and former Chairman of the Board and Chief Executive Officer, pursuant to which all monthly fees accrued prior to the date hereof and all fees payable thereafter during the three-year term are waived, and in exchange therefore we granted to Mr. Ferdinand 5,692,600 restricted shares of the common stock of the Company, based on the $1.8 million aggregate consulting fees that were otherwise payable by our company to him during the three-year term of the a consulting agreement divided by $0.3162, which is the average per-share last sale price as reported by the Nasdaq Capital Market for the five consecutive trading days ending prior to the date of the exchange. The exchange is irrevocable. The grants are subject to the terms and conditions and subject to the restrictions set forth in the Plan. The grant shall not be effective until the Charter Amendment and Plan Amendment (as described above) is effective under the Exchange Act and the Delaware General Corporation Law. Additionally, the grant shall not be effective until the date that the Company has obtained the necessary vote of a majority of the outstanding common stock approving an increase of the Company’s 2022 Equity Incentive Plan from 8 million shares to at least 20 million shares.

 

Item 9.01

Financial Statements and Exhibits

 

Exhibit		Description
10.1		Shares for Salary Agreement.
10.2		Restricted Stock Grant Agreement (Elan Blutinger).
10.3		Consulting Agreement Amendment.
10.4		Executive Employment Agreement.
99.1		Press Release Announcing Appointment of Robert Arigo as CEO.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: June 11, 2024	LUXURBAN HOTELS INC.
	By:	/s/ Michael James
		Name:	Michael James
		Title:	Chief Financial Officer

 

 

Exhibit 10.1

 

Restricted Stock in Lieu of Salary Agreement

(As of June 4, 2024)

 

1. The board of directors of LuxUrban Hotels Inc. (the “Company”) has unanimously resolved to award restricted shares under the Company’s 2022 Equity Incentive Plan (the “2022 Plan”) to certain key employees and directors of the Company who have elected to forgive accrued and past due and unpaid salary or cash board fees owed to them by the Company from January 1, 2024 through June 3, 2024. The per-share last sale price of the Company’s common stock as reported by the Nasdaq Capital Market on June 3, 2024 was $0.3080 per share and the average last sale price as reported by the Nasdaq Capital Market for the five consecutive trading days was $0.3162. Accordingly, pursuant to applicable Nasdaq rules, the board determined that the share value used to calculate the number of shares to be issue to each employee in lieu of such accrued salary would be based on $0.3162 per share.

 

2. Schedule A hereto sets forth the aggregate salary and/or board fees earned by each of the undersigned from January 1, 2024 through June 3, 2024 and the number of shares that will be issued in lieu of same.

 

3. By executing this Agreement, the undersigned employee or director hereby:

 

(a) agrees that the dollar amount set forth on Exhibit A hereto next to his or her name accurately represents all salary or board fees owed to him or her by the Company form January 1, 2024 through June 3, 2024;

 

(b) irrevocably waives and forfeits his or her right to any accrued amounts unpaid to him or her by the Company for salary and/or board fees accruing from any time prior to and through June 3, 2024 and agrees that he or she shall be issued shares of restricted stock under the 2022 Plan in exchange therefor (the “Compensation Shares”) and hereby waives any and claim with respect to any other cash salary or board fees earned prior to June 3, 2024;

 

(c) acknowledges that the Compensation Shares will not be issued to him or her until the date the Company has filed an amendment to its certificate of incorporation with the State of Delaware increasing the Company’s authorized capital as described in the Company’s preliminary information statement filed with the Securities and Exchange Commission on May 29, 2024 and, if applicable, any lock-up or standstill entered into by the Company prior to such time that prohibits the Company from issuing shares of common stock hereunder has expired, including any such provision contained in any underwriting agreement between the Company and any underwriter that has conducted or will conduct an underwriter offering for the Company (such latest date, the “Effective Date”);

 

(d) acknowledged and agrees that he or she has had access to all necessary information to make an investment decision and understands the risk of an investment in the Company and that the Compensation Shares will be restricted and not saleable or transferable without an effective registration available under the Securities Act of 1933, as amended (the “Act”) or an exemption from such registration requirements under the Act and that the undersigned must consult with his or her own tax and legal advisors to determine if he or she will file an 83(b) election with respect to the Compensation Shares and to timely make such election if so desired and the tax implications of being issued Compensation Shares in lieu of cash salary.

 

4. The Company and each of the undersigned irrevocably agree that the Compensation Shares will be issued pursuant to a restricted stock award agreement in form customarily utilized by the Company with respect to grants of restricted shares under the 2022 Plan (which agreement shall be executed promptly following the date hereof) and that execution of same by the undersigned will be a prerequisite to the Company’s issuance of such shares and that same shall not be effective until the Effective Date. The Company hereby irrevocably agrees to issue such shares promptly after the Effective Date and execution by the recipient of the aforementioned restricted stock award agreement.

 

 

5. This Agreement is intended as individual agreements between the Company, on the one hand, and each person signing below, on the other hand and shall be deemed binding without any other signatures hereto and separately enforceable by the Company and each individual between each such party.

 

	LUXURBAN HOTELS INC.
	By:	/s/ Michael James
		Michael James
		Chief Financial Officer

 

Agreed and accepted:
*
Shanoop Kothari
/s/ Brandon Elster
Brandon Elster
/s/ Jimmie Chatmon
Jimmie Chatmon
/s/ Brian L. Ferdinand
Brian L. Ferdinand
/s/ Elan Blutinger
Elan Blutinger
/s/ Leonard Toboroff
Leonard Toboroff

 

*

unsigned by oriignally eligible to participate

 

 

Schedule A

 

[schedule as signed reflect aggregate eligible issuance of up to 2,471,726 shares]

 

 

Exhibit 10.2

 

Restricted Stock Award Agreement¹

 

This Restricted Stock Award Agreement (this “Agreement”) is made and entered into as of June 10, 2024 by and between LuxUrban Hotels Inc., a Delaware corporation (the “Company”) and Robert Arigo (the “Grantee”).

 

WHEREAS, the Committee has determined that it is in the best interests of the Company and its shareholders to grant the award of Restricted Stock provided for herein.

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

 

1. Grant of Restricted Stock. In connection with the employment of the Grantee, and subject to the Company’s 2022 Equity Incentive Plan (the “Plan”) and the provisions of Section 3.4, below, the Company hereby grants to the Grantee a Restricted Stock Award consisting of, in the aggregate, 500,000 shares of Common Stock of the Company (the “Restricted Stock”), on the terms and conditions and subject to the restrictions set forth in this Agreement and the Plan. Capitalized terms that are used but not defined herein have the meanings ascribed to them in the Company’s 2022 Equity Incentive Plan (the “Plan”).

 

2. Consideration. The grant of the Restricted Stock is made in consideration of the services to be rendered by the Grantee to the Company.

 

3. Restricted Period; Vesting.

 

3.1 Except as otherwise provided herein, provided that the Grantee remains in Continuous Service through the applicable vesting date, subject to Section 3.4, below, the Restricted Stock will vest in three equal annual installments on the first, second and third anniversary of the date hereof. The period over which the Restricted Stock vests is referred to as the “Restricted Period”.

 

3.2 The foregoing vesting schedule notwithstanding, if the Grantee’s Continuous Service terminates for any reason (other than by the Company terminating such Continuous Service without Cause or Grantee terminating such Continuous Service for Good Reason, as “Cause” and “Good Reason” are defined in the Grantee’s employment agreement with the Company of even date herewith (the “Employment Agreement”)) at any time before all of the Grantee’s Restricted Stock has vested, the Grantee’s unvested Restricted Stock shall be automatically forfeited upon such termination of Continuous Service and neither the Company nor any Affiliate shall have any further obligations to the Grantee under this Agreement.

 

3.3 The foregoing vesting schedule notwithstanding, upon the occurrence of a Change in Control (as defined in the Employment Agreement) during the term of Grantee’s Continuous Service, 100% of the unvested Restricted Stock shall vest as of the date of the Change in Control (as defined in the Company’s 2022 Incentive Equity Plan).

 

 

1

This form also will be used for a second and third annual grant as prescribed by the Employment Agreement.

 

 

3.4 Notwithstanding anything to the contrary contained herein, none of the Restricted Stock shall be issued or deemed outstanding, and the Grantee shall have no rights therein, until the date (the “Grant Date”) that the amendment to the Company’s certificate of incorporation increasing the authorized capital stock of the Company as described in the Company’s preliminary information statement filed with the SEC on May 29, 2024 is filed with the Secretary of State of the State of Delaware and deemed effective.

 

4. Restrictions. Subject to any exceptions set forth in this Agreement or the Plan, during the Restricted Period, the Restricted Stock or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Stock or the rights relating thereto during the Restricted Period shall be wholly ineffective and, if any such attempt is made, the Restricted Stock will be forfeited by the Grantee and all of the Grantee’s rights to such shares shall immediately terminate without any payment or consideration by the Company.

 

5. Rights as Shareholder; Dividends.

 

5.1 Upon initial issuance, the Grantee shall be the record owner of the Restricted Stock until the shares of Common Stock are sold or otherwise disposed of, and shall be entitled to all of the rights of a shareholder of the Company including, without limitation, the right to vote such shares and receive all dividends or other distributions paid with respect to such shares.

 

5.2 The Company may issue stock certificates or evidence the Grantee’s interest by using a restricted book entry account with the Company’s transfer agent. Physical possession or custody of any stock certificates that are issued shall be retained by the Company until such time as the Restricted Stock vests.

 

5.3 If the Grantee forfeits any rights the Grantee has under this Agreement in accordance with Section 3, the Grantee shall, on the date of such forfeiture, no longer have any rights as a shareholder with respect to the Restricted Stock and shall no longer be entitled to vote or receive dividends on such shares.

 

6. No Right to Continued Service. Neither the Plan nor this Agreement shall confer upon the Grantee any right to be retained in any position, as an Employee, Consultant or Director of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Grantee’s Continuous Service at any time, with or without Cause.

 

7. Adjustments. If any change is made to the outstanding Common Stock or the capital structure of the Company, if required, the shares of Common Stock shall be adjusted or terminated in any manner as contemplated by the Plan.

 

 

8. Tax Liability and Withholding.

 

8.1 The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee pursuant to the Plan, the amount of any required withholding taxes in respect of the Restricted Stock and to take all such other action as the Committee deems necessary to satisfy all obligations for the payment of such withholding taxes. The Committee may permit the Grantee to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means:

 

(a) tendering a cash payment.

 

(b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable or deliverable to the Grantee as a result of the vesting of the Restricted Stock; provided, however, that no shares of Common Stock shall be withheld with a value exceeding the [minimum/maximum] amount of tax required to be withheld by law.

 

(c) delivering to the Company previously owned and unencumbered shares of Common Stock.

 

8.2 Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Grantee’s responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant or vesting of the Restricted Stock or the subsequent sale of any shares; and (b) does not commit to structure the Restricted Stock to reduce or eliminate the Grantee’s liability for Tax-Related Items.

 

9. Section 83(b) Election. The Grantee may make an election under Code Section 83(b) (a “Section 83(b) Election”) with respect to the Restricted Stock. Any such election must be made within thirty (30) days after the Grant Date. If the Grantee elects to make a Section 83(b) Election, the Grantee shall provide the Company with a copy of an executed version and satisfactory evidence of the filing of the executed Section 83(b) Election with the US Internal Revenue Service. The Grantee agrees to assume full responsibility for ensuring that the Section 83(b) Election is actually and timely filed with the US Internal Revenue Service and for all tax consequences resulting from the Section 83(b) Election.

 

10. Non-competition and Non-solicitation. It is acknowledged that the Restricted Stock is being issued in connection with the hiring of the Grantee by the Company and Grantee entering to the Employment Agreement with the Company and the Non-competition, Non-disclosure and Intellectual Property Agreement (“NNIPA”) prescribed thereby and made exhibit thereto, and it is further acknowledged that the Company would not have granted the Restricted Shares but for the undertakings and protections afforded the Company by the NNIPA. Accordingly, if the Grantee breaches any of the covenants set forth in the NNIPA all unvested Restricted Stock shall be immediately forfeited. The Grantee hereby consents and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief.

 

 

11. Compliance with Law. The issuance and transfer of shares of Common Stock shall be subject to compliance by the Company and the Grantee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s shares of Common Stock may be listed. No shares of Common Stock shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Grantee understands that the Company is under no obligation to register the shares of Common Stock with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

 

12. Legends. A legend may be placed on any certificate(s) or other document(s) delivered to the Grantee indicating restrictions on transferability of the shares of Restricted Stock pursuant to this Agreement or any other restrictions that the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any applicable federal or state securities laws or any stock exchange on which the shares of Common Stock are then listed or quoted.

 

13. Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Chief Executive Officer of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

 

14. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Delaware without regard to conflict of law principles.

 

15. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Grantee and the Company.

 

16. Restricted Stock Subject to Plan. This Agreement is subject to the Plan as approved by the Company’s shareholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

 

17. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee’s beneficiaries, executors, administrators and the person(s) to whom the Restricted Stock may be transferred by will or the laws of descent or distribution.

 

 

18. Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.

 

19. Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the Restricted Stock in this Agreement does not create any contractual right or other right to receive any Restricted Stock or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Grantee’s employment with the Company.

 

20. Amendment. The Committee has the right to amend, alter, suspend, discontinue or cancel the Restricted Stock, prospectively or retroactively; provided, that, no such amendment shall adversely affect the Grantee’s material rights under this Agreement without the Grantee’s consent.

 

21. No Impact on Other Benefits. The value of the Grantee’s Restricted Stock is not part of their normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

 

22. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

 

23. Acceptance. The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the Restricted Stock subject to all of the terms and conditions of the Plan and this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the grant or vesting of the Restricted Stock or disposition of the underlying shares and that the Grantee has been advised to consult a tax advisor prior to such grant, vesting or disposition.

 

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	LUXURBAN HOTEL INC.
	By:	/s/ Michael James
	Name:	Michael James
	Title:	Chief Financial Officer
	/s/ Robert Arigo
	ROBERT ARIGO

 

 

Exhibit 10.3

 

LUXURBAN HOTELS INC.

MODIFICATION TO
CONSULTING AGREEMENT

 

This Modification revises as specifically set forth herein the Consulting Agreement (the “Agreement”) by and between LuxUrban Hotels Inc., a Delaware corporation (the “Company”), and Brian L. Ferdinand (the “Consultant”), effective as of April 22, 2024 (the “Effective Date”). Specifically:

 

1. Section 3(a) is hereby modified such that no Consulting Fee shall be paid or be payable by the Company to the Consultant at any time, including any such fee that has accrued prior to the date hereof, and in exchange therefore the Company hereby grants to Consultant, subject to the provisions of this Modification, 5,692,600 restricted shares of the common stock of the Company (the “Consulting Fee Shares”), based on the $1.8 million aggregate Consulting Fees that was otherwise payable by the Company to Consultant during the three-year term of the Agreement divided by $0.3162, which is the average per-share last sale price as reported by the Nasdaq Capital Market for the five consecutive trading days ending prior to the date hereof. The elections made in this Section 1 by the parties shall be irrevocable.

 

2. Each party hereto agrees that no other cash amounts are currently owed to the Consultant under the Agreement and any claims to the contrary are hereby waived.

 

3. Consultant hereby acknowledges that while the terms hereof are irrevocable by either party, the Consulting Fee Shares will not be issued to him until the date that all of the following has occurred (a) Company has filed an amendment to its certificate of incorporation with the State of Delaware increasing the Company’s authorized capital as described in the Company’s preliminary information statement filed with the Securities and Exchange Commission on May 29, 2024, (b) if applicable, any lock-up or standstill entered into by the Company prior to such time that prohibits the Company from issuing shares of common stock hereunder has expired, including any such provision contained in any underwriting agreement between the Company and any underwriter that has conducted or will conduct an underwriter offering for the Company and (c) the Company has obtained the necessary vote of a majority of the outstanding common stock approving an increase of the Company’s 2022 Equity Incentive Plan from 8 million shares to at least 20 million shares (“Subject Plan Increase”) (the date of the last of the foregoing to occur, the “Effective Date”).

 

4. The Company will use commercially reasonable efforts to cause a stockholder vote on the Subject Plan Increase to occur on or prior to November 15, 2024. The Consultant hereby irrevocably agrees to vote or cause the vote of all shares beneficially owned by him in favor of any proposal to effect the Subject Plan Increase that is put to a vote of the stockholders of the Company. Additionally, at such time as the Company advises the Consultant that it will put the Subject Plan Increase to a vote of the stockholders (including notice through the filing of a proxy statement with the SEC), the Consultant will promptly exercise all penny warrants owned by him as necessary to allow him to timely and properly vote sell shares issued thereunder in favor of the Subject Plan Increase. The Consultant agrees that a condition to any sale or transfer by him or any affiliate controlled by him of shares or warrants of the Company (other than a bona fide good faith sale to nonaffiliates through arm’s length public market sales), shall be that the purchaser or transferees agrees to be bound by the provisions of this Section 4.

 

5. Consultant acknowledged and agrees that the Consulting Fee Shares will be restricted and not saleable or transferable without an effective registration available under the Securities Act of 1933, as amended (the “Act”) or an exemption from such registration requirements under the Act and that the undersigned must consult with his or her own tax and legal advisors to determine if he or she will file an 83(b) election with respect to the Compensation Shares and to timely make such election if so desired and the tax implications of being issued Compensation Shares in lieu of cash salary.

 

 

6. The Company and the Consultant irrevocably agree that the Consulting Fee Shares will be issued pursuant to a restricted stock award agreement in form customarily utilized by the Company with respect to grants of restricted shares under the 2022 Plan and that execution of same by the undersigned will be a prerequisite to the Company’s issuance of such shares and that same shall not be effective until the Effective Date. The Company hereby irrevocably agrees to issue such shares promptly after the Effective Date and execution by the recipient of the aforementioned restricted stock award agreement.

 

7. If the Subject Plan Increase has not occurred and the Consulting Fee Shares issued to the Consultant on or prior to November 15, 2024, the Consultant shall have a one-time right, exercisable by written notice to the Company on or prior to December 4, 2024, to put to the Company all rights to receive the Consulting Fee Shares for $1.8 million, payable as follows: (a) $1,250,000 on or prior to December 31, 2024, and (b) $600,0000 evidenced by a senior promissory note with all perfected pledges but subordinated to any current senior debt payable in 12 monthly installments of $50,000 each with interest thereon at 8% per annum. Payment under such note thereafter shall be conditioned upon the Consultant not being terminated for Cause or terminating his consulting with the Company without Good Reason as provided by the Agreement.

 

8. In the event the Consultant breaches the Agreement and is terminated for Cause or terminates the Agreement without Good Reason, the Company shall be entitled to recapture from Consultant (and Consultant agrees to promptly return) that number of Consulting Fee Shares prorated for the then remaining term of the Agreement, or if all such shares have been sold of transferred by the Consultant to third parties in valid good faith transactions, the payment of an amount of cash by Consultant to the Company equal to the cash Consulting Fee prorated for the then remaining term of the Agreement.

 

9. Provided that the Consulting Agreement has not then been terminated by the Company for Cause or the Consulting without Good Reason, in the event of any liquidity event that would result in the distribution of cash or assets to the holders of the then outstanding common stock of the Company as a whole at time prior to the issuance to the Consultant of the Consulting Fee Shares, the Company shall either cause all Consulting Fee Shares to be issued to the Consultant prior to such event, or shall pay the Consultant a cash amount equal to that which would have been distributed to him from such event (including any future earnout or other payments to stockholders following the initial closing of any such event).

 

10. The Consulting Agreement remains in force and effect as modified by this Modification.

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Modification effective as of June 7, 2024.

 

	CONSULTANT:
	/s/ Brian L. Ferdinand
	BRIAN L. FERDINAND
	LUXURBAN HOTELS INC.
	By:	/s/ Michael James
		Michael James
		Chief Financial Officer

 

 

Exhibit 10.4

 

LUXURBAN HOTELS INC.
EXECUTIVE EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into by and between LuxUrban Hotels Inc., a Delaware corporation (the “Company”), and Robert Arigo (the “Executive”), effective as of June 10, 2024 (the “Effective Date”). This Agreement supersedes any prior employment agreement between the Company and the Executive.

 

WHEREAS, the Company desires to employ the Executive as its Chief Executive Officer, pursuant to the terms and conditions of this Agreement; and

 

WHEREAS, the Executive desires to be employed by the Company in such capacity and position, pursuant to the terms and conditions of this Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby agree as follows:

 

1. Employment and Duties.

 

(a) General. The Executive shall serve as the Chief Executive Officer of the Company, reporting to the Board of Directors. The Executive is allowed to work remotely (the “Remote Location”) and as needed travel for the benefit of the Company. The Executive shall have such duties and responsibilities, commensurate with the Executive’s position, as may be reasonably assigned to the Executive from time to time by the Company. The Executive shall perform his or her duties and responsibilities hereunder to the best of his or her abilities and in a diligent, trustworthy, business-like and efficient manner.

 

(b) Exclusive Services. For so long as the Executive is employed by the Company, the Executive shall devote the Executive’s full business attention to the Executive’s duties hereunder, shall faithfully serve the Company, shall in all respects conform to and comply with the lawful and good faith directions and instructions given to the Executive by the Company, and shall use the Executive’s best efforts to promote and serve the interests of the Company. Further, unless the Company consents in writing, the Executive shall not, directly or indirectly, render services to any other person or organization or otherwise engage in activities that would interfere significantly with the Executive’s faithful performance of the Executive’s duties hereunder. Notwithstanding the foregoing, the Executive may (i) serve on one corporate board, provided the Executive receives prior permission from the Board of Directors (the “Board”); and (ii) serve on corporate, civic, children sports organization or charitable boards or engage in charitable activities without remuneration therefor, provided that such activity does not contravene the first sentence of this Section 1(b).

 

(c) Dodd-Frank Act, Sarbanes-Oxley and Other Applicable Law Requirements. The Executive agrees (i) to abide by any compensation recovery, recoupment, anti-hedging, anti-pledging, stock ownership, or other policy applicable to executives of the Company and its affiliates that is hereafter adopted by the Board or a duly authorized committee thereof; (ii) that any such cash-or equity-based incentive compensation granted on or after the Effective Date will be subject to any compensation recovery or recoupment policy applicable to executives of the Company and its affiliates that is hereafter adopted by the Board or a duly authorized committee thereof to adhere to the intent of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), or other applicable law, as advised to the Board in a written opinion (including via e-mail correspondence) of the Company’s legal counsel; and (iii) that the terms and conditions of this Agreement shall be deemed automatically and unilaterally amended to the minimum extent necessary to ensure compliance by the Executive and this Agreement with such policies, the Dodd-Frank Act, Sarbanes-Oxley, and any other applicable law.

 

2. Term of Employment. The Executive’s employment shall be covered by the terms of this Agreement, effective as of the Effective Date, and shall continue for a period of four (4) years, unless this Agreement (and the Executive’s employment hereunder) is otherwise terminated as set forth in this Agreement. If not previously terminated, this Agreement shall automatically renew for subsequent periods of one (1) year (the initial term, and the renewal terms, to the extent applicable, being the “Term”), unless either party provides written notice to the other at least ninety (90) days prior to the end of the initial Term (or any renewed Term thereafter) or unless this Agreement (and the Executive’s employment hereunder) is otherwise terminated as set forth in this Agreement.

 

 

3. Compensation and Benefits. Subject to the provisions of this Agreement, the Company shall pay and provide the following compensation and other benefits to the Executive during the Term as compensation for services rendered hereunder:

 

(a) Base Salary. The Company shall pay to the Executive an annual salary (the “Base Salary”) at the rate of $450,000 (prorated for 2024 from June 10, 2024 through December 31, 2024 and prorated for any partial years thereafter) payable in substantially equal installments at such intervals as may be determined by the Company in accordance with the Company’s then-current ordinary payroll practices as established from time to time. The compensation committee of the Board (the “Committee”) of directors shall review the Base Salary and other compensation provisions of this Agreement promptly following the three-month anniversary hereof of the Effective Date, at which time the Base Salary shall be increased to $500,000 per annum. Promptly following each anniversary of the Effective Date, the Base Salary shall be increased by no less than 4% annually, which shall be approved by the Committee. To the extent Base Salary is increased, then the defined term “Base Salary” shall also be increased by the same amount for all purposes of this Agreement, without the need for an amendment.

 

(b) Annual Bonus. The Executive shall be eligible to receive an annual bonus of up to $100,000 (the “Annual Bonus”) as determined by the Committee based on performance metrics established by the Committee in its discretion and otherwise in the discretion of the Committee based on the Executive’ performance. The Annual Bonus for each call shall be paid in cash (in lump sum) within 90 days of the end of each calendar year.

 

(c) Employee Benefits. The Executive shall be entitled to participate in all employee benefit arrangements that the Company may offer to its executives of like status from time to time, and as may be amended from time to time. The Executive is entitled to four weeks of annual vacation, with four weeks being mandatory for maintaining peek personal performance in the role.

 

(d) Expenses. The Executive shall be entitled to a car allowance in the amount of $1,000 per month from the Company. As well, the Executive shall be entitled to reimbursement of business expenses from the Company that are incurred in the ordinary course of business including travel from the Executive’s Remote Location for Company matters. If possible, the Executive shall stay at Company properties and if travel distances are lengthy the Executive may choose a higher class of services. The Company shall reimburse the Executive for all cellular phone service costs incurred by him during the Term for business purposes.

 

(e) Indemnification. The existing Indemnification Agreement between the Company and the Executive shall remain in effect under the terms thereof, which are incorporated into this Agreement by reference (together with any subsequently amended or restated versions thereof). Additionally, to the fullest extent permitted by the indemnification provisions of the Articles of Incorporation and Bylaws of the Company in effect from time to time and the indemnification provisions of the corporate statute of the jurisdiction of the Company’s incorporation in effect from time to time (collectively the “Indemnification Provisions”), and in each case subject to the conditions thereof, the Company shall (i) indemnify the Executive, as a director and officer of the Company or a trustee or fiduciary of an employee benefit plan of the Company against all liabilities and reasonable expenses that the Executive may incur in any threatened, pending, or completed action, suit or proceeding, whether civil, criminal or administrative, or investigative and whether formal or informal, because the Executive is or was a director or officer of the Company or a trustee or fiduciary of such employee benefit plan, and against which the Executive may be indemnified by the Company, and (ii) pay for or reimburse the reasonable expenses incurred by the Executive in the defense of any proceeding to which the Executive is a party because the Executive is or was a director or officer of the Company or a trustee or fiduciary of such employee benefit plan. Further, to the extent that the Company maintains a directors’ and officers’ liability insurance policy (or policies), or an errors and omissions liability insurance policy (or policies), in place covering individuals who are current or former officers or directors of the Company, the Executive shall be entitled to coverage under such policies on the same terms and conditions (including, without limitation, with respect to scope, exclusions, amounts and deductibles) as are available to other senior executives of the Company, while the Executive is employed with the Company and thereafter until the sixth anniversary of the Executive’s termination date; provided, however, that nothing in this Agreement shall require the Company to purchase or maintain any such insurance policy.

 

 

(f) Stock Grant. On the date of this Agreement, and each of the first and second anniversary of the Effective Date, so long as this Agreement is then in effect, the Company shall grant to the Executive 500,000 shares of the Company’s common stock vesting in three equal installments on each of the three consecutive anniversary dates immediately following the date of grant and shall be subject to the terms of the Restricted Stock Grant Award Agreement attached hereto as Exhibit A. The initial grant prescribed hereby shall not be deemed issued until the date that the Company has filed an amendment to its certificate of incorporation to increase its authorized capital stock as described in the preliminary information statement filed with the SEC on May 29, 2024.

 

4. Rights Upon a Termination of the Executive’s Employment.

 

(a) Termination of Employment by the Company for Cause or by the Executive Without Good Reason. If the Executive’s employment is terminated by the Company for Cause, or the Executive voluntarily terminates the Executive’s employment without Good Reason, then the Executive shall receive only the following from the Company: (i) any unpaid Base Salary accrued through the termination date, (ii) a lump sum payment for any accrued but unused vacation pay, (iii) rights to elect continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), and (iv) a lump sum payment for any previously unreimbursed business expenses incurred by the Executive on behalf of the Company during the Term (collectively, such (i) through (iv) being the “Accrued Rights”).

 

(i) For purposes of this Agreement, the term “Cause” shall mean a termination by the Company of the Executive’s employment because of: (A) any act or omission that constitutes a material breach by the Executive of any of his obligations under his Employment Agreement; (B) the Executive’s conviction of, or plea of nolo contendere to, (1) any felony or (2) another crime involving dishonesty or moral turpitude or which could reflect negatively upon the Company or otherwise impair or impede its operations; (C) the Executive engaging in any misconduct, negligence, act of dishonesty, violence or threat of violence (including any violation of federal securities laws) that is materially injurious to the Company; (D) the Executive’s willful and repeated refusal to follow the lawful directions of the Board; or (E) any other willful misconduct by the Executive which is materially injurious to the financial condition or business reputation of the Company. No event or condition described in Sections (A), (C), (D) or (E) shall constitute Cause unless (x) within 90 days from the Board first acquiring actual knowledge of the existence of the Cause condition, the Board provides the Executive written notice of its intention to terminate his employment for Cause and the grounds for such termination; (y) such grounds for termination (if susceptible to correction) are not corrected by the Executive within 20 business days of his receipt of such notice (or, in the event that such grounds cannot be corrected within such 20 business-day period, the Executive has not taken all reasonable steps within such 20 business-day period to correct such grounds as promptly as practicable thereafter); and (z) the Board terminates the Executive’s employment with the Company immediately following expiration of such 20 business-day period. Any attempt by the Executive to correct a stated Cause condition shall not be deemed an admission by the Executive that the Board’s assertion of Cause is valid.

 

(ii) For purposes of this Agreement, the term “Good Reason” shall mean a voluntary termination by the Executive of the Executive’s employment because of: (A) a material diminution in the Executive’s Annual Base Salary or a failure by the Company to pay material compensation due and payable to the Executive in connection with his employment; (B) a material diminution in the nature or scope of the Executive’s authority, duties, or responsibilities from those applicable to him as of the Effective Date; (C) the Company requiring the Executive to be based at any office or location more than 20 miles from the Remote Location; or (D) a material breach by the Company of any term or provision of this Agreement. No event or condition described in this Section shall constitute Good Reason unless, (x) within 90 days from the Executive first acquiring actual knowledge of the existence of the Good Reason condition described in this Section, the Executive provides the Board written notice of his intention to terminate his employment for Good Reason and the grounds for such termination; (y) such grounds for termination (if susceptible to correction) are not corrected by the Board within 20-business days of the Board’s receipt of such notice (or, in the event that such grounds cannot be corrected within such 20 business-day period, the Board has not taken all reasonable steps within such 20 business-day period to correct such grounds as promptly as practicable thereafter); and (z) the Executive terminates his employment with the Company immediately following expiration of such 20-day period. For purposes of this Section, any attempt by the Board to correct a stated Good Reason shall not be deemed an admission by the Board that the Executive’s assertion of Good Reason is valid.

 

 

(b) Termination of Employment by the Company without Cause or by the Executive for Good Reason. If the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason, then the Executive shall receive the following from the Company: (i) the Accrued Rights, (ii) an aggregate amount equal to twelve (12) months the Executive’s then Base Salary payable in equal installments across the Company’s then normal payroll schedule, (iii) any Annual Bonus declared by the Committee prorated for the applicable year through the date of termination, and (iv) twelve (12) months of the monthly premium payment to continue the Executive’s (and the Executive’s family’s) existing group health, dental coverage and vision, calculated under the applicable provisions of COBRA, and calculated without regard to whether the Executive actually elects such continuation coverage (the “COBRA Benefits”) (collectively, (i) through (iv) being the “Involuntary Termination Severance Benefits”).

 

(c) No Continued Benefits Following Termination. Unless otherwise specifically provided in this Agreement or contemplated by another agreement between the Executive and the Company, or as otherwise required by law, all compensation, equity plans, and benefits payable to the Executive under this Agreement shall terminate on the date of termination of the Executive’s employment with the Company under the terms of this Agreement.

 

(d) Resignation from Directorships, Offices and Fiduciary Titles. The termination of the Executive’s employment for any reason shall constitute the Executive’s immediate resignation from (i) any officer or employee position the Executive has with the Company, unless mutually agreed upon by the Executive and the Board; (ii) any position on the Board; and (iii) all fiduciary positions (including as a trustee) the Executive holds with respect to any employee benefit plans or trusts established by the Company. The Executive agrees that this Agreement shall serve as written notice of resignation in this circumstance.

 

(e) Separation Agreement and Release. Notwithstanding any other provisions of this Agreement to the contrary, the Company shall not make or provide the Involuntary Termination Severance Benefits under this Section 4, unless the Executive timely executes and delivers to the Company a general release (which shall be provided by the Company not later than five (5) days from the date on which the Executive’s employment is terminated and be substantially in the form attached hereto as Exhibit B, the “Separation Agreement and Release”), and such Separation Agreement and Release remains in full force and effect, has not been revoked and is no longer subject to revocation, within sixty (60) calendar days after the date of termination. If the requirements of this Section 4(e) are not satisfied by the Executive (or the Executive’s estate or legally appointed personal representative), then no Involuntary Termination Severance Benefits shall be due to the Executive (or the Executive’s estate) pursuant to this Agreement. Notwithstanding anything in this Agreement to the contrary, the Involuntary Termination Severance Benefits shall not be paid until the first scheduled payment date following the date the Separation Agreement and Release is executed and no longer subject to revocation; provided, that if the period during which the Executive has discretion to execute or revoke the Separation Agreement and Release straddles two (2) calendar years, then the Involuntary Termination Severance Benefits shall be paid or commence being paid, as applicable, in the second calendar year, with the first such payment being in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the date of termination if such deferral had not been required.

 

(f) Notice of Termination. Any termination of employment by the Company or the Executive shall be communicated by a written “Notice of Termination” to the other party hereto given in accordance with Section 8(l) of this Agreement. In the event of a termination by the Company for Cause or by the Executive for Good Reason, the Notice of Termination shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (iii) specify the date of termination. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

 

5. Confidentiality, Non-Compete and Intellectual Property. The Confidentiality, Non-Compete, and Intellectual Property Agreement previously executed the Company and the Executive remains in full force and effect and same is incorporated into this Agreement by reference (together with any subsequently amended or restated versions thereof (the terms of such agreement, as may be amended or supplemented being the “Restrictive Covenants”). As a condition to continued employment, the Executive shall execute any standard revisions to such agreement. Any breach (or threatened breach) by the Executive of the Executive’s obligations under the Restrictive Covenants, as determined by the Board in its reasonable discretion, shall constitute a material breach of this Agreement.

 

6. Section 280G Payments. Notwithstanding anything in this Agreement to the contrary, if the Executive is a “disqualified individual” (as defined in Section 280G(c) of the Internal Revenue Code of 1986, as amended (the “Code”)), and the payments and benefits provided for in this Agreement, together with any other payments and benefits which the Executive has the right to receive from the Company or any other person, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the payments and benefits provided for in this Agreement shall be either (a) reduced (but not below zero) so that the present value of such total amounts and benefits received by the Executive from the Company and/or such person(s) will be $1.00 less than three (3) times the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code) and so that no portion of such amounts and benefits received by the Executive shall be subject to the excise tax imposed by Section 4999 of the Code or (b) paid in full, whichever produces the better “net after-tax position” to the Executive (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable taxes). The reduction of payments and benefits hereunder, if applicable, shall be made by reducing, first, payments or benefits to be paid in cash hereunder in the order in which such payment or benefit would be paid or provided (beginning with such payment or benefit that would be made last in time and continuing, to the extent necessary, through to such payment or benefit that would be made first in time) and, then, reducing any benefit to be provided in-kind hereunder in a similar order. The determination as to whether any such reduction in the amount of the payments and benefits provided hereunder is necessary shall be made applying principles, assumptions and procedures consistent with Section 280G of the Code by an accounting firm or law firm of national reputation that is selected for this purpose by the Company (the “280G Firm”). In order to assess whether payments under this Agreement or otherwise qualify as reasonable compensation that is exempt from being a parachute payment under Section 280G of the Code, the 280G Firm or the Company may retain the services of an independent valuation expert. If a reduced payment or benefit is made or provided and through error or otherwise that payment or benefit, when aggregated with other payments and benefits from the Company (or its affiliates) used in determining if a “parachute payment” exists, exceeds $1.00 less than three (3) times the Executive’s base amount, then the Executive shall immediately repay such excess to the Company upon notification that an overpayment has been made. Nothing in this Section 6 shall require the Company to be responsible for, or have any liability or obligation with respect to, the Executive’s excise tax liabilities under Section 4999 of the Code.

 

7. Section 409A of the Code. This Agreement is intended to either avoid the application of, or comply with, Section 409A of the Code. To that end this Agreement shall at all times be interpreted in a manner that is consistent with Section 409A of the Code. Notwithstanding any other provision in this Agreement to the contrary, the Company shall have the right, in its sole discretion, to adopt such amendments to this Agreement or take such other actions (including amendments and actions with retroactive effect) as it determines is necessary or appropriate for this Agreement to comply with Section 409A of the Code. Further:

 

(a) Any reimbursement of any costs and expenses by the Company to the Executive under this Agreement shall be made by the Company in no event later than the close of the Executive’s taxable year following the taxable year in which the cost or expense is incurred by the Executive. The expenses incurred by the Executive in any calendar year that are eligible for reimbursement under this Agreement shall not affect the expenses incurred by the Executive in any other calendar year that are eligible for reimbursement hereunder and the Executive’s right to receive any reimbursement hereunder shall not be subject to liquidation or exchange for any other benefit.

 

(b) Any payment following a separation from service that would be subject to Section 409A(a)(2)(A)(i) of the Code as a distribution following a separation from service of a “specified employee” (as defined under Section 409A(a)(2)(B)(i) of the Code) shall be made on the first to occur of (i) ten (10) days after the expiration of the six-month (6) period following such separation from service, (ii) death, or (iii) such earlier date that complies with Section 409A of the Code.

 

(c) Each payment that the Executive may receive under this Agreement shall be treated as a “separate payment” for purposes of Section 409A of the Code.

 

 

(d) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A of the Code and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment,” or like terms shall mean “separation from service.”

 

8. Miscellaneous.

 

(a) Defense of Claims. The Executive agrees that, during and following the Term, upon request from the Company, the Executive will cooperate with the Company in the defense of any claims or actions that may be made by or against the Company that affect the Executive’s prior areas of responsibility, except if the Executive’s reasonable interests are adverse to the Company in such claim or action. The Company agrees to promptly reimburse the Executive for all of the Executive’s reasonable legal fees, travel and other direct expenses incurred, or to be reasonably incurred – and, if the Executive is no longer employed with the Company, to compensate the Executive (at a pro rata hourly rate calculated based on the Executive’s salary at the time of the Executive’s separation) for the Executive’s time – to comply with the Executive’s obligations under this Section 8(a).

 

(b) Non-Disparagement. The Executive agrees that at no time during or after the termination of the Executive’s employment shall the Executive make, or cause or assist any other person to make, any statement or other communication to any third party or in social media which impugns or attacks, or is otherwise critical of, the reputation, business or character of the Company or its affiliates or any of its respective directors, officers or employees. The Company agrees that at no time during or after the termination of the Executive’s employment shall the Company make, or cause or assist any other person to make, any statement or other communication to any third party or in social media which impugns or attacks, or is otherwise critical of, the reputation, business or character of the Executive.

 

(c) Source of Payments. All payments provided under this Agreement, other than payments made pursuant to a plan or agreement which provides otherwise, shall be paid in cash from the general funds of the Company, and no special or separate fund shall be established, and no other segregation of assets shall be made, to assure payment. The Executive shall have no right, title or interest whatsoever in or to any investments which the Company may make to aid the Company in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from the Company hereunder, such right shall be no greater than the right of an unsecured creditor of the Company.

 

(d) Amendment, Waiver. This Agreement may not be modified, amended or waived in any manner, except by an instrument in writing signed by both parties hereto. The waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement.

 

(e) Entire Agreement. This Agreement, the Exhibits attached hereto, and the agreements specifically incorporated herein are the entire agreement and understanding of the parties hereto with respect to the matters covered herein and supersedes all prior or contemporaneous negotiations, commitments, agreements and writings with respect to the subject matter hereof, all such other negotiations, commitments, agreements and writings shall have no further force or effect, and the parties to any such other negotiation, commitment, agreement or writing shall have no further rights or obligations thereunder.

 

(f) Governing Law/Venue. This Agreement shall be performable, governed by and construed in accordance with the laws of the State of Delaware, without regard to conflict of laws principles thereof. Each party to this Agreement hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts in Delaware, for the purposes of any proceeding arising out of or based upon this Agreement.

 

 

(g) Binding Arbitration. The Executive agrees that any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement, shall be settled by binding arbitration to be held in Florida in accordance with the rules then in effect of the American Arbitration Association. The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. The Company shall cover the legal costs and expenses of such arbitration; provided, however, that the prevailing party shall be entitled to recover from the non-prevailing party all reasonable legal costs and expenses incurred in preparing for and participating in the arbitration, including staff time, court costs, attorney’s fees, and all other related expenses incurred in such arbitration. If there is no prevailing party, each party will pay its own attorneys’ fees, costs, and expenses. Whether a prevailing party exists shall be determined solely by the arbitrator on a claim-by-claim basis, and such arbitrator, in its sole discretion, shall determine the amount of reasonable and necessary attorneys’ fees, costs, and/or expenses, if any, for which a party is entitled. The following guiding principles shall be applied by the arbitrator in any determination of a prevailing party: (i) the intent of the parties is to avoid any arbitration, action, or proceeding arising from a breach of this Agreement, and therefore, the parties will work together to resolve any such dispute; (ii) none of the parties will proceed with an arbitration, action, or proceeding arising from a breach of this Agreement until after exhausting all reasonable efforts to resolve such dispute using best efforts, an impasse has resulted and a satisfactory result cannot be reached without moving forward with such arbitration, action, or proceeding; and (iii) none of the parties will bring any arbitration, action, or proceeding arising from a breach of this Agreement until after such party has fully evaluated the merits of such purported claim or cause of action and made a determination that such party has a good-faith basis to move forward with such arbitration, action, or proceeding.

 

(h) No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

 

(i) Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

 

(j) No Assignment. Neither this Agreement nor any of the Executive’s rights and duties hereunder, shall be assignable or delegable by the Executive. Any purported assignment or delegation by the Executive in violation of the foregoing shall be null and void ab initio and of no force and effect. This Agreement may be assigned by the Company to a person or entity which is an affiliate or a successor in interest to substantially all of the business operations of the Company. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor person or entity.

 

(k) Successors; Binding Agreement. Upon the death of the Executive, this Agreement shall be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and/or legatees.

 

(l) Notices. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered by electronic mail, hand or overnight courier or three (3) days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

 

	If to the Company:
	LuxUrban Hotels Inc.
	2125 Biscayne Boulevard, Suite 253
	Miami Beach, Florida 33137
	Attn: Michael James, CFO
	Email: matthew@luxurbanhotels.com Cc: Board of Directors of the Company

 

 

	If to the Executive:
	Robert Arigo
	356 New York Avenue, Suite 9 Huntington, New York 11743 Email: rarigomc2@outlook.com

 

In each case, with a copy to:

 

Graubard Miller

The Chrysler Building

405 Lexington Avenue

New York, New York 10174

Attn: Brian L. Ross

Email: bross@graubard.com

 

(m) Withholding of Taxes. The Company may withhold from any amounts or benefits payable under this Agreement all taxes it may be required to withhold pursuant to any applicable law or regulation.

 

(n) Headings. The section headings in this Agreement are inserted only as a matter of convenience, and in no way define, limit or interpret the scope of this Agreement or of any particular section.

 

(o) Construction. Whenever the context so requires herein, the masculine shall include the feminine and neuter, and the singular shall include the plural. The words “includes” and “including” as used in this Agreement shall be deemed to be followed by the phrase “without limitation.” The word “or” is not exclusive.

 

(p) Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

(q) Survival. This Agreement shall terminate upon the termination of employment of the Executive; however, the following shall survive the termination of the Executive’s employment and/or the expiration or termination of this Agreement, regardless of the reasons for such expiration or termination, 3(f) (“Indemnification”), Section 4 (“Rights Upon a Termination of the Executive’s Employment”), Section 5 (“Confidentiality, Noncompete and Intellectual Property”), Section 8(a) (“Defense of Claims”), Section 8(b) (“Non-Disparagement”), Section 8(e) (“Entire Agreement”), Section 8(f) (“Governing Law/Venue”), Section 8(g) (“Binding Arbitration/Equitable Remedies”), Section 8(k) (“Successors/Binding Agreement”), and Section 8(l) (“Notices”).

 

 

[SIGNATURES ON NEXT PAGE]

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement effective as of the Effective Date.

 

	EXECUTIVE:
	/s/ Robert Arigo
	ROBERT ARIGO
	LUXURBAN HOTELS INC.
	By:	/s/ Michael James
	Name:	Michael James
	Title:	Co Financial Officer

 

 

Exhibit 99.1

 

 

 

LuxUrban Hotels Names Robert Arigo Chief Executive Officer

 

Hotel & Hospitality Industry Veteran Brings 35 Years of Experience to New Role

 

MIAMI, FL, - June 11, 2024 - LuxUrban Hotels Inc. (“LuxUrban” or the “Company”) (Nasdaq: LUXH), a hospitality company which leases entire existing hotels on a long-term basis and rents rooms in its hotels to business and vacation travelers, today announced that its Board of Directors (the “Board”) has appointed hotel and hospitality industry veteran Robert Arigo as its Chief Executive Officer, effective June 10, 2024. Mr. Arigo, who joined LuxUrban in March 2024 as Chief Operating Officer, is an accomplished industry executive who brings more than 35 years of relevant experience to his new role.

 

“In his short time here, Rob has distinguished himself as a thoughtful, skilled and experienced leader with a focus on improving experiences for owners and guests as part of the Company’s ongoing efforts to enhance performance,” said Elan Blutinger, Chairman of the Board. “Rob has held leadership positions at some of the most well-known and well-respected hospitality brands in the industry and his appointment is consistent with the Board’s commitment to add and strengthen industry representation and experience in key leadership roles. He has a track record of success in operations and asset management for large-scale turnaround initiatives, and possesses management experience at the franchise, independent and third-party levels. We are confident that Rob is the right person to assume the role of CEO at this critical time in the Company’s evolution.”

 

“I am excited and honored to become CEO at this pivotal time of opportunity for LuxUrban,” said Mr. Arigo. “Although we have much work to do, I remain convinced that we operate a unique business model that holds great promise. I look forward to collaborating with our team and lending my experience in pursuit of creating a foundation that can deliver on LuxUrban’s full potential.”

 

Mr. Arigo succeeds Shanoop Kothari as Chief Executive Officer. Mr. Arigo’s responsibilities as Chief Operating Officer will be absorbed throughout the organization and the Company will assess filling the role at a later time.

 

“On behalf of the Board, I want to thank Shanoop for his dedication and commitment to LuxUrban at the early stages of our existence as a public company,” continued Mr. Blutinger. “We wish him the very best in his future endeavors.”

 

About Robert M. Arrigo

Mr. Arigo joined LuxUrban in March 2024 from M&R Hotel Management, which provides hospitality development, turnaround, and management services to a portfolio of hotels throughout the United States, where he served as Vice President beginning in 2018. Prior to this, Mr. Arigo was Senior Director of Operations at Hersha Hospitality Management (HHM), a hotel management company that operates over 240 properties, including luxury and lifestyle properties, across the United States and Canada. Prior to joining HHM, Mr. Arigo served as the Chief Operating Officer of Widewaters Hotels, a leading developer and owner of branded and independent hotels and extended stay properties, in which position he was integral in shaping that company's growth and operational efficiency. Mr. Arigo’s executive experience also includes Highgate Hotels, Belleview Biltmore Resort & Spa, Crestline Hotels, Interstate Hotels Corporations, and Marriott. Mr. Arigo’s work has been recognized with awards that included “Hotel Region of the Year,” “Financial Leadership Award,” “Hotel of the Year,” and “Award of Excellence.”

 

 

LuxUrban Hotels Inc.

LuxUrban Hotels Inc. secures long-term operating rights for entire hotels through Master Lease Agreements (MLA) and rents out, on a short-term basis, hotel rooms to business and vacation travelers. The Company is strategically building a portfolio of hotel properties in destination cities by capitalizing on the dislocation in commercial real estate markets and the large amount of debt maturity obligations on those assets coming due with a lack of available options for owners of those assets. LuxUrban’s MLA allows owners to hold onto their assets and retain their equity value while LuxUrban operates and owns the cash flows of the operating business for the life of the MLA.

 

Forward Looking Statements

This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). The statements contained in this release that are not purely historical are forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Generally, the words “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this release may include, for example, statements with respect to scheduled property openings, expected closing of noted lease transactions, the Company’s ability to continue closing on additional leases for properties in the Company’s pipeline, as well the Company’s anticipated ability to commercialize efficiently and profitably the properties it leases and will lease in the future. The forward-looking statements contained in this release are based on current expectations and belief concerning future developments and their potential effect on the Company. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements are subject to a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results of performance to be materially different from those expressed or implied by these forward-looking statements, including those set forth under the caption “Risk Factors” in our public filings with the SEC, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 15, 2024, and any updates to those factors as set forth in subsequent Quarterly Reports on Form 10-Q or other public filings with the SEC. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.

 

Contact

Devin Sullivan

Managing Director

The Equity Group Inc.

dsullivan@equityny.com

 

Conor Rodriguez, Analyst

crodriguez@equityny.com

 

 

 

v3.24.1.1.u2

Cover	Jun. 07, 2024
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jun. 07, 2024
Entity File Number	001-41473
Entity Registrant Name	LuxUrban Hotels Inc.
Entity Central Index Key	0001893311
Entity Tax Identification Number	82-3334945
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	212 Biscayne Blvd
Entity Address, Address Line Two	Suite 253
Entity Address, City or Town	Miami
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33137
City Area Code	(833)
Local Phone Number	723-7368
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Common Stock 0. 00001 Par Value Per Share [Member]
Title of 12(b) Security	Common Stock, $0.00001 par value per share
Trading Symbol	LUXH
Security Exchange Name	NASDAQ
Series A Cumulative Redeemable Preferred [Member]
Title of 12(b) Security	13.00% Series A Cumulative Redeemable Preferred Stock, $0.00001 par value per share
Trading Symbol	LUXHP
Security Exchange Name	NASDAQ

---