As filed with the Securities and Exchange Commission on February 21, 2024
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PEBBLEBROOK HOTEL TRUST
(Exact name of registrant as specified in its charter)
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Maryland
(State or other jurisdiction of
incorporation or organization)
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27-1055421
(IRS Employer
Identification Number)
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4747 Bethesda Avenue, Suite 1100
Bethesda, Maryland, 20814
(240) 507-1300
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
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Jon E. Bortz
Chairman and Chief Executive Officer
4747 Bethesda Avenue, Suite 1100
Bethesda, Maryland, 20814
(240) 507-1300
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Copy to:
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Mark W. Wickersham
Hunton Andrews Kurth LLP
Riverfront Plaza, East Tower
951 E. Byrd Street
Richmond, Virginia 23219
Tel: (804) 788-8200
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Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, or the Securities Act, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ☒
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☒
If this form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.
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Large accelerated filer ☒
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☐
Emerging growth company ☐
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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 7(a)(2)(B) of the Securities Act. ☐
PROSPECTUS
PEBBLEBROOK HOTEL TRUST
Common Shares
Preferred Shares
Debt Securities
Warrants
Units
We may offer, issue and sell from time to time, together or separately, the securities described in this prospectus.
We will provide the specific terms of any securities we may offer in supplements to this prospectus. You should read this prospectus and any applicable prospectus supplement, including the documents incorporated by reference, carefully before you invest. This prospectus may not be used to offer and sell any securities unless accompanied by a prospectus supplement describing the amount of and terms of the offering of those securities.
We may offer and sell these securities to or through one or more underwriters, dealers or agents, or directly to purchasers on a continuous or delayed basis. We reserve the sole right to accept, and together with any underwriters, dealers and agents, reserve the right to reject, in whole or in part, any proposed purchase of securities. The names of any underwriters, dealers or agents involved in the sale of any securities, the specific manner in which they may be offered and any applicable commissions or discounts will be set forth in the prospectus supplement covering the sales of those securities.
Our common shares of beneficial interest, $0.01 par value per share, or our common shares, are listed on the New York Stock Exchange, or the NYSE, under the trading symbol “PEB,” our 6.375% Series E Cumulative Redeemable Preferred Shares, $0.01 par value per share, or our Series E Preferred Shares, are listed on the NYSE under the symbol “PEB-PE,” our 6.30% Series F Preferred Shares Cumulative Redeemable Preferred Shares, $0.01 par value per share, or our Series F Preferred Shares, are listed on the NYSE under the symbol “PEB-PF,” our 6.375% Series G Cumulative Redeemable Preferred Shares, $0.01 par value per share, or our Series G Preferred Shares, are listed on the NYSE under the symbol “PEB-PG,” and our 5.70% Series H Cumulative Redeemable Preferred Shares, $0.01 par value per share, or our Series H Preferred Shares, are listed on the NYSE under the symbol “PEB-PH.” On February 20, 2024, the closing prices per share on the NYSE of our common shares, Series E Preferred Shares, Series F Preferred Shares, Series G Preferred Shares and Series H Preferred Shares were $16.31, $21.77, $21.31, $21.71 and $19.19, respectively. We have not yet determined whether any of the other securities that may be offered by this prospectus will be listed on any exchange, inter-dealer quotation system or over-the-counter system. If we decide to seek a listing for any of those securities, that will be disclosed in a prospectus supplement.
Investing in our securities involves risks. You should carefully read and consider the risks described under the section entitled “Risk Factors” included in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q, in prospectus supplements relating to specific offerings of securities and in other information that we file with the Securities and Exchange Commission before making a decision to invest in our securities.
We impose certain restrictions on the ownership and transfer of our shares of beneficial interest. You should read the information under the section entitled “Description of Shares of Beneficial Interest — Restrictions on Ownership and Transfer” in this prospectus for a description of these restrictions.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is February 21, 2024.
TABLE OF CONTENTS
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You should rely only on the information contained in or incorporated by reference into this prospectus, any applicable prospectus supplement or any applicable free writing prospectus. We have not authorized any other person to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely on it. This prospectus and any applicable prospectus supplement do not constitute an offer to sell, or a solicitation of an offer to purchase, any securities in any jurisdiction to or from any person to whom or from whom it is unlawful to make such offer or solicitation in such jurisdiction. You should assume that the information appearing in this prospectus, any applicable prospectus supplement, any applicable free writing prospectus and the documents incorporated by reference herein or therein is accurate only as of their respective dates or on the date or dates which are specified in these documents. Our business, financial condition, results of operations and prospects may have changed since those dates.
ABOUT THIS PROSPECTUS
This prospectus is part of a “shelf” registration statement that we have filed with the United States Securities and Exchange Commission, or the SEC. By using a shelf registration statement, we may sell, at any time and from time to time, in one or more offerings, any combination of the securities described in this prospectus. The exhibits to our registration statement and documents incorporated by reference contain the full text of certain contracts and other important documents that we have summarized in this prospectus or that we may summarize in a prospectus supplement. Since these summaries may not contain all the information that you may find important in deciding whether to purchase the securities we offer, you should review the full text of these documents. The registration statement and the exhibits and other documents can be obtained from the SEC as indicated under the sections entitled “Where You Can Find More Information” and “Documents Incorporated By Reference.”
This prospectus only provides you with a general description of the securities we may offer, which is not meant to be a complete description of each security. Each time we sell securities, we will provide a prospectus supplement that contains specific information about the terms of those securities. The prospectus supplement may also add, update or change information contained in this prospectus. If there is any inconsistency between the information in this prospectus and any prospectus supplement, you should rely on the information in the prospectus supplement. You should read carefully both this prospectus and any prospectus supplement together with the additional information described under the sections entitled “Where You Can Find More Information” and “Incorporation of Certain Documents By Reference.”
Unless otherwise indicated or the context requires otherwise, in this prospectus and any prospectus supplement hereto, references to “our company,” “we,” “us” and “our” mean Pebblebrook Hotel Trust and its consolidated subsidiaries, including Pebblebrook Hotel, L.P., our operating partnership.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
SEC rules allow us to incorporate by reference information into this prospectus. This means that we can disclose important information to you by referring you to another document filed separately with the SEC. Any information referred to in this way is considered part of this prospectus from the date we file that document. We incorporate by reference into this prospectus the following documents or information filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):
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our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 21, 2024;
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the information specifically incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2022 from our Definitive Proxy Statement on Schedule 14A filed on March 31, 2023;
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All documents or portions thereof that we file (but not those or portions thereof that we furnish) pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, on or after the date of this prospectus and prior to the termination of the offering of any of the securities covered under this prospectus shall be deemed to be incorporated by reference into this prospectus and will automatically update and supersede the information in this prospectus, the applicable prospectus supplement and any previously filed documents. Our filings with the SEC are also available to the public through the SEC’s Internet website www.sec.gov.
We will provide without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon his or her written or oral request, a copy of any or all documents referred to above that have been or may be incorporated by reference into this prospectus, excluding exhibits to those documents unless they are specifically incorporated by reference into those documents. Requests for those documents should be directed to us as follows: Pebblebrook Hotel Trust, 4747 Bethesda Avenue, Suite 1100, Bethesda, Maryland 20814, Attn: Chief Financial Officer, Telephone: (240) 507-1300.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act, and, in accordance with those requirements, file reports, proxy statements and other information with the SEC. Copies of such reports, proxy statements and other information, as well as the registration statement and the exhibits and schedules thereto, may be obtained from the SEC’s website at www.sec.gov. Copies of these documents may be available on our website at www.pebblebrookhotels.com. Our website and the information contained therein or connected thereto are not incorporated into this prospectus or any amendment or supplement thereto.
We have filed with the SEC a registration statement on Form S-3 under the Securities Act of 1933, as amended, or the Securities Act, with respect to the securities offered by this prospectus. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement and its exhibits and schedules, certain parts of which are omitted in accordance with the SEC’s rules and regulations. For further information about us and the securities, we refer you to the registration statement and to such exhibits and schedules. Please be aware that statements in this prospectus referring to a contract or other document are summaries and you should refer to the exhibits that are part of the registration statement for a copy of the contract or document.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the information incorporated by reference herein and therein, contains, and documents we subsequently file with the SEC and incorporate by reference may contain, certain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “potential,” “could,” “seek,” “assume,” “forecast,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. Forward-looking statements in this prospectus or in the documents incorporated by reference include, among others, statements about our business strategy, including acquisition and development strategies, industry trends, estimated revenues and expenses, estimated costs and durations of renovation or restoration projects, timing and extent of debt refinancings, estimated insurance recoveries, our ability to realize deferred tax assets and expected liquidity needs and sources (including capital expenditures and our ability to obtain financing or raise capital). You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and which could materially affect actual results, performance or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the following:
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risks associated with the hotel industry, including competition, changes in visa and other travel policies by the U.S. government making it less convenient, more difficult or less desirable for international travelers to enter the U.S., increases in employment costs, energy costs and other operating costs, or decreases in demand caused by events beyond our control, including, without limitation, actual or threatened terrorist attacks, natural disasters, cyber-attacks, any type of flu or disease-related pandemic, or downturns in general and local economic conditions;
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the availability and terms of financing and capital and the general volatility of securities markets;
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our dependence on third-party managers of our hotels, including our inability to implement strategic business decisions directly;
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risks associated with the U.S. and global economies, the cyclical nature of hotel properties and the real estate industry, including environmental contamination and costs of complying with new or existing laws, including the Americans with Disabilities Act and similar laws;
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interest rate increases;
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our possible failure to maintain our qualification as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, and the risk of changes in laws affecting REITs;
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the timing and availability of potential hotel acquisitions, our ability to identify and complete hotel acquisitions and our ability to complete hotel dispositions in accordance with our business strategy;
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the possibility of uninsured losses;
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risks associated with redevelopment and repositioning projects, including delays and cost overruns; and
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the factors referenced or incorporated by reference into this prospectus and any prospectus supplement, as well as the factors described under the section entitled “Risk Factors” included in our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and other documents filed by us with the SEC.
Accordingly, there is no assurance that our expectations will be realized. Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
OUR COMPANY
We are an internally managed hotel investment company organized to opportunistically acquire and invest in hotel properties located primarily in major U.S. cities and resort properties located near our primary urban target markets and select destination resort markets, with an emphasis on major gateway urban markets. We focus on both branded and independent full-service hotels in the “upper upscale” segment of the lodging industry. The full-service hotels on which we focus our investment activity generally have one or more restaurants, lounges, meeting facilities and other amenities, as well as high levels of customer service. As of December 31, 2023, our company owned 46 hotels with a total of 11,924 guest rooms.
We conduct substantially all of our operations, and make substantially all of our investments, through our operating partnership, Pebblebrook Hotel, L.P., and its subsidiaries.
We believe that we qualify, and we have elected to be taxed, as a REIT under the Code, commencing with our short taxable year ended December 31, 2009.
Our principal executive offices are located at 4747 Bethesda Avenue, Suite 1100, Bethesda, Maryland 20814. Our telephone number is (240) 507-1300. Our website is www.pebblebrookhotels.com. The information contained on our website is not part of this prospectus.
RISK FACTORS
Before purchasing the securities offered by this prospectus you should carefully consider the risk factors incorporated by reference into this prospectus from our Annual Report on Form 10-K for the year ended December 31, 2023, as well as the risks, uncertainties and additional information set forth in our SEC reports on Forms 10-K, 10-Q and 8-K and in the other documents incorporated by reference into this prospectus. For a description of these reports and documents, and information about where you can find them, see “Where You Can Find More Information” and “Incorporation of Certain Documents By Reference.” Additional risks not presently known or that are currently deemed immaterial could also materially and adversely affect our financial condition, results of operations, business and prospects.
USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, we intend to use the net proceeds from the offering of securities under this prospectus for general corporate purposes, including funding our investment activity, repayment of indebtedness and working capital. Further details relating to the use of the net proceeds from the offering of securities under this prospectus will be set forth in the applicable prospectus supplement.
DESCRIPTION OF THE SECURITIES WE MAY OFFER
This prospectus contains summary descriptions of our common shares, preferred shares, debt securities, warrants to purchase debt or equity securities and units that we may offer from time to time. As further described in this prospectus, these summary descriptions are not meant to be complete descriptions of each security. The particular terms of any security will be described in the accompanying prospectus supplement and other offering material. The accompanying prospectus supplement may add, update or change the terms and conditions of the securities as described in this prospectus.
DESCRIPTION OF SHARES OF BENEFICIAL INTEREST
Although the following summary describes the material terms of our shares of beneficial interest, it is not a complete description of the Maryland REIT Law, or the MRL, the Maryland General Corporation Law, or the MGCL, provisions applicable to a Maryland real estate investment trust or our declaration of trust and bylaws. We have incorporated by reference our declaration of trust and bylaws as exhibits to the registration statement of which this prospectus is a part. See “Where You Can Find More Information.”
General
Our declaration of trust provides that we may issue up to 500,000,000 common shares of beneficial interest, $0.01 par value per share, and 100,000,000 preferred shares of beneficial interest, $0.01 par value per share, or preferred shares. As of February 14, 2024, 120,316,629 common shares, 4,400,000 Series E Preferred Shares, 6,000,000 Series F Preferred Shares, 9,200,000 Series G Preferred Shares and 8,000,000 Series H Preferred Shares, were issued and outstanding. Our declaration of trust authorizes our board of trustees to amend our declaration of trust to increase or decrease the aggregate number of authorized shares or the number of shares of any class or series without shareholder approval.
Under Maryland law, shareholders are not personally liable for the obligations of a real estate investment trust solely as a result of their status as shareholders.
Common Shares
The common shares we may offer from time to time under this prospectus, when issued, will be duly authorized, fully paid and nonassessable. Subject to the preferential rights, if any, of holders of any other class or series of shares of beneficial interest and to the provisions of our declaration of trust regarding the restrictions on ownership and transfer of our shares, holders of our common shares are entitled to receive distributions on such shares of beneficial interest out of assets legally available therefor if, as and when authorized by our board of trustees and declared by us, and the holders of our common shares are entitled to share ratably in our assets legally available for distribution to our shareholders in the event of our liquidation, dissolution or winding up after payment of or adequate provision for all of our known debts and liabilities.
Subject to the provisions of our declaration of trust regarding the restrictions on ownership and transfer of our shares and except as may otherwise be specified in the terms of any class or series of common shares, each outstanding common share entitles the holder to one vote on all matters submitted upon which holders of common shares are entitled to vote, including the election of trustees, and, except as provided with respect to any other class or series of shares of beneficial interest, the holders of our common shares will possess the exclusive voting power. There is no cumulative voting in the election of our trustees, which means that the shareholders entitled to cast a majority of the votes entitled to be cast in
the election of trustees can elect all of the trustees then standing for election, and the remaining shareholders will not be able to elect any trustees.
Holders of common shares have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any of our securities. Subject to the restrictions on ownership and transfer of shares contained in our declaration of trust and the terms of any other class or series of common shares, all of our common shares will have equal dividend, liquidation and other rights.
Preferred Shares
Our board of trustees may authorize the issuance of preferred shares in one or more class or series and may determine, with respect to any such class or series, the rights, preferences, privileges and restrictions of the preferred shares of that class or series, including:
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distribution rights;
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conversion rights;
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voting rights;
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redemption rights and terms of redemptions; and
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liquidation preferences.
The preferred shares we may offer from time to time under this prospectus, when issued, will be duly authorized, fully paid and nonassessable, and holders of preferred shares will not have any preemptive rights.
The issuance of preferred shares could have the effect of delaying, deferring or preventing a change in control or other transaction that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders. In addition, any preferred shares that we issue could rank senior to our common shares with respect to the payment of distributions, in which case we could not pay any distributions on our common shares until full distributions have been paid with respect to such preferred shares.
The rights, preferences, privileges and restrictions of each class or series of preferred shares will be fixed by articles supplementary relating to the class or series. We will describe the specific terms of the particular class or series of preferred shares in the prospectus supplement relating to that class or series, which terms will include:
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the designation and par value of the preferred shares;
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the voting rights, if any, of the preferred shares;
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the number of preferred shares offered, the liquidation preference per preferred share and the offering price of the preferred shares;
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the distribution rate(s), period(s) and payment date(s) or method(s) of calculation applicable to the preferred shares;
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whether distributions will be cumulative or non-cumulative and, if cumulative, the date(s) from which distributions on the preferred shares will cumulate;
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the procedures for any auction and remarketing for the preferred shares, if applicable;
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the provision for a sinking fund, if any, for the preferred shares;
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the provision for, and any restriction on, redemption, if applicable, of the preferred shares;
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the provision for, and any restriction on, repurchase, if applicable, of the preferred shares;
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the terms and provisions, if any, upon which the preferred shares will be convertible into common shares, including the conversion price (or manner or calculation) and conversion period;
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the terms under which the rights of the preferred shares may be modified, if applicable;
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the relative ranking and preferences of the preferred shares as to distribution rights and rights upon the liquidation, dissolution or winding up of our affairs;
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any limitation on issuance of any other class or series of preferred shares, including any class or series of preferred shares ranking senior to or on parity with the series of preferred shares as to distribution rights and rights upon the liquidation, dissolution or winding up of our affairs;
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any listing of the preferred shares on any securities exchange;
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if appropriate, a discussion of any additional material federal income tax considerations applicable to the preferred shares;
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information with respect to book-entry procedures, if applicable;
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in addition to those restrictions described below, any other restrictions on the ownership and transfer of the preferred shares; and
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any additional rights, preferences, privileges or restrictions of the preferred shares.
Power to Reclassify Our Unissued Shares of Beneficial Interest
Our declaration of trust authorizes our board of trustees to classify and reclassify any unissued common or preferred shares into other classes or series of shares of beneficial interest. Prior to the issuance of shares of each class or series, our board of trustees is required by Maryland law and by our declaration of trust to set, subject to the provisions of our declaration of trust regarding the restrictions on ownership and transfer of shares of beneficial interest and the express terms of any class or series of shares of beneficial interest outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series. Therefore, our board of trustees could authorize the issuance of common shares or preferred shares that have priority over our common shares as to voting rights, dividends or upon liquidation or with terms and conditions that could have the effect of delaying, deferring or preventing a change in control or other transaction that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders.
Power to Increase or Decrease Authorized Shares of Beneficial Interest and Issue Additional Common Shares and Preferred Shares
We believe that the power of our board of trustees to amend our declaration of trust to increase or decrease the number of authorized shares of beneficial interest, to authorize us to issue additional authorized but unissued common shares or preferred shares and to classify or reclassify unissued common shares or preferred shares and thereafter to issue such classified or reclassified shares of beneficial interest will provide us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that might arise. The additional classes or series, as well as the common shares, will be available for issuance without further action by our shareholders, unless such action is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded. Although our board of trustees does not intend to do so, it could authorize us to issue a class or series of shares that could, depending upon the terms of the particular class or series, delay, defer or prevent a change in control or other transaction that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders.
Restrictions on Ownership and Transfer
For us to qualify as a REIT under the Code, our shares of beneficial interest must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of our outstanding shares of beneficial interest may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made).
Our declaration of trust, subject to certain exceptions, contains restrictions on the ownership and transfer of our shares that are intended to assist us in complying with these requirements and continuing to
qualify as a REIT, among other purposes. Our declaration of trust provides that, subject to certain exceptions, no person may beneficially or constructively own more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our shares of beneficial interest.
Our declaration of trust also prohibits any person from (i) beneficially owning shares of beneficial interest to the extent that such beneficial ownership would result in our being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of the taxable year), (ii) transferring our shares of beneficial interest to the extent that such transfer would result in our shares of beneficial interest being beneficially owned by less than 100 persons (determined under the principles of Section 856(a)(5) of the Code), (iii) beneficially or constructively owning our shares of beneficial interest to the extent such beneficial or constructive ownership would cause us to constructively own ten percent or more of the ownership interests in a tenant (other than a taxable REIT subsidiary, or TRS) of our real property within the meaning of Section 856(d)(2)(B) of the Code or (iv) beneficially or constructively owning our shares of beneficial interest if such ownership or transfer would otherwise cause us to fail to qualify as a REIT under the Code, including, but not limited to, as a result of any hotel management companies failing to qualify as “eligible independent contractors” under the REIT rules. Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of our shares of beneficial interest that will or may violate any of the foregoing restrictions on ownership and transfer, or any person who would have owned our shares of beneficial interest that resulted in a transfer of shares to a charitable trust, is required to give written notice immediately to us, or in the case of a proposed or attempted transaction, to give at least 15 days prior written notice, and provide us with such other information as we may request in order to determine the effect of such transfer on our status as a REIT. The foregoing restrictions on ownership and transfer will not apply if our board of trustees determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance with any restriction is no longer required for REIT qualification.
Our board of trustees, in its sole discretion, may prospectively or retroactively exempt a person from certain of the limits described in the paragraph above and may establish or increase an excepted holder percentage limit for such person. The person seeking an exemption must provide to our board of trustees such representations, covenants and undertakings as our board of trustees may deem appropriate in order to conclude that granting the exemption will not cause us to lose our status as a REIT. Our board of trustees may not grant such an exemption to any person if such exemption would result in our failing to qualify as a REIT. Our board of trustees may require a ruling from the IRS or an opinion of counsel, in either case in form and substance satisfactory to the board of trustees, in its sole discretion, in order to determine or ensure our status as a REIT.
Any attempted transfer of our shares of beneficial interest which, if effective, would violate any of the restrictions described above will result in the number of shares causing the violation (rounded up to the nearest whole share) to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries, except that any transfer that results in the violation of the restriction relating to our shares of beneficial interest being beneficially owned by fewer than 100 persons will be void ab initio. In either case, the proposed transferee will not acquire any rights in such shares. The automatic transfer will be deemed to be effective as of the close of business on the business day prior to the date of the purported transfer or other event that results in the transfer to the trust. Shares held in the trust will remain issued and outstanding shares. The proposed transferee will not benefit economically from ownership of any shares held in the trust, will have no rights to dividends or other distributions and will have no rights to vote or other rights attributable to the shares held in the trust. The trustee of the trust will have all voting rights and rights to dividends or other distributions with respect to shares held in the trust. These rights will be exercised for the exclusive benefit of the charitable beneficiary. Any dividend or other distribution paid prior to our discovery that shares have been transferred to the trust will be paid by the recipient to the trustee upon demand. Any distribution authorized but unpaid will be paid when due to the trustee. Any dividend or other distribution paid to the trustee will be held in trust for the charitable beneficiary. Subject to Maryland law, the trustee will have the authority (i) to rescind as void any vote cast by the proposed transferee prior to our discovery that the shares have been transferred to the trust and (ii) to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if we have already taken irreversible corporate action, then the trustee will not have the authority to rescind and recast the vote.
Within 20 days of receiving notice from us that shares of beneficial interest have been transferred to the trust, the trustee will sell the shares to a person designated by the trustee, whose ownership of the shares will not violate the above ownership and transfer restrictions. Upon the sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the proposed transferee and to the charitable beneficiary as follows. The proposed transferee will receive the lesser of (i) the price paid by the proposed transferee for the shares in the transaction that resulted in such transfer, or if the event causing the shares to be held in the trust did not involve a purchase of such shares at the Market Price (as defined in our declaration of trust), the Market Price of the shares on the trading day immediately preceding the day of the event causing the shares to be held in the trust and (ii) the price received by the trustee (net of any commission and other expenses of sale) from the sale or other disposition of the shares. The trustee may reduce the amount payable to the proposed transferee by the amount of dividends or other distributions that have been paid to the proposed transferee and are owed by the proposed transferee to the trustee. Any net sale proceeds in excess of the amount payable to the proposed transferee will be paid immediately to the charitable beneficiary. If, prior to our discovery that our shares have been transferred to the trust, the shares are sold by the proposed transferee, then (i) the shares shall be deemed to have been sold on behalf of the trust and (ii) to the extent that the proposed transferee received an amount for the shares that exceeds the amount he or she was entitled to receive, the excess shall be paid to the trustee upon demand.
In addition, shares of beneficial interest held in the trust will be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in the transfer to the trust (or, if the event which resulted in the transfer did not involve a purchase of such shares at the Market Price, the Market Price on the trading day immediately preceding the day of the event causing the shares to be held in the trust) and (ii) the Market Price on the date we, or our designee, accept the offer, which we may reduce by the amount of dividends and other distributions paid to the proposed transferee and owed by the proposed transferee to the trustee. We will have the right to accept the offer until the trustee has sold the shares. Upon a sale to us, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the proposed transferee and the charitable beneficiary and any dividends or other distributions held by the trustee shall be paid to the charitable beneficiary.
If a transfer to a charitable trust, as described above, would be ineffective for any reason to prevent a violation of a restriction, the transfer that would have resulted in such violation will be void ab initio, and the proposed transferee shall acquire no rights in such shares.
Every owner of more than 5% (or such lower percentage as required by the Code or the regulations promulgated thereunder) of our shares of beneficial interest, within 30 days after the end of each taxable year, is required to give us written notice, stating his or her name and address, the number of shares of each class and series of our shares of beneficial interest that he or she beneficially owns and a description of the manner in which the shares are held. Each such owner will provide us with such additional information as we may request in order to determine the effect, if any, of his or her beneficial ownership on our status as a REIT and to ensure compliance with the ownership limits. In addition, each shareholder will upon demand be required to provide us with such information as we may request in good faith in order to determine our status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance.
These ownership limitations could delay, defer or prevent a transaction or a change in control that might involve a premium price for our shares or otherwise be in the best interest of our shareholders.
Stock Exchange Listings
Our common shares are listed on the NYSE under the symbol “PEB.” Our Series E Preferred Shares, Series F Preferred Shares, Series G Preferred Shares and Series H Preferred Shares are listed on the NYSE under the symbols “PEB-PE,” “PEB-PF,” “PEB-PG” and “PEB-PH,” respectively.
Transfer Agent and Registrar
The transfer agent and registrar for each class or series of our outstanding shares of beneficial interest is Equiniti Trust Company.
DESCRIPTION OF DEBT SECURITIES
General
The debt securities offered by this prospectus will be our direct unsecured general obligations. This prospectus describes certain general terms of the debt securities offered through this prospectus. In the following discussion, we refer to any of our direct unsecured general obligations as the “Debt Securities.” When we offer to sell a particular series of Debt Securities, we will describe the specific terms of that series in a prospectus supplement or a free writing prospectus. The Debt Securities will be issued under an open-ended indenture for debt securities between us and The Bank of New York Mellon Trust Company, N.A. or such other trustee as may be named in the applicable prospectus supplement. The Indenture, dated December 15, 2020, between us and The Bank of New York Mellon Trust Company, N.A. is incorporated by reference into the registration statement of which this prospectus is a part. In this prospectus we refer to such Indenture as the “Debt Securities Indenture.” We refer to the trustee under any Debt Securities Indenture as the “Debt Securities Trustee.” Our Debt Securities Indenture is qualified under the Trust Indenture Act of 1939, as amended, and you should refer to the Trust Indenture Act for the provisions that apply to the Debt Securities.
The prospectus supplement or any free writing prospectus applicable to a particular series of Debt Securities may state that such Debt Securities will be our subordinated obligations, which we refer to in the following discussion as the “Subordinated Debt Securities.” Unless the applicable prospectus supplement or any free writing prospectus provides otherwise, the Subordinated Debt Securities will be issued under an open-ended indenture for subordinated debt securities between us and a trustee named in the applicable prospectus supplement. The form of open-ended Indenture for Subordinated Debt Securities is filed as an exhibit to the registration statement of which this prospectus is a part. In this prospectus, references to the Debt Securities Indenture are to such form of Indenture for Subordinated Debt Securities as the context indicates.
We have summarized selected provisions of the Debt Securities Indenture below. Each Debt Securities Indenture will be independent of any other Debt Securities Indenture unless otherwise stated in a prospectus supplement or any free writing prospectus. The summary that follows is not complete and the summary is qualified in its entirety by reference to the provisions of the applicable Debt Securities Indenture. You should consult the applicable Debt Securities, Debt Securities Indenture, any supplemental indentures, officers’ certificates and other related documents for more complete information on the Debt Securities. These documents appear as exhibits to, or are incorporated by reference into, the registration statement of which this prospectus is a part, or will appear as exhibits to other documents that we will file with the SEC, which will be incorporated by reference into this prospectus. In the summary below, we have included references to applicable section numbers of the Debt Securities Indenture so that you can easily locate these provisions.
Ranking
Our Debt Securities that are not designated Subordinated Debt Securities will be effectively subordinated to all secured indebtedness that we have outstanding from time to time to the extent of the value of the collateral securing such secured indebtedness. Our Debt Securities that are designated Subordinated Debt Securities will be subordinate to all outstanding secured indebtedness as well as Debt Securities that are not designated Subordinated Debt Securities. As of December 31, 2023, we had outstanding approximately $1,380.0 million principal amount in unsecured term loans, $197.5 million principal amount in mortgage debt, $2.4 million principal amount in senior unsecured notes, $750.0 million principal amount in convertible notes and no borrowings under our $650.0 million senior unsecured revolving credit facility. The Debt Securities Indenture does not limit the amount of secured indebtedness that we may issue or incur.
We conduct substantially all of our operations, and make substantially all of our investments, through our operating partnership, Pebblebrook Hotel, L.P., and its subsidiaries. Our ability to meet our financial obligations with respect to any future Debt Securities, and cash needs generally, is dependent on our operating cash flow, our ability to access various sources of short- and long-term liquidity, including our bank facilities, the capital markets and distributions from our subsidiaries. Holders of our Debt Securities will effectively have a junior position to claims of creditors of our subsidiaries, including trade creditors, debt holders, secured creditors, taxing authorities and guarantee holders.
Provisions of a Particular Series
The Debt Securities may from time to time be issued in one or more series. You should consult the prospectus supplement or free writing prospectus relating to any particular series of Debt Securities for the following information:
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the title of the Debt Securities;
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any limit on aggregate principal amount of the Debt Securities or the series of which they are a part;
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the date(s), or method for determining the date(s), on which the principal of the Debt Securities will be payable;
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the rate, including the method of determination if applicable, at which the Debt Securities will bear interest, if any, and
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the date from which any interest will accrue;
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the dates on which we will pay interest;
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our ability to defer interest payments and any related restrictions during any interest deferral period; and
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the record date for any interest payable on any interest payment date;
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the place where:
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the principal of, premium, if any, and interest on the Debt Securities will be payable;
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you may register transfer of the Debt Securities;
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you may exchange the Debt Securities; and
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you may serve notices and demands upon us regarding the Debt Securities;
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the security registrar for the Debt Securities and whether the principal of the Debt Securities is payable without presentment or surrender of them;
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the terms and conditions upon which we may elect to redeem any Debt Securities, including any replacement capital or similar covenants limiting our ability to redeem any Subordinated Debt Securities;
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the denominations in which we may issue Debt Securities, if other than $1,000 and integral multiples of $1,000;
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the terms and conditions upon which the Debt Securities must be redeemed or purchased due to our obligations pursuant to any sinking fund or other mandatory redemption or tender provisions, or at the holder’s option, including any applicable exceptions to notice requirements;
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the currency, if other than United States currency, in which payments on the Debt Securities will be payable;
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the terms according to which elections can be made by us or the holder regarding payments on the Debt Securities in currency other than the currency in which the Debt Securities are stated to be payable;
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if payments are to be made on the Debt Securities in securities or other property, the type and amount of the securities and other property or the method by which the amount shall be determined;
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the manner in which we will determine any amounts payable on the Debt Securities that are to be determined with reference to an index or other fact or event ascertainable outside the applicable indenture;
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if other than the entire principal amount, the portion of the principal amount of the Debt Securities payable upon declaration of acceleration of their maturity;
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any addition to the events of default applicable to any Debt Securities and any additions to our covenants for the benefit of the holders of the Debt Securities;
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the terms applicable to any rights to convert Debt Securities into or exchange them for other of our securities or those of any other entity;
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whether we are issuing Debt Securities as global securities, and if so,
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any limitations on transfer or exchange rights or the right to obtain the registration of transfer;
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any limitations on the right to obtain definitive certificates for the Debt Securities; and
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any other matters incidental to the Debt Securities;
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whether we are issuing the Debt Securities as bearer securities;
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any limitations on transfer or exchange of Debt Securities or the right to obtain registration of their transfer, and the terms and amount of any service charge required for registration of transfer or exchange;
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any exceptions to the provisions governing payments due on legal holidays, or any variations in the definition of business day with respect to the Debt Securities;
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any collateral security, assurance, guarantee or other credit enhancement applicable to the Debt Securities;
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any other terms of the Debt Securities not in conflict with the provisions of the applicable Debt Securities Indenture; and
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the material federal income tax consequences applicable to the Debt Securities. For more information, see Section 301 of the applicable Debt Securities Indenture.
Debt Securities may be sold at a substantial discount below their principal amount. You should consult the applicable prospectus supplement or free writing prospectus for a description of certain material federal income tax considerations that may apply to Debt Securities sold at an original issue discount or denominated in a currency other than dollars.
Unless the applicable prospectus supplement or free writing prospectus states otherwise, the covenants contained in the applicable indenture will not afford holders of Debt Securities protection in the event we have a change in control or are involved in a highly-leveraged transaction.
Subordination
The applicable prospectus supplement or free writing prospectus may provide that a series of Debt Securities will be Subordinated Debt Securities, subordinate and junior in right of payment to all of our Senior Indebtedness, as defined below. If so, we will issue these securities under a separate Debt Securities Indenture for Subordinated Debt Securities. For more information, see Article XV of the Debt Securities Indenture.
Unless the applicable prospectus supplement or free writing prospectus states otherwise, no payment of principal of, including redemption and sinking fund payments, or any premium or interest on, the Subordinated Debt Securities may be made if:
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there occur certain acts of bankruptcy, insolvency, liquidation, dissolution or other winding up of our company;
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any Senior Indebtedness is not paid when due;
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any applicable grace period with respect to other defaults with respect to any Senior Indebtedness has ended, the default has not been cured or waived and the maturity of such Senior Indebtedness has been accelerated because of the default; or
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the maturity of the Subordinated Debt Securities of any series has been accelerated because of a default and Senior Indebtedness is then outstanding.
Upon any distribution of our assets to creditors upon any dissolution, winding-up, liquidation or reorganization, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings, all principal of, and any premium and interest due or to become due on, all outstanding Senior Indebtedness must be paid in full before the holders of the Subordinated Debt Securities are entitled to payment. For more information, see Section 1502 of the applicable Debt Securities Indenture. The rights of the holders of the Subordinated Debt Securities will be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions applicable to Senior Indebtedness until all amounts owing on the Subordinated Debt Securities are paid in full. For more information, see Section 1504 of the applicable Debt Securities Indenture.
Unless the applicable prospectus supplement or free writing prospectus states otherwise, the term “Senior Indebtedness” means all obligations (other than non-recourse obligations and the indebtedness issued under the Subordinated Debt Securities Indenture) of, or guaranteed or assumed by, us:
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for borrowed money (including both senior and subordinated indebtedness for borrowed money, but excluding the Subordinated Debt Securities);
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for the payment of money relating to any lease that is capitalized on our consolidated balance sheet in accordance with generally accepted accounting principles; or
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indebtedness evidenced by bonds, debentures, notes or other similar instruments.
In the case of any such indebtedness or obligations, Senior Indebtedness includes amendments, renewals, extensions, modifications and refundings, whether existing as of the date of the Subordinated Debt Securities Indenture or subsequently incurred by us.
The Subordinated Debt Securities Indenture does not limit the aggregate amount of Senior Indebtedness that we may issue.
Form, Exchange and Transfer
Unless the applicable prospectus supplement or free writing prospectus states otherwise, we will issue Debt Securities only in fully registered form without coupons and in denominations of $1,000 and integral multiples of that amount. For more information, see Sections 201 and 302 of the applicable Debt Securities Indenture.
Holders may present Debt Securities for exchange or for registration of transfer, duly endorsed or accompanied by a duly executed instrument of transfer, at the office of the security registrar or at the office of any transfer agent we may designate. Exchanges and transfers are subject to the terms of the applicable indenture and applicable limitations for global securities. We may designate ourselves the security registrar.
No charge will be made for any registration of transfer or exchange of Debt Securities, but we may require payment of a sum sufficient to cover any tax or other governmental charge that the holder must pay in connection with the transaction. Any transfer or exchange will become effective upon the security registrar or transfer agent, as the case may be, being satisfied with the documents of title and identity of the person making the request. For more information, see Section 305 of the applicable Debt Securities Indenture.
The applicable prospectus supplement or free writing prospectus will state the name of any transfer agent, in addition to the security registrar initially designated by us, for any Debt Securities. We may at any time designate additional transfer agents or withdraw the designation of any transfer agent or make a change in the office through which any transfer agent acts. We must, however, maintain a transfer agent in each place of payment for the Debt Securities of each series. For more information, see Section 602 of the applicable Debt Securities Indenture.
We will not be required to:
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issue, register the transfer of, or exchange any Debt Securities or any tranche of any Debt Securities during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any Debt Securities called for redemption and ending at the close of business on the day of mailing; or
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register the transfer of, or exchange any Debt Securities selected for redemption except the unredeemed portion of any Debt Securities being partially redeemed.
For more information, see Section 305 of the applicable Debt Securities Indenture.
Payment and Paying Agents
Unless the applicable prospectus supplement or free writing prospectus states otherwise, we will pay interest on a Debt Security on any interest payment date to the person in whose name the Debt Security is registered at the close of business on the regular record date for the interest payment. For more information, see Section 307 of the applicable Debt Securities Indenture.
Unless the applicable prospectus supplement or free writing prospectus provides otherwise, we will pay principal and any premium and interest on Debt Securities at the office of the paying agent whom we will designate for this purpose. Unless the applicable prospectus supplement or free writing prospectus states otherwise, the corporate trust office of the Debt Securities Trustee in New York City will be designated as our sole paying agent for payments with respect to Debt Securities of each series. Any other paying agents initially designated by us for the Debt Securities of a particular series will be named in the applicable prospectus supplement or free writing prospectus. We may at any time add or delete paying agents or change the office through which any paying agent acts. We must, however, maintain a paying agent in each place of payment for the Debt Securities of a particular series. For more information, see Section 602 of the applicable Debt Securities Indenture.
All money we pay to a paying agent for the payment of the principal and any premium or interest on any Debt Security that remains unclaimed at the end of two years after payment is due will be repaid to us. After that date, the holder of that Debt Security shall be deemed an unsecured general creditor and may look only to us for these payments. For more information, see Section 603 of the applicable Debt Securities Indenture.
Redemption
You should consult the applicable prospectus supplement or free writing prospectus for any terms regarding optional or mandatory redemption of Debt Securities. Except for any provisions in the applicable prospectus supplement or free writing prospectus regarding Debt Securities redeemable at the holder’s option, Debt Securities may be redeemed only upon notice by mail not less than 30 nor more than 60 days prior to the redemption date. Further, if less than all of the Debt Securities of a series, or any tranche of a series, are to be redeemed, the Debt Securities to be redeemed will be selected by the method provided for the particular series. In the absence of a selection provision, the Debt Securities Trustee will select a fair and appropriate method of selection. For more information, see Sections 403 and 404 of the applicable Debt Securities Indenture.
A notice of redemption we provide may state:
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that redemption is conditioned upon receipt by the paying agent on or before the redemption date of money sufficient to pay the principal of and any premium and interest on the Debt Securities; and
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that if the money has not been received, the notice will be ineffective and we will not be required to redeem the Debt Securities.
For more information, see Section 404 of the applicable Debt Securities Indenture.
Consolidation, Merger and Sale of Assets
We may not consolidate with or merge into any other person, nor may we transfer or lease substantially all of our assets and property to any person, unless:
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the corporation formed by the consolidation or into which we are merged, or the person that acquires by conveyance or transfer, or that leases, substantially all of our property and assets:
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is organized and validly existing under the laws of any domestic jurisdiction; and
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expressly assumes by supplemental indenture our obligations on the Debt Securities and under the applicable indentures;
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immediately after giving effect to the transaction, no event of default, and no event that would become an event of default, has occurred and is continuing; and
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we have delivered to the Debt Securities Trustee an officer’s certificate and opinion of counsel as provided in the applicable indentures.
For more information, see Section 1101 of the applicable Debt Securities Indenture.
Events of Default
Unless the applicable prospectus supplement or free writing prospectus states otherwise, “event of default” under the applicable indenture with respect to Debt Securities of any series means any of the following:
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failure to pay any interest due on any Debt Security of that series within 30 days after it becomes due;
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failure to pay principal or premium, if any, when due on any Debt Security of that series;
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breach of or failure to perform any other covenant or warranty in the applicable indenture with respect to Debt Securities of that series for 60 days (subject to extension under certain circumstances for another 120 days) after we receive notice from the Debt Securities Trustee, or we and the Debt Securities Trustee receive notice from the holders of at least 33% in principal amount of the Debt Securities of that series outstanding under the applicable indenture according to the provisions of the applicable indenture;
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certain events of bankruptcy, insolvency or reorganization; and
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any other event of default set forth in the applicable prospectus supplement or free writing prospectus. For more information, see Section 801 of the applicable Debt Securities Indenture.
An event of default with respect to a particular series of Debt Securities does not necessarily constitute an event of default with respect to the Debt Securities of any other series issued under the applicable indenture.
If an event of default with respect to a particular series of Debt Securities occurs and is continuing, either the Debt Securities Trustee or the holders of at least 33% in principal amount of the outstanding Debt Securities of that series may declare the principal amount of all of the Debt Securities of that series to be due and payable immediately. If the Debt Securities of that series are discount securities or similar Debt Securities, only the portion of the principal amount as specified in the applicable prospectus supplement or free writing prospectus may be immediately due and payable. If an event of default occurs and is continuing with respect to all series of Debt Securities issued under a Debt Securities Indenture, including all events of default relating to bankruptcy, insolvency or reorganization, the Debt Securities Trustee or the holders of at least 33% in principal amount of the outstanding Debt Securities of all series issued under that Debt Securities Indenture, considered together, may declare an acceleration of the principal amount of all series of Debt Securities issued under that Debt Securities Indenture. There is no automatic acceleration, even in the event of our bankruptcy or insolvency.
The applicable prospectus supplement or free writing prospectus may provide, with respect to a series of Debt Securities to which a credit enhancement is applicable, that the provider of the credit enhancement may, if a default has occurred and is continuing with respect to the series, have all or any part of the rights with respect to remedies that would otherwise have been exercisable by the holder of that series.
At any time after a declaration of acceleration with respect to the Debt Securities of a particular series, and before a judgment or decree for payment of the money due has been obtained, the event of default giving rise to the declaration of acceleration will, without further action, be deemed to have been waived, and the declaration and its consequences will be deemed to have been rescinded and annulled, if:
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we have paid or deposited with the Debt Securities Trustee a sum sufficient to pay:
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all overdue interest on all Debt Securities of the particular series;
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the principal of and any premium on any Debt Securities of that series that have become due otherwise than by the declaration of acceleration and any interest at the rate prescribed in the Debt Securities;
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interest upon overdue interest at the rate prescribed in the Debt Securities, to the extent payment is lawful; and
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all amounts due to the Debt Securities Trustee under the applicable indenture; and
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any other event of default with respect to the Debt Securities of the particular series, other than the failure to pay the principal of the Debt Securities of that series that has become due solely by the declaration of acceleration, has been cured or waived as provided in the applicable indenture.
For more information, see Section 802 of the applicable Debt Securities Indenture.
The applicable Debt Securities Indenture includes provisions as to the duties of the Debt Securities Trustee in case an event of default occurs and is continuing. Consistent with these provisions, the Debt Securities Trustee will be under no obligation to exercise any of its rights or powers at the request or direction of any of the holders unless those holders have offered to the Debt Securities Trustee reasonable indemnity against the costs, expenses and liabilities that may be incurred by it in compliance with such request or direction. For more information, see Section 903 of the applicable Debt Securities Indenture. Subject to these provisions for indemnification, the holders of a majority in principal amount of the outstanding Debt Securities of any series may direct the time, method and place of conducting any proceeding for any remedy available to the Debt Securities Trustee, or exercising any trust or power conferred on the Debt Securities Trustee, with respect to the Debt Securities of that series. For more information, see Section 812 of the applicable Debt Securities Indenture.
No holder of Debt Securities may institute any proceeding regarding the applicable indenture, or for the appointment of a receiver or a trustee, or for any other remedy under the applicable indenture unless:
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the holder has previously given to the Debt Securities Trustee written notice of a continuing event of default of that particular series;
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the holders of a majority in principal amount of the outstanding Debt Securities of all series with respect to which an event of default is continuing have made a written request to the Debt Securities Trustee, and have offered reasonable indemnity to the Debt Securities Trustee, to institute the proceeding as trustee; and
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the Debt Securities Trustee has failed to institute the proceeding, and has not received from the holders of a majority in principal amount of the outstanding Debt Securities of that series a direction inconsistent with the request, within 60 days after notice, request and offer of reasonable indemnity.
For more information, see Section 807 of the applicable Debt Securities Indenture.
The preceding limitations do not apply, however, to a suit instituted by a holder of a Debt Security for the enforcement of payment of the principal of or any premium or interest on the Debt Securities on or after the applicable due date stated in the Debt Securities. For more information, see Section 808 of the applicable Debt Securities Indenture.
We must furnish annually to the Debt Securities Trustee a statement by an appropriate officer as to that officer’s knowledge of our compliance with all conditions and covenants under each of the indentures for Debt Securities. Our compliance is to be determined without regard to any grace period or notice requirement under the respective indenture. For more information, see Section 606 of the applicable Debt Securities Indenture.
Modification and Waiver
We and the Debt Securities Trustee, without the consent of the holders of the Debt Securities, may enter into one or more supplemental indentures for any of the following purposes:
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to evidence the assumption by any permitted successor of our covenants in the applicable indenture and the Debt Securities;
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to add one or more covenants or other provisions for the benefit of the holders of outstanding Debt Securities or to surrender any right or power conferred upon us by the applicable indenture;
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to add any additional events of default;
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to change or eliminate any provision of the applicable indenture or add any new provision to it, but if this action would adversely affect the interests of the holders of any particular series of Debt Securities in any material respect, the action will not become effective with respect to that series while any Debt Securities of that series remain outstanding under the applicable indenture;
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to provide collateral security for the Debt Securities;
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to establish the form or terms of Debt Securities according to the provisions of the applicable indenture;
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to evidence the acceptance of appointment of a successor Debt Securities Trustee under the applicable indenture with respect to one or more series of the Debt Securities and to add to or change any of the provisions of the applicable indenture as necessary to provide for trust administration under the applicable indenture by more than one trustee;
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to provide for the procedures required to permit the use of a non-certificated system of registration for any series of Debt Securities;
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to change any place where:
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the principal of and any premium and interest on any Debt Securities are payable;
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any Debt Securities may be surrendered for registration of transfer or exchange; or
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notices and demands to or upon us regarding Debt Securities and the applicable indentures may be served; or
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to cure any ambiguity or inconsistency, but only by means of changes or additions that will not adversely affect the interests of the holders of Debt Securities of any series in any material respect.
For more information, see Section 1201 of the applicable Debt Securities Indenture.
The holders of at least a majority in aggregate principal amount of the outstanding Debt Securities of any series may waive:
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compliance by us with certain provisions of the applicable indenture (see Section 607 of the applicable Debt Securities Indenture); and
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any past default under the applicable indenture, except a default in the payment of principal, premium, or interest and certain covenants and provisions of the applicable indenture that cannot be modified or amended without consent of the holder of each outstanding Debt Security of the series affected (see Section 813 of the applicable Debt Securities Indenture).
The Trust Indenture Act of 1939 may be amended after the date of the applicable indenture to require changes to the indenture. In this event, the indenture will be deemed to have been amended so as to effect the changes, and we and the Debt Securities Trustee may, without the consent of any holders, enter into one or more supplemental indentures to evidence or effect the amendment. For more information, see Section 1201 of the applicable Debt Securities Indenture.
Except as provided in this section, the consent of the holders of a majority in aggregate principal amount of the outstanding Debt Securities issued pursuant to a Debt Securities Indenture, considered as one class, is required to change in any manner the applicable indenture pursuant to one or more supplemental indentures. If less than all of the series of Debt Securities outstanding under a Debt Securities Indenture are directly affected by a proposed supplemental indenture, however, only the consent of the holders of a majority in aggregate principal amount of the outstanding Debt Securities of all series directly affected, considered as one class, will be required. Furthermore, if the Debt Securities of any series have been issued in
more than one tranche and if the proposed supplemental indenture directly affects the rights of the holders of one or more, but not all, tranches, only the consent of the holders of a majority in aggregate principal amount of the outstanding Debt Securities of all tranches directly affected, considered as one class, will be required. In addition, an amendment or modification:
•
may not, without the consent of the holder of each outstanding Debt Security affected:
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change the maturity of the principal of, or any installment of principal of or interest on, any Debt Securities;
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reduce the principal amount or the rate of interest, or the amount of any installment of interest, or change the method of calculating the rate of interest;
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reduce any premium payable upon the redemption of the Debt Securities;
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reduce the amount of the principal of any Debt Security originally issued at a discount from the stated principal amount that would be due and payable upon a declaration of acceleration of maturity;
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change the currency or other property in which a Debt Security or premium or interest on a Debt Security is payable; or
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impair the right to institute suit for the enforcement of any payment on or after the stated maturity, or in the case of redemption, on or after the redemption date, of any Debt Securities;
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may not reduce the percentage of principal amount requirement for consent of the holders for any supplemental indenture, or for any waiver of compliance with any provision of or any default under the applicable indenture, or reduce the requirements for quorum or voting, without the consent of the holder of each outstanding Debt Security of each series or tranche affected; and
•
may not modify provisions of the applicable indenture relating to supplemental indentures, waivers of certain covenants and waivers of past defaults with respect to the Debt Securities of any series, or any tranche of a series, without the consent of the holder of each outstanding Debt Security affected.
A supplemental indenture will be deemed not to affect the rights under the applicable indenture of the holders of any series or tranche of the Debt Securities if the supplemental indenture:
•
changes or eliminates any covenant or other provision of the applicable indenture expressly included solely for the benefit of one or more other particular series of Debt Securities or tranches thereof; or
•
modifies the rights of the holders of Debt Securities of any other series or tranches with respect to any covenant or other provision.
For more information, see Section 1202 of the applicable Debt Securities Indenture.
If we solicit from holders of the Debt Securities any type of action, we may at our option by board resolution fix in advance a record date for the determination of the holders entitled to vote on the action. We shall have no obligation, however, to do so. If we fix a record date, the action may be taken before or after the record date, but only the holders of record at the close of business on the record date shall be deemed to be holders for the purposes of determining whether holders of the requisite proportion of the outstanding Debt Securities have authorized the action. For that purpose, the outstanding Debt Securities shall be computed as of the record date. Any holder action shall bind every future holder of the same security and the holder of every security issued upon the registration of transfer of or in exchange for or in lieu of the security in respect of anything done or permitted by the Debt Securities Trustee or us in reliance on that action, whether or not notation of the action is made upon the security. For more information, see Section 104 of the applicable Debt Securities Indenture.
Defeasance
Unless the applicable prospectus supplement or free writing prospectus provides otherwise, any Debt Security, or portion of the principal amount of a Debt Security, will be deemed to have been paid for purposes
of the applicable indenture, and, at our election, our entire indebtedness in respect of the Debt Security, or portion thereof, will be deemed to have been satisfied and discharged, if we have irrevocably deposited with the Debt Securities Trustee or any paying agent other than us, in trust money, certain eligible obligations, as defined in the applicable indenture, or a combination of the two, sufficient to pay principal of and any premium and interest due and to become due on the Debt Security or portion thereof. For more information, see Section 701 of the applicable Debt Securities Indenture. For this purpose, unless the applicable prospectus supplement or free writing prospectus provides otherwise, eligible obligations include direct obligations of, or obligations unconditionally guaranteed by, the United States, entitled to the benefit of full faith and credit of the United States, and certificates, depositary receipts or other instruments that evidence a direct ownership interest in those obligations or in any specific interest or principal payments due in respect of those obligations.
Resignation, Removal of Debt Securities Trustee; Appointment of Successor
The Debt Securities Trustee may resign at any time by giving written notice to us or may be removed at any time by an action of the holders of a majority in principal amount of outstanding Debt Securities delivered to the Debt Securities Trustee and us. No resignation or removal of the Debt Securities Trustee and no appointment of a successor trustee will become effective until a successor trustee accepts appointment in accordance with the requirements of the applicable indenture. So long as no event of default or event that would become an event of default has occurred and is continuing, and except with respect to a Debt Securities Trustee appointed by an action of the holders, if we have delivered to the Debt Securities Trustee a resolution of our board of trustees appointing a successor trustee and the successor trustee has accepted the appointment in accordance with the terms of the applicable indenture, the Debt Securities Trustee will be deemed to have resigned and the successor trustee will be deemed to have been appointed as trustee in accordance with the applicable indenture. For more information, see Section 910 of the applicable Debt Securities Indenture.
Notices
We will give notices to holders of Debt Securities by mail to their addresses as they appear in the Debt Security Register. For more information, see Section 106 of the applicable Debt Securities Indenture.
Title
The Debt Securities Trustee and its agents, and we and our agents, may treat the person in whose name a Debt Security is registered as the absolute owner of that Debt Security, whether or not that Debt Security may be overdue, for the purpose of making payment and for all other purposes. For more information, see Section 308 of the applicable Debt Securities Indenture.
Governing Law
The Debt Securities Indentures and the Debt Securities, including any Subordinated Debt Securities Indentures and Subordinated Debt Securities, will be governed by, and construed in accordance with, the law of the State of New York. For more information, see Section 112 of the applicable Debt Securities Indenture.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase debt or equity securities. Warrants may be issued independently or together with any securities or may be attached to or separate from the securities. Each series of warrants will be issued under a separate warrant agreement to be entered into by us with a bank or trust company, as warrant agent, as specified in the applicable prospectus supplement. The warrant agent will act solely as our agent in connection with the warrants and will not assume any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants.
We will describe the specific terms of any warrants we may offer in the prospectus supplement relating to those warrants, which terms will include:
•
the title of the warrants;
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the aggregate number of warrants;
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the price or prices at which the warrants will be issued;
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the designation, amount and terms of the securities purchasable upon exercise of the warrants;
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any provisions for adjustment of the number of securities purchasable upon exercise of the warrants or the exercise price of the warrants;
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the designation and terms of the other securities, if any, with which the warrants are to be issued and the number of the warrants issued with each security;
•
if applicable, the date on and after which the warrants and the securities purchasable upon exercise of the warrants will be separately transferable;
•
the price or prices at which the securities purchasable upon exercise of the warrants may be purchased;
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the minimum or maximum number of warrants which may be exercised at any one time;
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the date on which the right to exercise the warrants shall commence and the date on which the right shall expire;
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if appropriate, a discussion of any material federal income tax considerations applicable to the warrants;
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information with respect to book-entry procedures, if applicable; and
•
any additional terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants.
Each warrant will entitle the holder of the warrant to purchase for cash the amount of common shares or preferred shares, as applicable, at the exercise price stated or determinable in the applicable prospectus supplement. Warrants may be exercised at any time up to the close of business on the expiration date shown in the applicable prospectus supplement, unless otherwise specified in such prospectus supplement. After the close of business on the expiration date, unexercised warrants will become void. Warrants may be exercised as described in the applicable prospectus supplement. When the warrant holder makes the payment and properly completes and signs the warrant certificate at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement, we will, as soon as possible, forward the common shares or preferred shares, as applicable, that the warrant holder has purchased. If the warrant holder exercises the warrant for less than all of the warrants represented by the warrant certificate, we will issue a new warrant certificate for the remaining warrants.
Additionally, in order to enable us to preserve our status as a REIT, we may take certain actions to restrict ownership and transfer of our outstanding securities, including any warrants. The prospectus supplement related to the offering of any warrants will specify any additional ownership limitation relating to the warrants being offered thereby.
DESCRIPTION OF UNITS
This section describes some of the general terms and provisions applicable to units we may issue from time to time. We will describe the specific terms of a series of units and the applicable unit agreement in the applicable prospectus supplement. The following description and any description of the units in the applicable prospectus supplement may not be complete and is subject to and qualified in its entirety by reference to the terms and provisions of the applicable unit agreement. A form of the unit agreement reflecting the particular terms and provisions of a series of offered units will be filed with the SEC in connection with the offering and incorporated by reference into the registration statement and this prospectus.
We may issue units from time to time in such amounts and in as many distinct series as we determine. We will issue each series of units under a unit agreement to be entered into between us and a unit agent to be designated in the applicable prospectus supplement. When we refer to a series of units, we mean all units issued as part of the same series under the applicable unit agreement.
We may issue units consisting of any combination of two or more securities described in this prospectus. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
The applicable prospectus supplement will describe the terms of the units offered pursuant to it, including one or more of the following:
•
the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
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the aggregate number of, and the price at which we will issue, the units any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units;
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whether the units will be issued in fully registered or global form;
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the name of the unit agent;
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a description of the terms of any unit agreement to be entered into between us and a bank or trust company, as unit agent, governing the units;
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if appropriate, a discussion of the material federal income tax consequences applicable to the units; and
•
whether the units will be listed on any securities exchange.
Additionally, in order to enable us to preserve our status as a REIT, we may take certain actions to restrict ownership and transfer of our outstanding securities, including any units. The prospectus supplement related to the offering of any units will specify any additional ownership limitation relating to the units being offered thereby.
GLOBAL SECURITIES
We may issue some or all of our securities of any series as global securities. We will register each global security in the name of a depositary identified in the applicable prospectus supplement. The global securities will be deposited with a depositary or nominee or custodian for the depositary and will bear a legend regarding restrictions on exchanges and registration of transfer as discussed below and any other matters to be provided pursuant to the indenture.
As long as the depositary or its nominee is the registered holder of a global security, that person will be considered the sole owner and holder of the global security and the securities represented by it for all purposes under the securities and the indenture. Except in limited circumstances, owners of a beneficial interest in a global security:
•
will not be entitled to have the global security or any securities represented by it registered in their names;
•
will not receive or be entitled to receive physical delivery of certificated securities in exchange for the global security; and
•
will not be considered to be the owners or holders of the global security or any securities represented by it for any purposes under the securities or the indenture.
We will make all payments of principal and any premium and interest on a global security to the depositary or its nominee as the holder of the global security. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. These laws may impair the ability to transfer beneficial interests in a global security.
Ownership of beneficial interests in a global security will be limited to institutions having accounts with the depositary or its nominee, called “participants” for purposes of this discussion, and to persons that hold beneficial interests through participants. When a global security is issued, the depositary will credit on its book-entry, registration and transfer system the principal amounts of securities represented by the global security to the accounts of its participants. Ownership of beneficial interests in a global security will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by:
•
the depositary, with respect to participants’ interests; or
•
any participant, with respect to interests of persons held by the participants on their behalf.
Payments by participants to owners of beneficial interests held through the participants will be the responsibility of the participants. The depositary may from time to time adopt various policies and procedures governing payments, transfers, exchanges and other matters relating to beneficial interests in a global security. None of the following will have any responsibility or liability for any aspect of the depositary’s or any participant’s records relating to, or for payments made on account of, beneficial interests in a global security, or for maintaining, supervising or reviewing any records relating to those beneficial interests:
•
us or our affiliates;
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the trustee under any indenture; or
•
any agent of any of the above.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
This section summarizes the material federal income tax considerations that you, as a securityholder, may consider relevant in the acquisition, ownership and disposition of our securities. Hunton Andrews Kurth LLP has acted as our counsel, has reviewed this summary, and is of the opinion that the discussion contained herein is accurate in all material respects. Because this section is a summary, it does not address all aspects of taxation that may be relevant to particular securityholders in light of their personal investment or tax circumstances, or to certain types of securityholders that are subject to special treatment under the federal income tax laws, such as:
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insurance companies;
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tax-exempt organizations (except to the limited extent discussed in “— Taxation of Tax-Exempt Shareholders” below);
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financial institutions or broker-dealers;
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non-U.S. individuals, foreign partnerships and foreign corporations (except to the limited extent discussed in “— Taxation of Non-U.S. Shareholders” below);
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U.S. expatriates;
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persons who mark-to-market our securities;
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subchapter S corporations;
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U.S. shareholders (as defined below) whose functional currency is not the U.S. dollar;
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regulated investment companies and REITs;
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trusts and estates;
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holders who receive our securities through the exercise of employee share options or otherwise as compensation;
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persons holding our securities as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment;
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persons subject to the alternative minimum tax provisions of the Code; and
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persons holding our securities through a partnership or similar pass-through entity.
This summary assumes that securityholders hold our securities as capital assets for federal income tax purposes, which generally means property held for investment.
The statements in this section are not intended to be, and should not be construed as, tax advice. The statements in this section are based on the Code, current, temporary and proposed U.S. Department of the Treasury (“Treasury”) regulations, the legislative history of the Code, current administrative interpretations and practices of the Internal Revenue Service (the “IRS”), and court decisions. The reference to IRS interpretations and practices includes the IRS practices and policies endorsed in private letter rulings, which are not binding on the IRS except with respect to the taxpayer that receives the ruling. In each case, these sources are relied upon as they exist on the date of this discussion. Future legislation, Treasury regulations, administrative interpretations and court decisions could change current law or adversely affect existing interpretations of current law on which the information in this section is based. Any such change could apply retroactively. We have not received any rulings from the IRS concerning our qualification as a REIT. Accordingly, even if there is no change in the applicable law, no assurance can be provided that the statements made in the following discussion, which do not bind the IRS or the courts, will not be challenged by the IRS or will be sustained by a court if so challenged.
WE URGE YOU TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND SALE OF OUR SECURITIES AND OF OUR ELECTION TO BE TAXED AS A REIT. SPECIFICALLY, YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, FOREIGN,
AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION, AND REGARDING POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
Taxation of Our Company
We elected to be taxed as a REIT for federal income tax purposes commencing with our short taxable year ended December 31, 2009. We believe that, commencing with such short taxable year, we have been organized and have operated in such a manner as to qualify for taxation as a REIT under the Code, and we intend to continue to operate in such a manner, but no assurances can be given that we will operate in a manner so as to qualify or remain qualified as a REIT. This section discusses the laws governing the federal income tax treatment of a REIT and its shareholders. These laws are highly technical and complex.
In the opinion of Hunton Andrews Kurth LLP, we qualified to be taxed as a REIT under the federal income tax laws for our taxable years ended December 31, 2020 through December 31, 2023, and our organization and current and proposed method of operation will enable us to continue to satisfy the requirements for qualification and taxation as a REIT under the federal income tax laws for our taxable year ending December 31, 2024 and subsequent taxable years. Investors should be aware that Hunton Andrews Kurth LLP’s opinion is based upon customary assumptions, is conditioned upon certain representations made by us as to factual matters, including representations regarding the nature of our assets and the conduct of our business, is not binding upon the IRS, or any court, and speaks as of the date issued. In addition, Hunton Andrews Kurth LLP’s opinion is based on existing federal income tax law governing qualification as a REIT, which is subject to change either prospectively or retroactively. Moreover, our qualification and taxation as a REIT depend upon our ability to meet on a continuing basis, through actual annual and quarterly operating results, certain qualification tests set forth in the federal income tax laws. Those qualification tests involve the percentage of income that we earn from specified sources, the percentage of our assets that falls within specified categories, the diversity of ownership of our shares of beneficial interest, and the percentage of our earnings that we distribute. Hunton Andrews Kurth LLP will not review our compliance with those tests on a continuing basis. Accordingly, no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements. Hunton Andrews Kurth LLP’s opinion does not foreclose the possibility that we may have to use one or more of the REIT savings provisions described below, which would require us to pay an excise or penalty tax (which could be material) in order to maintain our REIT qualification. For a discussion of the tax consequences of our failure to qualify as a REIT, see “— Failure to Qualify.”
If we qualify as a REIT, we generally will not be subject to federal income tax on the taxable income that we distribute to our shareholders. The benefit of that tax treatment is that it avoids the “double taxation,” or taxation at both the corporate and shareholder levels, that generally results from owning stock in a corporation. However, we will be subject to federal tax in the following circumstances:
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We will pay federal income tax on any taxable income, including undistributed net capital gain, that we do not distribute to shareholders during, or within a specified time period after, the calendar year in which the income is earned.
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We will pay income tax at the highest corporate rate on:
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net income from the sale or other disposition of property acquired through foreclosure or after default on a lease of the property (“foreclosure property”) that we hold primarily for sale to customers in the ordinary course of business, and
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other non-qualifying income from foreclosure property.
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We will pay a 100% tax on net income from sales or other dispositions of property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business.
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If we fail to satisfy one or both of the 75% gross income test or the 95% gross income test, as described below under “— Gross Income Tests,” and nonetheless continue to qualify as a REIT because we meet other requirements, we will pay a 100% tax on:
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the gross income attributable to the greater of the amount by which we fail the 75% gross income test or the 95% gross income test, in either case, multiplied by
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a fraction intended to reflect our profitability.
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If we fail to distribute during a calendar year at least the sum of (1) 85% of our REIT ordinary income for the year, (2) 95% of our REIT capital gain net income for the year, and (3) any undistributed taxable income required to be distributed from earlier periods, we will pay a 4% nondeductible excise tax on the excess of the required distribution over the sum of (A) the amount we actually distributed plus (B) retained amounts on which corporate-level tax was paid by us.
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We may elect to retain and pay income tax on our net long-term capital gain. In that case, a U.S. shareholder would be taxed on its proportionate share of our undistributed long-term capital gain (to the extent that we made a timely designation of such gain to the shareholders) and would receive a credit or refund for its proportionate share of the tax we paid.
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We will be subject to a 100% excise tax on transactions with a TRS that are not conducted on an arm’s-length basis.
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If we fail any of the asset tests, other than a de minimis failure of the 5% asset test, the 10% vote test or the 10% value test, as described below under “— Asset Tests,” as long as the failure was due to reasonable cause and not to willful neglect, we file a description of each asset that caused such failure with the IRS, and we dispose of such assets or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify such failure, we will pay a tax equal to the greater of $50,000 or the highest federal income tax rate then applicable to U.S. corporations on the net income from the nonqualifying assets during the period in which we failed to satisfy the asset tests.
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If we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, and such failure is due to reasonable cause and not to willful neglect, we will be required to pay a penalty of $50,000 for each such failure.
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If we acquire any asset from a C corporation, or a corporation that generally is subject to full corporate-level tax, in a merger or other transaction in which we acquire a basis in the asset that is determined by reference either to the C corporation’s basis in the asset or to another asset, we will pay tax at the highest regular corporate rate applicable if we recognize gain on the sale or disposition of the asset during the 5-year period after we acquire the asset provided no election is made for the transaction to be taxable on a current basis. The amount of gain on which we will pay tax is the lesser of:
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the amount of gain that we recognize at the time of the sale or disposition, and
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the amount of gain that we would have recognized if we had sold the asset at the time we acquired it.
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We may be required to pay monetary penalties to the IRS in certain circumstances, including if we fail to meet recordkeeping requirements intended to monitor our compliance with rules relating to the composition of a REIT’s shareholders, as described below in “— Recordkeeping Requirements.”
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The earnings of our lower-tier entities that are subchapter C corporations, including TRSs, will be subject to federal corporate income tax.
In addition, we may be subject to a variety of taxes, including payroll taxes and state, local and foreign income, property and other taxes on our assets and operations. We could also be subject to tax in situations and on transactions not presently contemplated. Moreover, as further described below, TRSs will be subject to federal, state and local corporate income tax on their taxable income.
Requirements for Qualification
A REIT is a corporation, trust, or association that meets each of the following requirements:
1.
It is managed by one or more directors or trustees.
2.
Its beneficial ownership is evidenced by transferable shares, or by transferable certificates of beneficial interest.
3.
It would be taxable as a domestic corporation but for the REIT provisions of the federal income tax laws.
4.
It is neither a financial institution nor an insurance company subject to special provisions of the federal income tax laws.
5.
At least 100 persons are beneficial owners of its shares or ownership certificates.
6.
Not more than 50% in value of its outstanding shares or ownership certificates is owned, directly or indirectly, by five or fewer individuals, which the Code defines to include certain entities, during the last half of any taxable year.
7.
It elects to be a REIT, or has made such election for a previous taxable year, and satisfies all relevant filing and other administrative requirements established by the IRS that must be met to elect and maintain REIT status.
8.
It meets certain other qualification tests, described below, regarding the nature of its income and assets and the amount of its distributions to shareholders.
9.
It uses a calendar year for federal income tax purposes and complies with the recordkeeping requirements of the federal income tax laws.
We must meet requirements 1 through 4, 7, 8 and 9 during our entire taxable year and must meet requirement 5 during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. Requirements 5 and 6 applied to us beginning with our 2010 taxable year. If we comply with all the requirements for ascertaining the ownership of our outstanding shares in a taxable year and have no reason to know that we violated requirement 6, we will be deemed to have satisfied requirement 6 for that taxable year. For purposes of determining share ownership under requirement 6, an “individual” generally includes a supplemental unemployment compensation benefits plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes. An “individual,” however, generally does not include a trust that is a qualified employee pension or profit sharing trust under the Code, and beneficiaries of such a trust will be treated as holding our shares in proportion to their actuarial interests in the trust for purposes of requirement 6.
Our declaration of trust provides restrictions regarding the transfer and ownership of our shares of beneficial interest. See “Description of Shares of Beneficial Interest — Restrictions on Ownership and Transfer.” We believe that we have issued sufficient shares of beneficial interest with sufficient diversity of ownership to allow us to satisfy requirements 5 and 6 above. The restrictions in our declaration of trust are intended (among other things) to assist us in continuing to satisfy requirements 5 and 6 described above. These restrictions, however, may not ensure that we will, in all cases, be able to satisfy such share ownership requirements. If we fail to satisfy these share ownership requirements, our qualification as a REIT may terminate.
In addition, we must satisfy all relevant filing and other administrative requirements established by the IRS that must be met to maintain REIT status and comply with the recordkeeping requirements of the Code and regulations promulgated thereunder.
Qualified REIT Subsidiaries. A corporation that is a “qualified REIT subsidiary” is not treated as a corporation separate from its parent REIT. All assets, liabilities, and items of income, deduction, and credit of a “qualified REIT subsidiary” are treated as assets, liabilities, and items of income, deduction, and credit of the REIT. A “qualified REIT subsidiary” is a corporation, other than a TRS, all of the stock of which is owned by a REIT. Thus, in applying the requirements described herein, any “qualified REIT subsidiary” that we own will be ignored, and all assets, liabilities, and items of income, deduction, and credit of such subsidiary will be treated as our assets, liabilities, and items of income, deduction, and credit.
Other Disregarded Entities and Partnerships. An unincorporated domestic entity, such as a limited liability company, that has a single owner for federal income tax purposes generally is not treated as an entity separate from its owner for federal income tax purposes. An unincorporated domestic entity with two or more owners generally is treated as a partnership for federal income tax purposes. In the case of a REIT that is a partner in a partnership that has other partners, the REIT is treated as owning its proportionate share of the assets of the partnership and as earning its allocable share of the gross income of the partnership for purposes of the applicable REIT qualification tests. Our proportionate share of the assets of a partnership
for purposes of the 10% value test (see “— Asset Tests”) is based on our proportionate interest in the equity interests and certain debt securities issued by the partnership. For all of the other asset and income tests, our proportionate share is based on our proportionate interest in the capital interests in the partnership. Our proportionate share of the assets, liabilities, and items of income of any partnership, joint venture, or limited liability company that is treated as a partnership for federal income tax purposes in which we acquire an equity interest, directly or indirectly, are treated as our assets and gross income for purposes of applying the various REIT qualification requirements.
We have control of our operating partnership and intend to control any subsidiary partnerships and limited liability companies, and we intend to operate them in a manner consistent with the requirements for our qualification as a REIT. We may from time to time be a limited partner or non-managing member in some of our partnerships and limited liability companies. If a partnership or limited liability company in which we own an interest takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. In addition, it is possible that a partnership or limited liability company could take an action that could cause us to fail a gross income or asset test, and that we would not become aware of such action in time to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely basis. In that case, we could fail to qualify as a REIT unless we were entitled to relief, as described below.
Taxable REIT Subsidiaries. A REIT may own up to 100% of the capital stock of one or more TRSs. A TRS is a fully taxable corporation that may earn income that would not be qualifying income if earned directly by the parent REIT. The subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation (other than a REIT) of which a TRS directly or indirectly owns more than 35% of the voting power or value of the outstanding securities will automatically be treated as a TRS. However, an entity will not qualify as a TRS if it directly or indirectly operates or manages a lodging or health care facility or, generally, provides to another person under a franchise, license, or otherwise, rights to any brand name under which any lodging facility or health care facility is operated, unless such rights are provided to an “eligible independent contractor” (as defined below under “— Gross Income Test — Rents from Real Property”) to operate or manage a lodging facility or health care facility and such lodging facility or health care facility is either owned by the TRS or leased to the TRS by its parent REIT. Additionally, a TRS that employs individuals working at a qualified lodging facility outside the United States will not be considered to operate or manage a qualified lodging facility as long as an “eligible independent contractor” is responsible for the daily supervision and direction of such individuals on behalf of the TRS pursuant to a management contract or similar service contract.
We are not treated as holding the assets of a TRS or as receiving any income that the TRS earns. Rather, the stock issued by a TRS to us is an asset in our hands, and we treat the distributions paid to us from such TRS, if any, as dividend income to the extent of the TRS’s current and accumulated earnings and profits. This treatment can affect our compliance with the gross income and asset tests. Because we do not include the assets and income of TRSs in determining our compliance with the REIT requirements, we may use such entities to undertake indirectly activities that the REIT rules might otherwise preclude us from doing directly or through pass-through subsidiaries. Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs.
A TRS will pay income tax at regular corporate rates on any income that it earns. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. In addition, overall limitations on the deductibility of net interest expense by businesses could apply to any TRS. Further, the rules impose a 100% excise tax on transactions between a TRS and its parent REIT or the REIT’s tenants that are not conducted on an arm’s-length basis. We have formed a TRS, Pebblebrook Hotel Lessee, Inc., whose wholly owned subsidiaries are the lessees of our wholly owned hotels. The hotels in our joint venture are leased to lessee entities in which we own our interest through our TRS. We refer to our TRS and its subsidiaries as our TRS lessees. We may also form additional TRSs in the future. See “— Taxable REIT Subsidiaries.”
Ownership of Subsidiary REITs. Our operating partnership owns 100% of the common shares of certain subsidiary REITs. Our subsidiary REITs are subject to the various REIT qualification requirements and other limitations described herein that are applicable to us. We believe that each of our subsidiary REITs is organized and has operated and will continue to operate in a manner to permit it to qualify for
taxation as a REIT for federal income tax purposes from and after the effective date of its REIT election. However, if a subsidiary REIT of ours were to fail to qualify as a REIT, then (1) the subsidiary REIT would become subject to regular U.S. corporate income tax, as described herein, see “— Failure to Qualify” below, and (2) our ownership of shares in such subsidiary REIT would cease to be a qualifying real estate asset for purposes of the 75% asset test and would become subject to the 5% asset test, the 10% vote test, and the 10% value test generally applicable to our ownership in corporations other than REITs, qualified REIT subsidiaries, and TRSs. See “— Asset Tests” below. If any of our subsidiary REITs were to fail to qualify as a REIT, it is possible that we would not meet the 10% vote test and the 10% value test with respect to our indirect interest in such entity, in which event we would fail to qualify as a REIT unless we could avail ourselves of certain relief provisions. We have made “protective” TRS elections with respect to our subsidiary REITs and may implement other protective arrangements intended to avoid such an outcome if our subsidiary REITs were not to qualify as REITs, but there can be no assurance that such “protective” elections and other arrangements will be effective to avoid the resulting adverse consequences to us. Moreover, even if the “protective” TRS elections with respect to our subsidiary REITs were to be effective in the event of the failure of a subsidiary REIT to qualify as a REIT, we cannot assure you that we would not fail to satisfy the requirement that not more than 20% of the value of our total assets may be represented by the securities of one or more TRSs. In this event, we would fail to qualify as a REIT unless we or our subsidiary REITs could avail ourselves of certain relief provisions.
Gross Income Tests
We must satisfy two gross income tests annually to maintain our qualification as a REIT. First, at least 75% of our gross income for each taxable year must consist of defined types of income that we derive, directly or indirectly, from investments relating to real property or mortgages on real property or qualified temporary investment income. Qualifying income for purposes of that 75% gross income test generally includes:
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rents from real property;
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interest on debt secured by mortgages on real property, or on interests in real property, and interest on debt secured by mortgages on both real and personal property if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property;
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dividends or other distributions on, and gain from the sale of, shares in other REITs;
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gain from the sale of real estate assets;
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income and gain from foreclosure property; and
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income derived from the temporary investment of new capital that is attributable to the issuance of our shares of beneficial interest or a public offering of our debt with a maturity date of at least five years and that we receive during the one-year period beginning on the date on which we received such new capital.
Although a debt instrument issued by a “publicly offered REIT” (i.e., a REIT that is required to file annual and periodic reports with the SEC under the Exchange Act) is treated as a “real estate asset” for the asset tests, the interest income and gain from the sale of such debt instruments is not treated as qualifying income for the 75% gross income test unless the debt instrument is secured by real property or an interest in real property.
Second, in general, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of interest and dividends, gain from the sale or disposition of shares or securities, or any combination of these. Gross income from our sale of property that we hold primarily for sale to customers in the ordinary course of business is excluded from both the numerator and the denominator in both gross income tests. In addition, income and gain from “hedging transactions” (as defined in “— Hedging Transactions”) that we enter into to hedge indebtedness incurred or to be incurred to acquire or carry real estate assets and that are clearly and timely identified as such will be excluded from both the numerator and the denominator for purposes of the 75% and 95% gross income tests. In addition, certain foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests. See “— Foreign Currency Gain” below. Finally, gross income attributable to cancellation of indebtedness will be excluded from both the numerator and
denominator for purposes of both of the gross income tests. The following paragraphs discuss the specific application of the gross income tests to us.
Rents from Real Property. Rent that we receive from our real property will qualify as “rents from real property,” which is qualifying income for purposes of the 75% and 95% gross income tests, only if the following conditions are met:
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First, the rent must not be based, in whole or in part, on the income or profits of any person, but may be based on a fixed percentage or percentages of receipts or sales.
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Second, neither we nor a direct or indirect owner of 10% or more of our shares of beneficial interest may own, actually or constructively, 10% or more of a tenant from whom we receive rent, other than a TRS. If the tenant is a TRS and the property is a “qualified lodging facility,” such TRS may not directly or indirectly operate or manage such property. Instead, the property must be operated on behalf of the TRS by a person who qualifies as an “independent contractor” and who is, or is related to a person who is, actively engaged in the trade or business of operating lodging facilities for any person unrelated to us and the TRS. See “— Taxable REIT Subsidiaries.”
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Third, if the rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total rent received under the lease, then the rent attributable to personal property will qualify as rents from real property. However, if the 15% threshold is exceeded, the rent attributable to personal property will not qualify as rents from real property.
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Fourth, we generally must not operate or manage our real property or furnish or render services to our tenants, other than through an “independent contractor” who is adequately compensated and from whom we do not derive revenue. Furthermore, we may own up to 100% of the stock of a TRS that may provide customary and noncustomary services to our tenants without tainting our rental income from the leased properties. Moreover, we need not provide services through an “independent contractor” or TRS, but instead may provide services directly to our tenants, if the services are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not considered to be provided for the tenants’ convenience. In addition, we may provide a minimal amount of services not described in the prior sentence to the tenants of a property, other than through an independent contractor or a TRS, as long as our income from the services (valued at not less than 150% of our direct cost of performing such services) does not exceed 1% of our income from the related property. Furthermore, we may own up to 100% of the stock of a TRS which may provide customary and noncustomary services to our tenants without tainting our rental income for the related properties. See “— Taxable REIT Subsidiaries.”
Our TRS lessees lease from our operating partnership and its subsidiaries the land, buildings, improvements, furnishings and equipment comprising our hotel properties. In order for the rent paid under the leases to constitute “rents from real property,” the leases must be respected as true leases for federal income tax purposes and not treated as service contracts, joint ventures or some other type of arrangement. The determination of whether our leases are true leases depends on an analysis of all the surrounding facts and circumstances. In making such a determination, courts have considered a variety of factors, including the following:
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the intent of the parties;
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the form of the agreement;
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the degree of control over the property that is retained by the property owner (for example, whether the lessee has substantial control over the operation of the property or whether the lessee was required simply to use its best efforts to perform its obligations under the agreement); and
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the extent to which the property owner retains the risk of loss with respect to the property (for example, whether the lessee bears the risk of increases in operating expenses or the risk of damage to the property) or the potential for economic gain with respect to the property.
In addition, federal income tax law provides that a contract that purports to be a service contract or a partnership agreement is treated instead as a lease of property if the contract is properly treated as such,
taking into account all relevant factors. Since the determination of whether a service contract should be treated as a lease is inherently factual, the presence or absence of any single factor may not be dispositive in every case.
We believe that our leases are structured so that they qualify as true leases for federal income tax purposes. Our belief is based on the following with respect to each lease:
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our operating partnership and the lessees intend for their relationship to be that of a lessor and lessee, and such relationship is documented by a lease agreement;
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the lessee has the right to exclusive possession and use and quiet enjoyment of the hotels covered by the lease during the term of the lease;
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the lessee bears the cost of, and is responsible for, day-to-day maintenance and repair of the hotels other than the cost of certain capital expenditures, and dictates through hotel managers that are eligible independent contractors, who work for the lessee during the terms of the lease, how the hotels are operated and maintained;
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the lessee bears all of the costs and expenses of operating the hotels, including the cost of any inventory used in their operation, during the term of the lease, other than utilities, real estate and personal property taxes and the cost of certain furniture, fixtures and equipment, and certain capital expenditures;
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the lessee benefits from any savings and bears the burdens of any increases in the costs of operating the hotels during the term of the lease;
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in the event of damage or destruction to a hotel, the lessee will be at economic risk because it will bear the economic burden of the loss in income from operation of the hotels subject to the right, in certain circumstances, to terminate the lease if the lessor does not restore the hotel to its prior condition;
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the lessee generally indemnifies the lessor against all liabilities imposed on the lessor during the term of the lease by reason of (1) injury to persons or damage to property occurring at the hotels or (2) the lessee’s use, management, maintenance or repair of the hotels;
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the lessee is obligated to pay, at a minimum, substantial base rent for the period of use of the hotels under the lease;
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the lessee stands to incur substantial losses or reap substantial gains depending on how successfully it, through the hotel managers who work for the lessees during the terms of the leases, operates the hotels;
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each lease that we have entered into, at the time we entered into it (or at any time that any such lease is subsequently renewed or extended) enables the tenant to derive a meaningful profit, after expenses and taking into account the risks associated with the lease, from the operation of the hotels during the term of its leases; and
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upon termination of each lease, the applicable hotel is expected to have a substantial remaining useful life and substantial remaining fair market value.
We expect that the leases we enter into in the future with our TRS lessees will have similar features.
Investors should be aware that there are no controlling Treasury regulations, published rulings or judicial decisions involving leases with terms substantially the same as our leases that discuss whether such leases constitute true leases for federal income tax purposes. If our leases are characterized as service contracts or partnership agreements, rather than as true leases, or disregarded altogether for tax purposes, part or all of the payments that our operating partnership and its subsidiaries receive from the TRS lessees may not be considered rent or may not otherwise satisfy the various requirements for qualification as “rents from real property.” In that case, we likely would not be able to satisfy either the 75% or 95% gross income test and, as a result, would lose our REIT status unless we qualify for relief, as described below under “— Failure to Satisfy Gross Income Tests.”
As described above, in order for the rent that we receive to constitute “rents from real property,” several other requirements must be satisfied. One requirement is that percentage rent must not be based in whole or in part on the income or profits of any person. Percentage rent, however, will qualify as “rents from real property” if it is based on percentages of receipts or sales and the percentages:
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are fixed at the time the percentage leases are entered into;
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are not renegotiated during the term of the percentage leases in a manner that has the effect of basing percentage rent on income or profits; and
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conform with normal business practice.
More generally, percentage rent will not qualify as “rents from real property” if, considering the leases and all the surrounding circumstances, the arrangement does not conform with normal business practice, but is in reality used as a means of basing the percentage rent on income or profits.
We must not own, actually or constructively, 10% or more of the shares or the assets or net profits of any lessee (a “related party tenant”), other than a TRS. The constructive ownership rules generally provide that, if 10% or more in value of our shares of beneficial interest is owned, directly or indirectly, by or for any person, we are considered as owning the shares owned, directly or indirectly, by or for such person. We currently lease all of our hotels to TRS lessees and intend to lease to a TRS any hotels we acquire in the future. In addition, our declaration of trust prohibits transfers of our shares of beneficial interest that would cause us to own actually or constructively, 10% or more of the ownership interests in any non-TRS lessee. Based on the foregoing, we should never own, actually or constructively, 10% or more of any lessee other than a TRS. However, because the constructive ownership rules are broad and it is not possible to monitor continually direct and indirect transfers of our shares of beneficial interest, no absolute assurance can be given that such transfers or other events of which we have no knowledge will not cause us to own constructively 10% or more of a lessee (or a subtenant, in which case only rent attributable to the subtenant is disqualified) other than a TRS at some future date.
As described above, we may own up to 100% of the capital stock of one or more TRSs. A TRS is a fully taxable corporation that generally may engage in any business, including the provision of customary or noncustomary services to tenants of its parent REIT, except that a TRS may not directly or indirectly operate or manage any lodging facilities or health care facilities or provide rights to any brand name under which any lodging or health care facility is operated, unless such rights are provided to an “eligible independent contractor” to operate or manage a lodging or health care facility if such rights are held by the TRS as a franchisee, licensee, or in a similar capacity and such hotel is either owned by the TRS or leased to the TRS by its parent REIT. A TRS will not be considered to operate or manage a qualified lodging facility solely because the TRS directly or indirectly possesses a license, permit, or similar instrument enabling it to do so. Additionally, a TRS that employs individuals working at a qualified lodging facility located outside the United States will not be considered to operate or manage a qualified lodging facility located outside of the United States as long as an “eligible independent contractor” is responsible for the daily supervision and direction of such individuals on behalf of the TRS pursuant to a management contract or similar service contract. However, rent that we receive from a TRS with respect to any property will qualify as “rents from real property” as long as the property is a “qualified lodging facility” and such property is operated on behalf of the TRS by an “independent contractor” who is adequately compensated, who does not, directly or through its shareholders, own more than 35% of our shares, taking into account certain ownership attribution rules, and who is, or is related to a person who is, actively engaged in the trade or business of operating “qualified lodging facilities” for any person unrelated to us and the TRS lessee (an “eligible independent contractor”). A “qualified lodging facility” is a hotel, motel, or other establishment more than one-half of the dwelling units in which are used on a transient basis, unless wagering activities are conducted at or in connection with such facility by any person who is engaged in the business of accepting wagers and who is legally authorized to engage in such business at or in connection with such facility. A “qualified lodging facility” includes customary amenities and facilities operated as part of, or associated with, the lodging facility as long as such amenities and facilities are customary for other properties of a comparable size and class owned by other unrelated owners. See “— Taxable REIT Subsidiaries.”
We have formed Pebblebrook Hotel Lessee, Inc., a TRS whose wholly owned subsidiaries are the lessees of our wholly owned hotels. The hotels in our joint venture are leased to lessee entities in which we
own our interest through our TRS. Our TRS lessees engage independent third-party hotel managers that qualify as “eligible independent contractors” to operate the related hotels on behalf of such TRS lessees.
The rent attributable to the personal property leased in connection with the lease of a hotel must not be greater than 15% of the total rent received under the lease. The rent attributable to the personal property contained in a hotel is the amount that bears the same ratio to total rent for the taxable year as the average of the fair market values of the personal property at the beginning and at the end of the taxable year bears to the average of the aggregate fair market values of both the real and personal property contained in the hotel at the beginning and at the end of such taxable year (the “personal property ratio”). To comply with this limitation, a TRS lessee may acquire furnishings, equipment and other personal property. With respect to each hotel in which the TRS lessee does not own the personal property, we believe either that the personal property ratio is less than 15% or that any rent attributable to excess personal property does not jeopardize our ability to qualify as a REIT. There can be no assurance, however, that the IRS would not challenge our calculation of a personal property ratio, or that a court would not uphold such assertion. If such a challenge were successfully asserted, we could fail to satisfy the 75% or 95% gross income test and thus potentially lose our REIT status.
We cannot furnish or render noncustomary services to the tenants of our hotels, or manage or operate our hotels, other than through an independent contractor who is adequately compensated and from whom we do not derive or receive any income. Furthermore, our TRSs may provide customary and noncustomary services to our tenants without tainting our rental income from such properties. However, we need not provide services through an “independent contractor” or TRS, but instead may provide services directly to our tenants, if the services are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not considered to be provided for the tenants’ convenience. In addition, we may provide a minimal amount of “noncustomary” services to the tenants of a property, other than through an independent contractor or a TRS, as long as our income from the services does not exceed 1% of our income from the related property. We will not perform any services other than customary ones for our lessees, unless such services are provided through independent contractors or TRSs or would not jeopardize our tax status as a REIT.
If a portion of the rent that we receive from a hotel does not qualify as “rents from real property” because the rent attributable to personal property exceeds 15% of the total rent for a taxable year, the portion of the rent that is attributable to personal property will not be qualifying income for purposes of either the 75% or 95% gross income test. Thus, if such rent attributable to personal property, plus any other income that is nonqualifying income for purposes of the 95% gross income test, during a taxable year exceeds 5% of our gross income during the year, we would lose our REIT qualification. If, however, the rent from a particular hotel does not qualify as “rents from real property” because either (1) the percentage rent is considered based on the income or profits of the related lessee, (2) the lessee either is a related party tenant or fails to qualify for the exception to the related party tenant rule for qualifying TRSs or (3) we furnish noncustomary services to the tenants of the hotel, or manage or operate the hotel, other than through a qualifying independent contractor or a TRS, none of the rent from that hotel would qualify as “rents from real property.” In that case, we might lose our REIT qualification because we might be unable to satisfy either the 75% or 95% gross income test. In addition to the rent, the lessees will be required to pay certain additional charges. To the extent that such additional charges represent either (1) reimbursements of amounts that we are obligated to pay to third parties, such as a lessee’s proportionate share of a property’s operational or capital expenses, or (2) penalties for nonpayment or late payment of such amounts, such charges should qualify as “rents from real property.” However, to the extent that such charges do not qualify as “rents from real property,” they instead may be treated as interest that qualifies for the 95% gross income test, but not the 75% gross income test, or they may be treated as nonqualifying income for purposes of both gross income tests. We believe that we have structured our leases in a manner that will enable us to satisfy the REIT gross income tests.
Interest. The term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination of such amount depends in whole or in part on the income or profits of any person. However, interest generally includes the following:
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an amount that is based on a fixed percentage or percentages of receipts or sales; and
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an amount that is based on the income or profits of a debtor, as long as the debtor derives substantially all of its income from the real property securing the debt from leasing substantially all of its interest in the property, and only to the extent that the amounts received by the debtor would be qualifying “rents from real property” if received directly by a REIT.
If a loan contains a provision that entitles a REIT to a percentage of the borrower’s gain upon the sale of the real property securing the loan or a percentage of the appreciation in the property’s value as of a specific date, income attributable to that loan provision will be treated as gain from the sale of the property securing the loan, which generally is qualifying income for purposes of both gross income tests.
We may, on a select basis, purchase mortgage debt and mezzanine loans when we believe our investment will allow us to acquire ownership of the underlying property. Interest on debt secured by a mortgage on real property or on interests in real property, including, for this purpose, discount points, prepayment penalties, loan assumption fees, and late payment charges that are not compensation for services, generally is qualifying income for purposes of the 75% gross income test. However, except to the extent described below, if a loan is secured by real property and other property and the highest principal amount of a loan outstanding during a taxable year exceeds the fair market value of the real property securing the loan as of the date the REIT agreed to originate or acquire the loan or on the date the REIT modifies the loan (if the modification is treated as “significant” for federal income tax purposes), a portion of the interest income from such loan will not be qualifying income for purposes of the 75% gross income test, but will be qualifying income for purposes of the 95% gross income test. In the case of a loan that is secured by both real property and personal property, if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property securing the loan, then the personal property securing the loan will be treated as real property for purposes of determining whether the interest on such loan is qualifying income for purposes of the 75% gross income test. The portion of the interest income that will not be qualifying income for purposes of the 75% gross income test will be equal to the portion of the principal amount of the loan that is not secured by real property — that is, the amount by which the loan exceeds the value of the real estate that is security for the loan. IRS guidance provides that we do not need to redetermine the fair market value of the real property securing a loan in connection with a loan modification that is occasioned by a borrower default or made at a time when we reasonably believe that the modification to the loan will substantially reduce a significant risk of default on the original loan. In addition, in the case of a loan that is secured by both real property and personal property, if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property securing the loan, then the personal property securing the loan will be treated as real property for purposes of determining whether the interest on such loan is qualifying income for purposes of the 75% gross income test. To the extent we invest in any mortgage debt, we intend to do so in a manner that will enable us to continue to satisfy the gross income and asset tests.
Mezzanine loans are loans secured by equity interests in an entity that directly or indirectly owns real property, rather than by a direct mortgage of the real property. IRS Revenue Procedure 2003-65 provides a safe harbor pursuant to which a mezzanine loan, if it meets each of the requirements contained in the Revenue Procedure, will be treated by the IRS as a real estate asset for purposes of the REIT asset tests described below, and interest derived from it will be treated as qualifying mortgage interest for purposes of the 75% gross income test. Although the Revenue Procedure provides a safe harbor on which taxpayers may rely, it does not prescribe rules of substantive tax law. Moreover, we anticipate that the mezzanine loans we will acquire typically may not meet all of the requirements for reliance on this safe harbor. To the extent we invest in any mezzanine loans, we intend to do so in a manner that will enable us to continue to satisfy the gross income and asset tests.
Dividends. Our share of any dividends received from any corporation (including any TRS, but excluding any REIT) in which we own an equity interest will qualify for purposes of the 95% gross income test but not for purposes of the 75% gross income test. Our share of any dividends received from any other REIT in which we own an equity interest, including our subsidiary REITs, will be qualifying income for purposes of both gross income tests.
Prohibited Transactions. A REIT will incur a 100% tax on the net income (including foreign currency gain) derived from any sale or other disposition of property, other than foreclosure property, that the REIT
holds primarily for sale to customers in the ordinary course of a trade or business. We believe that none of our assets will be held primarily for sale to customers and that a sale of any of our assets will not be in the ordinary course of our business. Whether a REIT holds an asset “primarily for sale to customers in the ordinary course of a trade or business” depends, however, on the facts and circumstances in effect from time to time, including those related to a particular asset. A safe harbor to the characterization of the sale of property by a REIT as a prohibited transaction and the 100% prohibited transaction tax is available if the following requirements are met:
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the REIT has held the property for not less than two years;
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the aggregate expenditures made by the REIT, or any partner of the REIT, during the two-year period preceding the date of the sale that are includable in the basis of the property do not exceed 30% of the selling price of the property;
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either (1) during the year in question, the REIT did not make more than seven sales of property other than foreclosure property or sales to which Section 1031 or 1033 of the Code applies, (2) the aggregate adjusted bases of all such properties sold by the REIT during the year did not exceed 10% of the aggregate adjusted bases of all of the assets of the REIT at the beginning of the year, (3) the aggregate fair market value of all such properties sold by the REIT during the year did not exceed 10% of the aggregate fair market value of all of the assets of the REIT at the beginning of the year, (4) (a) the aggregate adjusted bases of all such properties sold by the REIT during the year did not exceed 20% of the aggregate adjusted bases of all of the assets of the REIT at the beginning of the year and (b) the average annual percentage of properties sold by the REIT compared to all the REIT’s properties (measured by adjusted bases) taking into account the current and two prior years did not exceed 10% or (5) (a) the aggregate fair market value of all such properties sold by the REIT during the year did not exceed 20% of the aggregate fair market value of all of the assets of the REIT at the beginning of the year and (b) the average annual percentage of properties sold by the REIT compared to all the REIT’s properties (measured by fair market value) taking into account the current and two prior years did not exceed 10%;
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in the case of property not acquired through foreclosure or lease termination, the REIT has held the property for at least two years for the production of rental income; and
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if the REIT has made more than seven sales of non-foreclosure property during the taxable year, substantially all of the marketing and development expenditures with respect to the property were made through an independent contractor from whom the REIT derives no income or a TRS.
We have selectively disposed of certain of our hotel properties in the past and may make additional dispositions in the future. We will attempt to comply with the terms of the safe-harbor provision in the federal income tax laws prescribing when an asset sale will not be characterized as a prohibited transaction. We cannot assure you, however, that we can comply with the safe-harbor provision or that we will avoid owning property that may be characterized as property that we hold “primarily for sale to customers in the ordinary course of a trade or business.” The 100% tax will not apply to gains from the sale of property that is held through a TRS or other taxable corporation, although such income will be taxed to the corporation at regular corporate income tax rates.
Foreclosure Property. We will be subject to tax at the maximum corporate rate on any net income from foreclosure property, which includes certain foreign currency gains and related deductions, other than income that otherwise would be qualifying income for purposes of the 75% gross income test, less expenses directly connected with the production of that income. However, gross income from foreclosure property will qualify under the 75% and 95% gross income tests. Foreclosure property is any real property, including interests in real property, and any personal property incident to such real property:
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that is acquired by a REIT as the result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or default was imminent on a lease of such property or on indebtedness that such property secured;
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for which the related loan was acquired by the REIT at a time when the default was not imminent or anticipated; and
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for which the REIT makes a proper election to treat the property as foreclosure property.
A REIT will not be considered to have foreclosed on a property where the REIT takes control of the property as a mortgagee-in-possession and cannot receive any profit or sustain any loss except as a creditor of the mortgagor. Property generally ceases to be foreclosure property at the end of the third taxable year following the taxable year in which the REIT acquired the property, or longer if an extension is granted by the Secretary of the Treasury. However, this grace period terminates and foreclosure property ceases to be foreclosure property on the first day:
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on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test, or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after such day that will give rise to income that does not qualify for purposes of the 75% gross income test;
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on which any construction takes place on the property, other than completion of a building or any other improvement, where more than 10% of the construction was completed before default became imminent; or
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which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income or a TRS.
Hedging Transactions. From time to time, we or our operating partnership have entered and may in the future enter into hedging transactions with respect to one or more of our assets or liabilities. Our hedging activities may include entering into interest rate swaps, caps, and floors, options to purchase such items, and futures and forward contracts. Income and gain from “hedging transactions” will be excluded from gross income for purposes of both the 75% and 95% gross income tests provided we satisfy the identification requirements discussed below. A “hedging transaction” means any of (1) any transaction entered into in the normal course of our or our operating partnership’s trade or business primarily to manage the risk of interest rate changes, price changes, or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets, (2) any transaction entered into primarily to manage the risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% gross income test (or any property which generates such income or gain) or (3) any transaction entered into to “offset” a transaction described in (1) or (2) if a portion of the hedged indebtedness is extinguished or the related property disposed of. We are required to clearly identify any such hedging transaction before the close of the day on which it was acquired or entered into and to satisfy other identification requirements. We believe we have structured any hedging transactions in a manner that does not jeopardize our qualification as a REIT.
Foreign Currency Gain. Certain foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests. “Real estate foreign exchange gain” will be excluded from gross income for purposes of the 75% and 95% gross income tests. Real estate foreign exchange gain generally includes foreign currency gain attributable to any item of income or gain that is qualifying income for purposes of the 75% gross income test, foreign currency gain attributable to the acquisition or ownership of (or becoming or being the obligor under) obligations secured by mortgages on real property or on interests in real property and certain foreign currency gain attributable to certain “qualified business units” of a REIT. “Passive foreign exchange gain” will be excluded from gross income for purposes of the 95% gross income test. Passive foreign exchange gain generally includes real estate foreign exchange gain as described above, and also includes foreign currency gain attributable to any item of income or gain that is qualifying income for purposes of the 95% gross income test and foreign currency gain attributable to the acquisition or ownership of (or becoming or being the obligor under) obligations. These exclusions for real estate foreign exchange gain and passive foreign exchange gain do not apply to any certain foreign currency gain derived from dealing, or engaging in substantial and regular trading, in securities. Such gain is treated as nonqualifying income for purposes of both the 75% and 95% gross income tests.
Failure to Satisfy Gross Income Tests. If we fail to satisfy one or both of the gross income tests for any taxable year, we nevertheless may qualify as a REIT for that year if we qualify for relief under certain provisions of the federal income tax laws. Those relief provisions are available if:
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our failure to meet those tests is due to reasonable cause and not to willful neglect; and
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following such failure for any taxable year, we file a schedule of the sources of our income in accordance with regulations prescribed by the Secretary of the Treasury.
We cannot predict, however, whether in all circumstances we would qualify for the relief provisions. In addition, as discussed above in “— Taxation of Our Company,” even if the relief provisions apply, we would incur a 100% tax on the gross income attributable to the greater of the amount by which we fail the 75% gross income test or the 95% gross income test multiplied, in either case, by a fraction intended to reflect our profitability.
Asset Tests
To maintain our qualification as a REIT, we also must satisfy the following asset tests at the end of each quarter of each taxable year.
First, at least 75% of the value of our total assets must consist of:
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cash or cash items, including certain receivables, money market funds and, in certain circumstances, foreign currencies;
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government securities;
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interests in real property, including leaseholds, options to acquire real property and leaseholds, and personal property to the extent such personal property is leased in connection with real property and rents attributable to such personal property are treated as “rents from real property”;
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interests in mortgage loans secured by real property or real property and personal property if the fair market value of such personal property does not exceed 15% of the total fair market value of such property;
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stock in other REITs and debt instruments issued by “publicly offered REITs”; and
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investments in stock or debt instruments during the one-year period following our receipt of new capital that we raise through equity offerings or public offerings of debt with at least a five-year term.
Second, of our investments not included in the 75% asset class, the value of our interest in any one issuer’s securities may not exceed 5% of the value of our total assets (the “5% asset test”).
Third, of our investments not included in the 75% asset class, we may not own more than 10% of the voting power of any one issuer’s outstanding securities or 10% of the value of any one issuer’s outstanding securities(the “10% vote test” or the “10% value test,” respectively).
Fourth, no more than 20% of the value of our total assets may consist of the securities of one or more TRSs.
Fifth, no more than 25% of the value of our total assets may consist of the securities of TRSs and other non-TRS taxable subsidiaries and other assets that are not qualifying assets for purposes of the 75% asset test (the “25% securities test”).
Sixth, no more than 25% of the value of our total assets may consist of debt instruments issued by “publicly offered REITs” to the extent such debt instruments are not secured by real property or interests in real property.
For purposes of the 5% asset test, the 10% vote test and the 10% value test, the term “securities” does not include shares in another REIT, debt of “publicly offered REITs,” equity or debt securities of a qualified REIT subsidiary or TRS, mortgage loans that constitute real estate assets, or equity interests in a partnership. The term “securities,” however, generally includes debt securities issued by a partnership or another REIT, other than a “publicly offered REIT,” except that for purposes of the 10% value test, the term “securities” does not include:
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“straight debt” securities, which is defined as a written unconditional promise to pay on demand or on a specified date a sum certain in money if (1) the debt is not convertible, directly or indirectly, into
equity, and (2) the interest rate and interest payment dates are not contingent on profits, the borrower’s discretion, or similar factors. “Straight debt” securities do not include any securities issued by a partnership or a corporation in which we or any controlled TRS (i.e., a TRS in which we own directly or indirectly more than 50% of the voting power or value of the stock) hold non-”straight debt” securities that have an aggregate value of more than 1% of the issuer’s outstanding securities. However, “straight debt” securities include debt subject to the following contingencies:
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a contingency relating to the time of payment of interest or principal, as long as either (1) there is no change to the effective yield of the debt obligation, other than a change to the annual yield that does not exceed the greater of 0.25% or 5% of the annual yield, or (2) neither the aggregate issue price nor the aggregate face amount of the issuer’s debt obligations held by us exceeds $1 million and no more than 12 months of unaccrued interest on the debt obligations can be required to be prepaid; and
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a contingency relating to the time or amount of payment upon a default or prepayment of a debt obligation, as long as the contingency is consistent with customary commercial practice;
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any loan to an individual or an estate;
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any “Section 467 rental agreement,” other than an agreement with a related party tenant;
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any obligation to pay “rents from real property”;
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certain securities issued by governmental entities;
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any security issued by a REIT;
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any debt instrument issued by an entity treated as a partnership for federal income tax purposes in which we are a partner to the extent of our proportionate interest in the equity and debt securities of the partnership; and
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any debt instrument issued by an entity treated as a partnership for federal income tax purposes not described in the preceding bullet points if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test described above in “— Gross Income Tests.”
For purposes of the 10% value test, our proportionate share of the assets of a partnership is our proportionate interest in any securities issued by the partnership, without regard to the securities described in the last two bullet points above.
As described above, we may, on a select basis, invest in mortgage debt and mezzanine loans when we believe our investment will allow us to acquire ownership of the underlying property. Although we expect that any investments in mezzanine loans generally will be treated as real estate assets, we anticipate that the mezzanine loans in which we would invest may not meet all the requirements of the safe harbor in IRS Revenue Procedure 2003-65. Thus, no assurance can be provided that the IRS will not challenge our treatment of mezzanine loans as real estate assets. Additionally, we expect that any investments in mortgage loans generally will be treated as real estate assets. However, for purposes of the asset tests, if the outstanding principal balance of a mortgage loan during a taxable year exceeds the fair market value of the real property securing the loan, a portion of such loan likely will not be a qualifying real estate asset. IRS Revenue Procedure 2014-51 provides a safe harbor under which the IRS has stated that it will not challenge a REIT’s treatment of a loan as being, in part, a real estate asset for purposes of the 75% asset test if the REIT treats the loan as being a qualifying real estate asset in an amount equal to the lesser of (1) the fair market value of the loan on the relevant quarterly REIT asset testing date or (2) the greater of (a) the fair market value of the real property securing the loan on the relevant quarterly REIT asset testing date or (b) the fair market value of the real property securing the loan on the date the REIT committed to originate or acquire the loan. It is unclear how the safe harbor in Revenue Procedure 2014-51 is affected by the recent legislative changes regarding the treatment of loans secured by both real property and personal property where the fair market value of the personal property does not exceed 15% of the sum of the fair market values of the real property and personal property securing the loan. We intend to invest in mortgage debt and mezzanine loans in a manner that will enable us to continue to satisfy the asset and gross income test requirements.
We intend to continue to monitor the status of our assets for purposes of the various asset tests and will manage our portfolio in order to comply at all times with such tests. However, there is no assurance that we will not inadvertently fail to comply with such tests. If we fail to satisfy the asset tests at the end of a calendar quarter, we will not lose our REIT qualification if:
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we satisfied the asset tests at the end of the preceding calendar quarter; and
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the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition of one or more non-qualifying assets.
If we did not satisfy the condition described in the second item, above, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the calendar quarter in which it arose.
If we violate the 5% asset test, the 10% vote or the 10% value test described above, we will not lose our REIT qualification if (1) the failure is de minimis (up to the lesser of 1% of our assets or $10 million) and (2) we dispose of assets causing the failure or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify such failure. In the event of a failure of any of the asset tests (other than de minimis failures described in the preceding sentence), as long as the failure was due to reasonable cause and not to willful neglect, we will not lose our REIT status if we (1) dispose of the assets causing the failure or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify the failure, (2) we file a description of each asset causing the failure with the IRS and (3) pay a tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income from the nonqualifying assets during the period in which we failed to satisfy the asset tests.
We believe that the assets that we hold satisfy the foregoing asset test requirements. However, we have not in all cases obtained, and we may not in the future obtain, independent appraisals to support our conclusions as to the value of our assets and securities, or the real estate collateral for the mortgage or mezzanine loans that support our investments. Moreover, the values of some assets may not be susceptible to a precise determination. As a result, there can be no assurance that the IRS will not contend that our ownership of securities and other assets violates one or more of the asset tests applicable to REITs.
Distribution Requirements
Each taxable year, we must distribute dividends, other than capital gain dividends and deemed distributions of retained capital gain, to our shareholders in an aggregate amount at least equal to:
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the sum of:
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90% of our “REIT taxable income,” computed without regard to the dividends paid deduction and our net capital gain or loss; and
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90% of our after-tax net income, if any, from foreclosure property; minus
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the excess of the sum of certain items of non-cash income over a specified percentage of our “REIT taxable income.”
We must pay such distributions in the taxable year to which they relate, or in the following taxable year if either (a) we declare the distribution before we timely file our federal income tax return for the year and pay the distribution on or before the first regular dividend payment date after such declaration or (b) we declare the distribution in October, November or December of the taxable year, payable to shareholders of record on a specified day in any such month, and we actually pay the dividend before the end of January of the following year. The distributions under clause (a) are taxable to the shareholders in the year in which paid, and the distributions in clause (b) are treated as paid on December 31st of the prior taxable year. In both instances, these distributions relate to our prior taxable year for purposes of the 90% distribution requirement to the extent of our earnings and profits for such prior taxable year.
If we cease to be a “publicly offered REIT”, then in order for our distributions to be counted as satisfying the annual distribution requirement for REITs and to provide us with the REIT-level tax deduction, such distributions must not have been “preferential dividends.” A dividend is not a preferential
dividend if that distribution is (i) pro rata among all outstanding shares within a particular class and (ii) in accordance with the preferences among different classes of shares as set forth in our declaration of trust.
We will pay federal income tax on taxable income, including net capital gain, that we do not distribute to shareholders. Furthermore, if we fail to distribute during a calendar year, or by the end of January following the calendar year in the case of distributions with declaration and record dates falling in the last three months of the calendar year, at least the sum of:
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85% of our REIT ordinary income for such year;
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95% of our REIT capital gain income for such year; and
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any undistributed taxable income from prior periods,
we will incur a 4% nondeductible excise tax on the excess of such required distribution over the amounts we actually distribute.
We may elect to retain and pay income tax on the net long-term capital gain we receive in a taxable year. If we so elect, we will be treated as having distributed any such retained amount for purposes of the 4% nondeductible excise tax described above. We intend to make timely distributions sufficient to satisfy the annual distribution requirements and to avoid corporate income tax and the 4% nondeductible excise tax.
It is possible that, from time to time, we may experience timing differences between the actual receipt of income and actual payment of deductible expenses and the inclusion of that income and deduction of such expenses in arriving at our REIT taxable income. For example, we may not deduct recognized net capital losses from our “REIT taxable income.” Further, it is possible that, from time to time, we may be allocated a share of net capital gain attributable to the sale of depreciated property that exceeds our allocable share of cash attributable to that sale. As a result of the foregoing, we may have less cash than is necessary to distribute taxable income sufficient to avoid corporate income tax and the excise tax imposed on certain undistributed income or even to meet the 90% distribution requirement. In such a situation, we may need to borrow funds or, if possible, pay taxable dividends of our shares of beneficial interest or debt securities.
We may satisfy the 90% distribution test with taxable distributions of our shares or debt securities. The IRS has issued a revenue procedure authorizing publicly offered REITs to treat certain distributions that are paid partly in cash and partly in shares as dividends that would satisfy the REIT annual distribution requirement and qualify for the dividends paid deduction for federal income tax purposes. Under IRS Revenue Procedure 2017-45, as a publicly offered REIT, as long as at least 20% of the total dividend is available in cash and certain other requirements are satisfied, the IRS will treat the shares distribution as a dividend (to the extent applicable rules treat such distribution as being made out of our earnings and profits). We currently do not intend to pay taxable dividends in cash and shares of beneficial interest.
Under certain circumstances, we may be able to correct a failure to meet the distribution requirement for a year by paying “deficiency dividends” to our shareholders in a later year. We may include such deficiency dividends in our deduction for dividends paid for the earlier year. Although we may be able to avoid income tax on amounts distributed as deficiency dividends, we will be required to pay interest to the IRS based upon the amount of any deduction we take for deficiency dividends.
Recordkeeping Requirements
We must maintain certain records in order to maintain our qualification as a REIT. In addition, to avoid a monetary penalty, we must request on an annual basis information from our shareholders designed to disclose the actual ownership of our outstanding shares of beneficial interest. We intend to comply with these requirements.
Failure to Qualify
If we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests (for which the cure provisions are described above), we could avoid disqualification if our failure is due to reasonable cause and not to willful neglect and we pay a penalty of $50,000 for each such
failure. In addition, there are relief provisions for a failure of the gross income tests and asset tests, as described in “— Gross Income Tests” and “— Asset Tests.”
If we fail to qualify as a REIT in any taxable year, and no relief provision applies, we would be subject to federal income tax on our taxable income at regular corporate rates. In calculating our taxable income in a year in which we fail to qualify as a REIT, we would not be able to deduct amounts paid out to shareholders. In fact, we would not be required to distribute any amounts to shareholders in that year. In such event, to the extent of our current and accumulated earnings and profits, distributions to shareholders generally would be taxable as ordinary dividend income, whether or not attributable to capital gains. Subject to certain limitations of the federal income tax laws, corporate shareholders might be eligible for the dividends received deduction and shareholders taxed at individual rates may be eligible for a reduced federal income tax rate on such dividends. Unless we qualified for relief under specific statutory provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. We cannot predict whether in all circumstances we would qualify for such statutory relief.
Taxation of Taxable U.S. Shareholders
As used herein, the term “U.S. shareholder” means a beneficial owner of our shares of beneficial interest that for federal income tax purposes is:
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a citizen or resident of the United States;
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a corporation (including an entity treated as a corporation for federal income tax purposes) created or organized in or under the laws of the United States, any of its states or the District of Columbia;
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an estate whose income is subject to federal income taxation regardless of its source; or
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any trust if (1) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person.
If a partnership, entity or arrangement treated as a partnership for federal income tax purposes holds our shares, the federal income tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. If you are a partner in a partnership holding our shares, you are urged to consult your tax advisor regarding the consequences of the ownership and disposition of our shares by the partnership.
Taxation of U.S. Shareholders on Distributions on Our Shares
As long as we qualify as a REIT, a taxable U.S. shareholder must generally take into account as ordinary income distributions made out of our current or accumulated earnings and profits that we do not designate as capital gain dividends or retained long-term capital gain. For purposes of determining whether a distribution is made out of our current or accumulated earnings and profits, our earnings and profits will be allocated first to our preferred share dividends and then to our common share dividends. A U.S. shareholder will not qualify for the dividends received deduction generally available to corporations.
Under the Tax Cuts and Jobs Act (“TCJA”), for taxable years beginning before January 1, 2026, individuals, trusts and estates may deduct up to 20% of certain pass-through income, including ordinary REIT dividends that are not “capital gain dividends” or “qualified dividend income,” subject to complex limitations.
Dividends paid to a U.S. shareholder generally will not qualify for the preferential tax rate for “qualified dividend income.” Qualified dividend income generally includes dividends paid to U.S. shareholders taxed at individual rates by domestic C corporations and certain qualified foreign corporations. Because we are generally not subject to federal income tax on the portion of our REIT taxable income distributed to our shareholders (see “— Taxation of Our Company” above), our dividends generally will not be eligible for the preferential tax rate on qualified dividend income. As a result, our ordinary REIT dividends generally will be taxed at the ordinary income tax rates for individuals. However, the preferential tax rate for qualified dividend income will apply to our ordinary REIT dividends (1) attributable to dividends received by us
from non-REIT corporations, such as our TRS, and (2) to the extent attributable to income upon which we have paid corporate income tax (e.g., to the extent that we distribute less than 100% of our taxable income). In general, to qualify for the reduced tax rate on qualified dividend income, a shareholder must hold our shares for more than 60 days during the 121-day period beginning on the date that is 60 days before the date on which our shares becomes ex-dividend.
A U.S. shareholder generally will take into account as long-term capital gain any distributions that we designate as capital gain dividends without regard to the period for which the U.S. shareholder has held our shares. We generally will designate our capital gain dividends as either from the sale or exchange of “Section 1250,” property or depreciable real property, or the distribution from the sale or exchange of all other capital assets. See “— Capital Gains and Losses.” A corporate U.S. shareholder, however, may be required to treat a portion of certain capital gain dividends as ordinary income.
We may elect to retain and pay income tax on the net long-term capital gain that we receive in a taxable year. In that case, to the extent that we designate such amount in a timely notice to such shareholder, a U.S. shareholder would be taxed on its proportionate share of our undistributed long-term capital gain. The U.S. shareholder would receive a credit for its proportionate share of the tax we paid. The U.S. shareholder would increase the basis in its shares of beneficial interest by the amount of its proportionate share of our undistributed long-term capital gain, minus its share of the tax we paid.
A U.S. shareholder will not incur tax on a distribution in excess of our current and accumulated earnings and profits if the distribution does not exceed the adjusted basis of the U.S. shareholder’s shares. Instead, the distribution will reduce the adjusted basis of such shares of beneficial interest. A U.S. shareholder will recognize a distribution in excess of both our current and accumulated earnings and profits and the U.S. shareholder’s adjusted tax basis in his or her shares of beneficial interest as long-term capital gain, or short-term capital gain if the shares of beneficial interest have been held for one year or less, assuming the shares of beneficial interest are a capital asset in the hands of the U.S. shareholder. In addition, if we declare a distribution in October, November or December of any year that is payable to a U.S. shareholder of record on a specified date in any such month, such distribution shall be treated as both paid by us and received by the U.S. shareholder on December 31 of such year, provided that we actually pay the distribution during January of the following calendar year.
Shareholders may not include in their individual income tax returns any of our net operating losses or capital losses. Instead, these losses generally are carried over by us for potential offset against our future income. Taxable distributions from us and gain from the disposition of our shares will not be treated as passive activity income and, therefore, shareholders generally will not be able to apply any “passive activity losses,” such as losses from certain types of limited partnerships in which the shareholder is a limited partner, against such income. In addition, taxable distributions from us and gain from the disposition of our shares generally will be treated as investment income for purposes of the investment interest limitations. We will notify shareholders after the close of our taxable year as to the portions of the distributions attributable to that year that constitute ordinary income, return of capital and capital gain.
Taxation of U.S. Shareholders on the Disposition of Our Shares
A U.S. shareholder who is not a dealer in securities must generally treat any gain or loss realized upon a taxable disposition of our shares as long-term capital gain or loss if the U.S. shareholder has held the shares for more than one year and otherwise as short-term capital gain or loss. In general, a U.S. shareholder will realize gain or loss in an amount equal to the difference between the sum of the fair market value of any property and the amount of cash received in such disposition and the U.S. shareholder’s adjusted tax basis. A shareholder’s adjusted tax basis generally will equal the U.S. shareholder’s acquisition cost, increased by the excess of net capital gains deemed distributed to the U.S. shareholder (discussed above) less tax deemed paid on such gains and reduced by any returns of capital. However, a U.S. shareholder must treat any loss upon a sale or exchange of shares held by such shareholder for six months or less as a long-term capital loss to the extent of capital gain dividends and any other actual or deemed distributions from us that such U.S. shareholder treats as long-term capital gain. All or a portion of any loss that a U.S. shareholder realizes upon a taxable disposition of our shares may be disallowed if the U.S. shareholder purchases other shares within 30 days before or after the disposition.
Taxation of U.S. Shareholders on a Conversion of Preferred Shares
Except as provided below, (1) a shareholder generally will not recognize gain or loss upon the conversion of preferred shares into our common shares, and (2) a shareholder’s basis and holding period in our common shares received upon conversion generally will be the same as those of the converted preferred shares (but the basis will be reduced by the portion of adjusted tax basis allocated to any fractional share exchanged for cash). Any of our common shares received in a conversion that are attributable to accumulated and unpaid dividends on the converted preferred shares will be treated as a distribution that is potentially taxable as a dividend. Cash received upon conversion in lieu of a fractional share generally will be treated as a payment in a taxable exchange for such fractional share, and gain or loss will be recognized on the receipt of cash in an amount equal to the difference between the amount of cash received and the adjusted tax basis allocable to the fractional share deemed exchanged. This gain or loss will be long-term capital gain or loss if the U.S. shareholder has held the preferred shares for more than one year at the time of conversion. Shareholders are urged to consult with their tax advisors regarding the federal income tax consequences of any transaction by which such holder exchanges shares received on a conversion of preferred shares for cash or other property.
Taxation of U.S. Shareholders on a Redemption of Preferred Shares
A redemption of our preferred shares will be treated under Section 302 of the Code as a distribution that is taxable as dividend income (to the extent of our current or accumulated earnings and profits), unless the redemption satisfies certain tests set forth in Section 302(b) of the Code enabling the redemption to be treated as a sale of the preferred shares (in which case the redemption will be treated in the same manner as a sale described above in “— Taxation of U.S. Shareholders on the Disposition of Our Shares”). The redemption will satisfy such tests if it (1) is “substantially disproportionate” with respect to the U.S. shareholder’s interest in our shares, (2) results in a “complete termination” of the U.S. shareholder’s interest in all of our classes of shares, or (3) is “not essentially equivalent to a dividend” with respect to the shareholder, all within the meaning of Section 302(b) of the Code. In determining whether any of these tests have been met, shares considered to be owned by the holder by reason of certain constructive ownership rules set forth in the Code, as well as shares actually owned, generally must be taken into account. Because the determination as to whether any of the three alternative tests of Section 302(b) of the Code described above will be satisfied with respect to any particular U.S. shareholder of the preferred shares depends upon the facts and circumstances at the time that the determination must be made, prospective investors are urged to consult their tax advisors to determine such tax treatment. If a redemption of our preferred shares does not meet any of the three tests described above, the redemption proceeds will be treated as a taxable dividend, as described above “— Taxation of Taxable U.S. Shareholders.” In that case, a U.S. shareholder’s adjusted tax basis in the redeemed preferred shares will be transferred to such U.S. shareholder’s remaining shareholdings in us. If the U.S. shareholder does not retain any of our shares, such basis could be transferred to a related person that holds our shares or it may be lost.
Capital Gains and Losses
A taxpayer generally must hold a capital asset for more than one year for gain or loss derived from its sale or exchange to be treated as long-term capital gain or loss, which generally entitles the taxpayer to a preferential rate on such gain. The tax rate on capital gain from the sale or exchange of “Section 1250 property,” or depreciable real property, applies to the lesser of the total amount of the gain or the accumulated depreciation on the “Section 1250 property.”
With respect to distributions that we designate as capital gain dividends and any retained capital gain that we are deemed to distribute, we generally may designate whether such a distribution is from the sale of “Section 1250 property” or of other capital assets in order to determine which individual tax rate applies. The tax rate differential between capital gain and ordinary income for those taxpayers may be significant. In addition, the characterization of income as capital gain or ordinary income may affect the deductibility of capital losses. A non-corporate taxpayer may deduct capital losses not offset by capital gains against its ordinary income only up to a maximum annual amount. A non-corporate taxpayer may carry forward unused capital losses indefinitely. A corporate taxpayer must pay tax on its net capital gain at ordinary
corporate rates. A corporate taxpayer may deduct capital losses only to the extent of capital gains, with unused losses being carried back three years and forward five years.
FATCA Withholding
Under the Foreign Account Tax Compliance Act (“FATCA”), a U.S. withholding tax will be imposed on dividends paid to certain U.S. shareholders who own our shares of beneficial interest through foreign accounts or foreign intermediaries if certain disclosure requirements related to U.S. accounts or ownership are not satisfied. We will not pay any additional amounts in respect of any amounts withheld.
Additional Medicare Tax
Certain U.S. shareholders, including individuals, estates and trusts, will be subject to an additional tax, which, for individuals, applies to the lesser of (i) “net investment income” or (ii) the excess of “modified adjusted gross income” over a certain threshold amount. “Net investment income” generally equals the taxpayer’s gross investment income reduced by the deductions that are allocable to such income. Investment income generally includes passive income such as interest, dividends, annuities, royalties, rents and capital gains. It is unclear whether the deduction that individuals may take with respect to ordinary dividends received from us is available to reduce the taxpayer’s gross investment income for these purposes.
Taxation of Tax-Exempt Shareholders
Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts, generally are exempt from federal income taxation. However, they are subject to taxation on their unrelated business taxable income (“UBTI”). Although many investments in real estate generate UBTI, the IRS has issued a ruling that dividend distributions from a REIT to an exempt employee pension trust do not constitute UBTI so long as the exempt employee pension trust does not otherwise use the shares of beneficial interest in the REIT in an unrelated trade or business of the pension trust. Based on that ruling, amounts that we distribute to tax-exempt shareholders generally should not constitute UBTI. However, if a tax-exempt shareholder were to finance (or be deemed to finance) its acquisition of our shares with debt, a portion of the income that it receives from us would constitute UBTI pursuant to the “debt-financed property” rules. Moreover, social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans that are exempt from taxation under special provisions of the federal income tax laws are subject to different UBTI rules, which generally will require them to characterize distributions that they receive from us as UBTI. Finally, in certain circumstances, a qualified employee pension or profit sharing trust that owns more than 10% of our shares of beneficial interest must treat a percentage of the dividends that it receives from us as UBTI. Such percentage is equal to the gross income we derive from an unrelated trade or business, determined as if we were a pension trust, divided by our total gross income for the year in which we pay the dividends. That rule applies to a pension trust holding more than 10% of our shares only if:
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the percentage of our dividends that the tax-exempt trust must treat as UBTI is at least 5%;
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we qualify as a REIT by reason of the modification of the rule requiring that no more than 50% of our shares be owned by five or fewer individuals that allows the beneficiaries of the pension trust to be treated as holding our shares in proportion to their actuarial interests in the pension trust; and
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either:
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one pension trust owns more than 25% of the value of our shares of beneficial interest; or
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a group of pension trusts individually holding more than 10% of the value of our shares collectively owns more than 50% of the value of our shares.
Taxation of Non-U.S. Shareholders
The term “non-U.S. shareholder” means a beneficial owner of our shares that is not a U.S. shareholder or a partnership (or entity treated as a partnership for federal income tax purposes). The rules governing federal income taxation of nonresident alien individuals, foreign corporations, foreign partnerships, and other foreign shareholders are complex. This section is only a summary of such rules. We urge non-U.S.
shareholders to consult their tax advisors to determine the impact of federal, state, and local income tax laws on the purchase, ownership and sale of our shares, including any reporting requirements.
Taxation of Non-U.S. Shareholders on Distributions on Our Shares
A non-U.S. shareholder that receives a distribution that is not attributable to gain from our sale or exchange of a United States real property interest (“USPRI”), as defined below, and that we do not designate as a capital gain dividend or retained capital gain will recognize ordinary income to the extent that we pay such distribution out of our current or accumulated earnings and profits. A withholding tax on the gross amount of the distribution ordinarily will apply to such distribution unless an applicable tax treaty reduces or eliminates the tax. However, if a distribution is treated as effectively connected with the non-U.S. shareholder’s conduct of a U.S. trade or business, the non-U.S. shareholder generally will be subject to federal income tax on the distribution at graduated rates, in the same manner as U.S. shareholders are taxed with respect to such distribution, and a non-U.S. shareholder that is a corporation also may be subject to the branch profits tax with respect to that distribution. Except with respect to certain distributions attributable to the sale of USRPIs described below, we plan to withhold U.S. income tax at the applicable rate on the gross amount of any such distribution paid to a non-U.S. shareholder unless either:
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a lower treaty rate applies and the non-U.S. shareholder files an IRS Form W-8BEN or W-8BEN-E evidencing eligibility for that reduced rate with us; or
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the non-U.S. shareholder files an IRS Form W-8ECI with us claiming that the distribution is effectively connected income.
A non-U.S. shareholder will not incur tax on a distribution in excess of our current and accumulated earnings and profits if the excess portion of such distribution does not exceed the adjusted basis of its shares. Instead, the excess portion of such distribution will reduce the adjusted basis of such shares. A non-U.S. shareholder will be subject to tax to the extent a distribution exceeds both our current and accumulated earnings and profits and the adjusted basis of its shares, if the non-U.S. shareholder otherwise would be subject to tax on gain from the sale or disposition of its shares, as described below. Because we generally cannot determine at the time we make a distribution whether the distribution will exceed our current and accumulated earnings and profits, we normally will withhold tax on the entire amount of any distribution at the same rate as we would withhold on a dividend. However, a non-U.S. shareholder may claim a refund of amounts that we withhold if we later determine that a distribution in fact exceeded our current and accumulated earnings and profits. In addition, because we cannot generally determine whether a non-U.S. shareholder is subject to tax on gain from the sale or disposition of our shares, we may withhold on any distribution that exceeds our current and accumulated earnings and profits.
For any year in which we qualify as a REIT, a non-U.S. shareholder will incur tax on distributions that are attributable to gain from our sale or exchange of a USRPI under the Foreign Investment in Real Property Act of 1980 (“FIRPTA”). A USRPI includes certain interests in real property and stock in corporations at least 50% of whose assets consist of USRPIs. Under FIRPTA, a non-U.S. shareholder is taxed on distributions attributable to gain from sales of USRPIs as if such gain were effectively connected with a U.S. business of the non-U.S. shareholder. A non-U.S. shareholder thus would be taxed on such a distribution at the normal capital gains rates applicable to U.S. shareholders, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of a nonresident alien individual. A non-U.S. corporate shareholder not entitled to treaty relief or exemption also may be subject to the branch profits tax on such a distribution. We would be required to withhold on any distribution that we could designate as a capital gain dividend. A non-U.S. shareholder may receive a credit against its tax liability for the amount we withhold.
Capital gain distributions on our shares that are attributable to our sale of real property will be treated as ordinary dividends rather than as gain from the sale of a USRPI, as long as (1)(a) the applicable class of our shares is regularly traded on an established securities market in the United States and (b) the non-U.S. shareholder did not own more than 10% of the applicable class of our shares at any time during the one-year period preceding the distribution or (2) the non-U.S. shareholder was treated as a “qualified shareholder” or “qualified foreign pension fund,” as discussed below. As a result, non-U.S. shareholders owning 10% or less of the applicable class of our shares generally would be subject to withholding tax on such capital gain distributions in the same manner as they are subject to withholding tax on ordinary dividends. We believe
that our common shares, Series E Preferred Shares, Series F Preferred Shares, Series G Preferred Shares and Series H Preferred Shares currently are treated as regularly traded on an established securities market in the United States. If the applicable class of our shares is not regularly traded on an established securities market in the United States or the non-U.S. shareholder owned more than 10% of the applicable class of our shares at any time during the one-year period preceding the distribution, capital gain distributions that are attributable to our sale of real property would be subject to tax under FIRPTA, as described in the preceding paragraph. In such case, we must withhold on any distribution that we could designate as a capital gain dividend. A non-U.S. shareholder may receive a credit against its tax liability for the amount we withhold. Moreover, if we are a “domestically controlled qualified investment entity,” and a non-U.S. shareholder disposes of our shares during the 30-day period preceding a dividend payment, and such non-U.S. shareholder (or a person related to such non-U.S. shareholder) acquires or enters into a contract or option to acquire our shares within 61 days of the first day of the 30-day period described above, and any portion of such dividend payment would, but for the disposition, be treated as being subject to FIRPTA to such non-U.S. shareholder, then such non-U.S. shareholder shall be treated as having income subject to FIRPTA in an amount that, but for the disposition, would have been treated as income subject to FIRPTA.
Although the law is not clear on the matter, it appears that amounts we designate as retained capital gains in respect of our shares of beneficial interest held by U.S. shareholders generally should be treated with respect to non-U.S. shareholders in the same manner as actual distributions by us of capital gain dividends. Under this approach, a non-U.S. shareholder would be able to offset as a credit against its federal income tax liability resulting from its proportionate share of the tax paid by us on such retained capital gains, and to receive from the IRS a refund to the extent of the non-U.S. shareholder’s proportionate share of such tax paid by us exceeds its actual federal income tax liability, provided that the non-U.S. shareholder furnishes required information to the IRS on a timely basis.
Taxation of Non-U.S. Shareholders on the Disposition of Our Shares
Non-U.S. shareholders could incur tax under FIRPTA with respect to gain realized upon a disposition of our shares if we are a United States real property holding corporation during a specified testing period. If at least 50% of a REIT’s assets are USRPIs, then the REIT will be a United States real property holding corporation. We believe that we are a United States real property holding corporation based on our investment strategy. However, despite our status as a United States real property holding corporation, a non-U.S. shareholder generally would not incur tax under FIRPTA on gain from the sale of our shares if we are a “domestically controlled qualified investment entity.” A domestically controlled qualified investment entity includes a REIT in which, at all times during a specified testing period, less than 50% in value of its shares are held directly or indirectly by non-U.S. shareholders. We cannot assure you that this test will be met.
If the applicable class of our shares is regularly traded on an established securities market, an additional exception to the ta x under FIRPTA is available, even if we do not qualify as a domestically controlled qualified investment entity at the time the non-U.S. shareholder sells the applicable class of our shares. Under that exception, the gain from such a sale by such a non-U.S. shareholder will not be subject to tax under FIRPTA if:
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the applicable class of our shares is treated as being regularly traded under applicable Treasury regulations on an established securities market; and
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the non-U.S. shareholder owned, actually or constructively, 10% or less of the applicable class of our shares at all times during a specified testing period.
As noted above, we believe that our common shares, Series E Preferred Shares, Series F Preferred Shares, Series G Preferred Shares and Series H Preferred Shares currently are treated as being regularly traded on an established securities market.
If the gain on the sale of our shares were taxed under FIRPTA, a non-U.S. shareholder would be taxed on that gain in the same manner as U.S. shareholders, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals. Furthermore, a non-U.S. shareholder generally will incur tax on gain not subject to FIRPTA if:
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the gain is effectively connected with the non-U.S. shareholder’s U.S. trade or business, in which case the non-U.S. shareholder will be subject to the same treatment as U.S. shareholders with respect to such gain; or
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the non-U.S. shareholder is a nonresident alien individual who was present in the U.S. for 183 days or more during the taxable year and has a “tax home” in the United States, in which case the non-U.S. shareholder will incur a 30% tax on his or her capital gains.
Taxation of Non-U.S. Shareholders on a Conversion of Preferred Shares
The conversion of our preferred shares into our common shares may be a taxable exchange for a non-U.S. shareholder if our preferred shares constitute a USRPI. Even if our preferred shares constitute a USRPI, provided our common shares also constitute a USRPI, a non-U.S. shareholder generally will not recognize gain or loss upon a conversion of preferred shares into our common shares so long as certain FIRPTA-related reporting requirements are satisfied. If our preferred shares constitute a USRPI and such requirements are not satisfied, however, a conversion will be treated as a taxable exchange of preferred shares for our common shares. Such a deemed taxable exchange will be subject to tax under FIRPTA at the rate of tax, including any applicable capital gains rates, that would apply to a U.S. shareholder of the same type (e.g., a corporate or a non-corporate shareholder, as the case may be) on the excess, if any, of the fair market value of such non-U.S. shareholder’s common shares received over such non-U.S. shareholder’s adjusted tax basis in its preferred shares. Collection of such tax will be enforced by a refundable withholding tax on the value of the common shares.
Non-U.S. shareholders are urged to consult with their tax advisors regarding the federal income tax consequences of any transaction by which such non-U.S. shareholder exchanges common shares of beneficial interest received on a conversion of preferred shares for cash or other property.
Taxation of Non-U.S. Shareholders on a Redemption of Preferred Shares
For a discussion of the treatment of a redemption of preferred shares, see “— Taxation of U.S. Shareholders on a Redemption of Preferred Shares.”
Qualified Shareholders
Subject to the exception discussed below, any distribution to a “qualified shareholder” who holds REIT shares directly or indirectly (through one or more partnerships) will not be subject to FIRPTA and thus will not be subject to special withholding rules under FIRPTA. While a “qualified shareholder” generally will not be subject to FIRPTA withholding on REIT distributions, the portion of REIT distributions attributable to certain investors of a “qualified shareholder” (i.e., non-U.S. persons who hold interests in the “qualified shareholder” (other than interests solely as a creditor), and directly or indirectly hold more than 10% of the shares of such REIT (whether or not by reason of the investor’s ownership in the “qualified shareholder”)) may be subject to FIRPTA withholding. REIT distributions received by a “qualified shareholder” that are exempt from FIRPTA withholding may still be subject to regular U.S. withholding tax.
In addition, a sale of our shares by a “qualified shareholder” who holds such shares directly or indirectly (through one or more partnerships) generally will not be subject to federal income taxation under FIRPTA. As with distributions, the portion of amounts realized attributable to certain investors of a “qualified shareholder” (i.e., non-U.S. persons who hold interests in the “qualified shareholder” (other than interests solely as a creditor), and directly or indirectly hold more than 10% of the shares of such REIT (whether or not by reason of the investor’s ownership in the “qualified shareholder”)) may be subject to U.S. income taxation and FIRPTA withholding on a sale of our shares.
A qualified shareholder is a foreign person that (1) either is eligible for the benefits of a comprehensive income tax treaty which includes an exchange of information program and whose principal class of interests is listed and regularly traded on one or more recognized stock exchanges (as defined in such comprehensive income tax treaty), or is a foreign partnership that is created or organized under foreign law as a limited partnership in a jurisdiction that has an agreement for the exchange of information with respect to taxes with
the United States and has a class of limited partnership units representing greater than 50% of the value of all the partnership units that is regularly traded on the NYSE or NASDAQ markets, (2) is a qualified collective investment vehicle (defined below), and (3) maintains records on the identity of each person who, at any time during the foreign person’s taxable year, is the direct owner of 5% or more of the class of interests or units (as applicable) described in (1), above.
A qualified collective investment vehicle is a foreign person that (1) would be eligible for a reduced rate of withholding under the comprehensive income tax treaty described above, even if such entity holds more than 10% of the shares of such REIT, (2) is publicly traded, is treated as a partnership under the Code, is a withholding foreign partnership, and would be treated as a “United States real property holding corporation” if it were a domestic corporation, or (3) is designated as such by the Secretary of the Treasury and is either (a) fiscally transparent within the meaning of Section 894, or (b) required to include dividends in its gross income, but is entitled to a deduction for distributions to its investors.
Qualified Foreign Pension Funds
Any distribution to a “qualified foreign pension fund” (or an entity all of the interests of which are held by a “qualified foreign pension fund”) who holds REIT shares directly or indirectly (through one or more partnerships) will not be subject to federal income taxation under FIRPTA and thus will not be subject to special withholding rules under FIRPTA. REIT distributions received by a “qualified foreign pension fund” that are exempt from FIRPTA withholding may still be subject to regular U.S. withholding tax. In addition, a sale of our shares by a “qualified foreign pension fund” that holds such shares directly or indirectly (through one or more partnerships) will not be subject to federal income taxation under FIRPTA.
A qualified foreign pension fund is any trust, corporation, or other organization or arrangement (1) which is created or organized under the law of a country other than the United States, (2) which is established to provide retirement or pension benefits to participants or beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, (3) which does not have a single participant or beneficiary with a right to more than 5% of its assets or income, (4) which is subject to government regulation and with respect to which annual information reporting about its beneficiaries is provided or otherwise made available to the relevant tax authorities in the country in which it is established or operates, and (5) with respect to which, under the laws of the country in which it is established or operates, (a) contributions to such organization or arrangement that would otherwise be subject to tax under such laws are deductible or excluded from the gross income of such entity or taxed at a reduced rate, or (b) taxation of any investment income of such organization or arrangement is deferred or such income is taxed at a reduced rate.
FATCA Withholding
Under FATCA, a U.S. withholding tax will be imposed on dividends paid on our shares received by certain non-U.S. shareholders if certain disclosure requirements related to U.S. accounts or ownership are not satisfied. If payment of withholding taxes is required, non-U.S. shareholders that are otherwise eligible for an exemption from, or reduction of, U.S. withholding taxes with respect to such dividends will be required to seek a refund from the IRS to obtain the benefit or such exemption or reduction. We will not pay any additional amounts in respect of any amounts withheld.
Information Reporting Requirements and Backup Withholding, Shares Held Offshore
We will report to our shareholders and to the IRS the amount of distributions we pay during each calendar year, and the amount of tax we withhold, if any. Under the backup withholding rules, a shareholder may be subject to backup withholding with respect to distributions unless the holder:
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is a corporation or qualifies for certain other exempt categories and, when required, demonstrates this fact; or
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provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.
A shareholder who does not provide us with its correct taxpayer identification number also may be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be creditable against the shareholder’s income tax liability. In addition, we may be required to withhold a portion of capital gain distributions to any shareholders who fail to certify their non-foreign status to us.
Backup withholding generally will not apply to payments of dividends made by us or our paying agents, in their capacities as such, to a non-U.S. shareholder provided that the non-U.S. shareholder furnishes to us or our paying agent the required certification as to its non-U.S. status, such as providing a valid IRS Form W-8BEN, Form W-8BEN-E or Form W-8ECI, or certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a U.S. person that is not an exempt recipient. Payments of the net proceeds from a disposition or a redemption effected outside the U.S. by a non-U.S. shareholder made by or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not backup withholding) generally will apply to such a payment if the broker has certain connections with the U.S. unless the broker has documentary evidence in its records that the beneficial owner is a non-U.S. shareholder and specified conditions are met or an exemption is otherwise established. Payment of the net proceeds from a disposition by a non-U.S. shareholder of our shares made by or through the U.S. office of a broker generally is subject to information reporting and backup withholding unless the non-U.S. shareholder certifies under penalties of perjury that it is not a U.S. person and satisfies certain other requirements, or otherwise establishes an exemption from information reporting and backup withholding.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the shareholder’s federal income tax liability if certain required information is furnished to the IRS. Shareholders are urged consult their tax advisors regarding application of backup withholding to them and the availability of, and procedure for obtaining an exemption from, backup withholding.
Other Tax Consequences
Tax Aspects of Our Investments in Our Operating Partnership and Subsidiary Partnerships
Substantially all of our investments are owned indirectly through our operating partnership, which owns the hotel properties either directly or through certain subsidiaries. The following discussion summarizes certain federal income tax considerations applicable to our direct or indirect investments in our operating partnership and any subsidiary partnerships or limited liability companies that we form or acquire (each individually a “Partnership” and, collectively, the “Partnerships”). The discussion does not cover state or local tax laws or any federal tax laws other than income tax laws.
Classification as Partnerships. We are entitled to include in our income our distributive share of each Partnership’s income and to deduct our distributive share of each Partnership’s losses only if such Partnership is classified for federal income tax purposes as a partnership (or an entity that is disregarded for federal income tax purposes if the entity is treated as having only one owner for federal income tax purposes) rather than as a corporation or an association taxable as a corporation. An unincorporated entity with at least two owners or members will be classified as a partnership, rather than as a corporation, for federal income tax purposes if it:
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is treated as a partnership under the Treasury regulations relating to entity classification (the “check-the-box regulations”); and
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is not a “publicly traded” partnership.
Under the check-the-box regulations, an unincorporated entity with at least two owners or members may elect to be classified either as an association taxable as a corporation or as a partnership. If such an entity fails to make an election, it generally will be treated as a partnership (or an entity that is disregarded for federal income tax purposes if the entity has only one owner or member) for federal income tax purposes. Each Partnership intends to be classified as a partnership for federal income tax purposes and no Partnership will elect to be treated as an association taxable as a corporation under the check-the-box regulations.
A publicly traded partnership is a partnership whose interests are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof. A publicly traded partnership will not, however, be treated as a corporation for any taxable year if, for each taxable year beginning after December 31, 1987 in which it was classified as a publicly traded partnership, 90% or more of the partnership’s gross income for such year consists of certain passive-type income, including real property rents, gains from the sale or other disposition of real property, interest, and dividends (the “90% passive income exception”). Treasury regulations (the “PTP regulations”) provide limited safe harbors from the definition of a publicly traded partnership. Pursuant to one of those safe harbors (the “private placement exclusion”), interests in a partnership will not be treated as readily tradable on a secondary market or the substantial equivalent thereof if (1) all interests in the partnership were issued in a transaction or transactions that were not required to be registered under the Securities Act and (2) the partnership does not have more than 100 partners at any time during the partnership’s taxable year. In determining the number of partners in a partnership, a person owning an interest in a partnership, grantor trust, or S corporation that owns an interest in the partnership is treated as a partner in such partnership only if (1) substantially all of the value of the owner’s interest in the entity is attributable to the entity’s direct or indirect interest in the partnership and (2) a principal purpose of the use of the entity is to permit the partnership to satisfy the 100-partner limitation. Each Partnership is expected to qualify for the private placement exclusion in the foreseeable future. Additionally, if our operating partnership were a publicly traded partnership, we believe that our operating partnership would have sufficient qualifying income to satisfy the 90% passive income exception and thus would continue to be taxed as a partnership for federal income tax purposes.
We have not requested, and do not intend to request, a ruling from the IRS that the Partnerships will be classified as partnerships for federal income tax purposes. If for any reason a Partnership were taxable as a corporation, rather than as a partnership, for federal income tax purposes, we likely would not be able to qualify as a REIT unless we qualified for certain relief provisions. See “— Gross Income Tests” and “— Asset Tests.” In addition, any change in a Partnership’s status for tax purposes might be treated as a taxable event, in which case we might incur tax liability without any related cash distribution. See “— Distribution Requirements.” Further, items of income and deduction of such Partnership would not pass through to its partners, and its partners would be treated as shareholders for tax purposes. Consequently, such Partnership would be required to pay income tax at corporate rates on its net income, and distributions to its partners would constitute dividends that would not be deductible in computing such Partnership’s taxable income.
Income Taxation of the Partnerships and their Partners
Partners, Not the Partnerships, Subject to Tax. A partnership is not a taxable entity for federal income tax purposes. Rather, we are required to take into account our allocable share of each Partnership’s income, gains, losses, deductions, and credits for any taxable year of such Partnership ending within or with our taxable year, without regard to whether we have received or will receive any distribution from such Partnership. However, the tax liability for adjustments to a Partnership’s tax returns made as a result of an audit by the IRS will be imposed on the Partnership itself in certain circumstances absent an election to the contrary. See “— Partnership Audit Rules.”
Partnership Allocations. Although a partnership agreement generally will determine the allocation of income and losses among partners, such allocations will be disregarded for tax purposes if they do not comply with the provisions of the federal income tax laws governing partnership allocations. If an allocation is not recognized for federal income tax purposes, the item subject to the allocation will be reallocated in accordance with the partners’ interests in the partnership, which will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. Each Partnership’s allocations of taxable income, gain, and loss are intended to comply with the requirements of the federal income tax laws governing partnership allocations.
Tax Allocations With Respect to Our Properties. Income, gain, loss, and deduction attributable to appreciated or depreciated property that is contributed to a partnership in exchange for an interest in the partnership must be allocated in a manner such that the contributing partner is charged with, or benefits from, respectively, the unrealized gain or unrealized loss associated with the property at the time of the contribution. When cash is contributed to a partnership in exchange for a partnership interest, such as our
contribution of the proceeds of any offering to our operating partnership in exchange for common or preferred units, similar rules apply to ensure that the existing partners in the partnership are charged with, or benefit from, respectively, the unrealized gain or unrealized loss associated with the partnership’s existing properties at the time of the cash contribution. In the case of a contribution of property, the amount of the unrealized gain or unrealized loss (“built-in gain” or “built-in loss”) is generally equal to the difference between the fair market value of the contributed property at the time of contribution and the adjusted tax basis of such property at the time of contribution (a “book-tax difference”). In the case of a contribution of cash, a book-tax difference may be created because the fair market value of the properties of the partnership on the date of the cash contribution may be higher or lower than the partnership’s adjusted tax basis in those properties. Any property purchased for cash initially will have an adjusted tax basis equal to its fair market value, resulting in no book-tax difference.
In the future, however, our operating partnership may admit partners in exchange for a contribution of appreciated or depreciated property, resulting in book-tax differences. Such allocations are solely for federal income tax purposes and do not affect the book capital accounts or other economic or legal arrangements among the partners. The Treasury has issued regulations requiring partnerships to use a “reasonable method” for allocating items with respect to which there is a book-tax difference and outlining several reasonable allocation methods. Under certain available methods, the carryover basis of contributed properties in the hands of our operating partnership (1) would cause us to be allocated lower amounts of depreciation deductions for tax purposes than would be allocated to us if all contributed properties were to have a tax basis equal to their fair market value at the time of the contribution and (2) in the event of a sale of such properties, could cause us to be allocated taxable gain in excess of the economic or book gain allocated to us as a result of such sale, with a corresponding benefit to the contributing partners. An allocation described in (2) above might cause us to recognize taxable income in excess of cash proceeds in the event of a sale or other disposition of property, which might adversely affect our ability to comply with the REIT distribution requirements and may result in a greater portion of our distributions being taxed as dividends.
Basis in Partnership Interest. Our adjusted tax basis in our partnership interest in our operating partnership generally is equal to:
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the amount of cash and the basis of any other property contributed by us to our operating partnership;
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increased by our allocable share of our operating partnership’s income and our allocable share of indebtedness of our operating partnership; and
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reduced, but not below zero, by our allocable share of our operating partnership’s loss and the amount of cash distributed to us, and by constructive distributions resulting from a reduction in our share of indebtedness of our operating partnership.
If the allocation of our distributive share of our operating partnership’s loss would reduce the adjusted tax basis of our partnership interest below zero, the recognition of such loss will be deferred until such time as the recognition of such loss would not reduce our adjusted tax basis below zero. To the extent that our operating partnership’s distributions, or any decrease in our share of the indebtedness of our operating partnership, which is considered a constructive cash distribution to the partners, reduce our adjusted tax basis below zero, such distributions will constitute taxable income to us. Such distributions and constructive distributions normally will be characterized as long-term capital gain.
Depreciation Deductions Available to Our Operating Partnership. To the extent that our operating partnership acquires its hotels in exchange for cash, its initial basis in such hotels for federal income tax purposes generally was or will be equal to the purchase price paid by our operating partnership. Our operating partnership’s initial basis in hotels acquired in exchange for units in our operating partnership should be the same as the transferor’s basis in such hotels on the date of acquisition by our operating partnership. Although the law is not entirely clear, our operating partnership generally will depreciate such depreciable hotel property for federal income tax purposes over the same remaining useful lives and under the same methods used by the transferors. Our operating partnership’s tax depreciation deductions will be allocated among the partners in accordance with their respective interests in our operating partnership, except to the extent that our operating partnership is required under the federal income tax laws governing partnership
allocations to use a method for allocating tax depreciation deductions attributable to contributed properties that results in our receiving a disproportionate share of such deductions.
Partnership Audit Rules
The Bipartisan Budget Act of 2015 changed the rules applicable to federal income tax audits of partnerships. Under these rules, among other changes and subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction or credit of a partnership (and any partner’s distributive share thereof) is determined, and taxes, interest or penalties attributable thereto are assessed and collected, at the partnership level, absent an election to the contrary. It is possible that these rules could result in Partnerships in which we directly or indirectly invest being required to pay additional taxes, interest and penalties as a result of an audit adjustment, and we, as a direct or indirect partner of these Partnerships, could be required to bear the economic burden of those taxes, interest, and penalties. Shareholders are urged to consult their tax advisors with respect to these changes and their potential impact on their investment in our shares of beneficial interest.
Sale of a Partnership’s Property
Generally, any gain realized by a Partnership on the sale of property held by the Partnership for more than one year will be long-term capital gain, except for any portion of such gain that is treated as depreciation or cost recovery recapture. Any gain or loss recognized by a Partnership on the disposition of contributed properties will be allocated first to the partners of the Partnership who contributed such properties to the extent of their built-in gain or loss on those properties for federal income tax purposes. The partners’ built-in gain or loss on such contributed properties will equal the difference between the partners’ proportionate share of the book value of those properties and the partners’ tax basis allocable to those properties at the time of the contribution. Any remaining gain or loss recognized by the Partnership on the disposition of the contributed properties, and any gain or loss recognized by the Partnership on the disposition of the other properties, will be allocated among the partners in accordance with their respective percentage interests in the Partnership.
Our share of any gain realized by a Partnership on the sale of any property held by the Partnership as inventory or other property held primarily for sale to customers in the ordinary course of the Partnership’s trade or business will be treated as income from a prohibited transaction that is subject to a 100% penalty tax. Such prohibited transaction income also may have an adverse effect upon our ability to satisfy the income tests for REIT status. See “— Gross Income Tests.” We do not presently intend to acquire or hold or to allow any Partnership to acquire or hold any property that represents inventory or other property held primarily for sale to customers in the ordinary course of our or such Partnership’s trade or business.
Legislative or Other Actions Affecting REITs
The present federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time. The REIT rules are constantly under review by persons involved in the legislative process and by the IRS and Treasury which may result in statutory changes as well as revisions to regulations and interpretations. We cannot predict the long-term effect of any recent changes or any future law changes on REITs and their security holders. Prospective securityholders are urged to consult with their tax advisors regarding the effect of potential changes to the federal tax laws on an investment in our securities.
State, Local and Foreign Taxes
We and/or you may be subject to taxation by various states, localities and foreign jurisdictions, including those in which we or a securityholder transacts business, owns property or resides. The state, local and foreign tax treatment may differ from the federal income tax treatment described above. Consequently, you are urged to consult your tax advisors regarding the effect of state, local and foreign tax laws upon an investment in our securities.
PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus from time to time in one or more transactions, including without limitation:
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through underwriters or dealers;
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directly to purchasers;
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in a rights offering;
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in “at the market” offerings, within the meaning of Rule 415(a)(4) of the Securities Act to or through a market maker or into an existing trading market on an exchange or otherwise;
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through agents;
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through a combination of any of these methods; or
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through any other method permitted by applicable law and described in a prospectus supplement. The prospectus supplement with respect to any offering of securities will include the following information:
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the terms of the offering;
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the names of any underwriters or agents;
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the name or names of any managing underwriter or underwriters;
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the purchase price or initial public offering price of the securities;
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the net proceeds from the sale of the securities;
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any delayed delivery arrangements;
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any underwriting discounts, commissions and other items constituting underwriters’ compensation;
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any discounts or concessions allowed or reallowed or paid to dealers;
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any commissions paid to agents; and
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any securities exchange on which the securities may be listed.
Sale Through Underwriters or Dealers
If underwriters are used in the sale, the underwriters may resell the securities from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Underwriters may offer securities to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. Unless we inform you otherwise in the applicable prospectus supplement, the obligations of the underwriters to purchase the securities will be subject to certain conditions, and the underwriters will be obligated to purchase all of the offered securities if they purchase any of them. The underwriters may change from time to time any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers.
We will describe the name or names of any underwriters, dealers or agents and the purchase price of the securities in a prospectus supplement relating to the securities.
In connection with the sale of the securities, underwriters may receive compensation from us or from purchasers of the securities, for whom they may act as agents, in the form of discounts, concessions or commissions. Underwriters may sell the securities to or through dealers, and these dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents, which is not expected to exceed that customary in the types of transactions involved. Underwriters, dealers and agents that participate in the distribution of the securities may be deemed to be underwriters, and any discounts or commissions they receive from us, and any profit on the resale of the securities they realize may be deemed to be underwriting
discounts and commissions, under the Securities Act. The prospectus supplement will identify any underwriter or agent and will describe any compensation they receive from us.
Underwriters could make sales in privately negotiated transactions and/or any other method permitted by law, including sales deemed to be an “at-the-market” offering, sales made directly on the NYSE, the existing trading market for our common shares, Series E Preferred Shares, Series F Preferred Shares, Series G Preferred Shares, Series H Preferred Shares or sales made to or through a market maker other than on an exchange. The name of any such underwriter or agent involved in the offer and sale of our securities, the amounts underwritten, and the nature of its obligations to take our securities will be described in the applicable prospectus supplement.
Unless otherwise specified in the prospectus supplement, each series of the securities will be a new issue with no established trading market, other than our common shares, which are currently listed on the NYSE. We currently intend to list any common shares sold pursuant to this prospectus on the NYSE. We may elect to list any series of preferred shares on an exchange, but are not obligated to do so. It is possible that one or more underwriters may make a market in a series of the securities, but underwriters will not be obligated to do so and may discontinue any market making at any time without notice. Therefore, we can give no assurance about the liquidity of the trading market for any of the securities.
Under agreements we may enter into, we may indemnify underwriters, dealers, and agents who participate in the distribution of the securities against certain liabilities, including liabilities under the Securities Act, or contribute with respect to payments that the underwriters, dealers or agents may be required to make.
In compliance with the guidelines of the Financial Industry Regulatory Authority, Inc., or FINRA, the maximum aggregate discounts, commissions, agency fees or other items constituting underwriting compensation to be received by any FINRA member or independent broker-dealer will not exceed 8% of the aggregate offering price of the securities offered pursuant to this prospectus and any applicable prospectus supplement.
To facilitate the offering of securities, certain persons participating in the offering may engage in transactions that stabilize, maintain, or otherwise affect the price of the securities. This may include over-allotments or short sales of the securities, which involve the sale by persons participating in the offering of more securities than we sold to them. In these circumstances, these persons would cover such over-allotments or short positions by making purchases in the open market or by exercising their over-allotment option, if any. In addition, these persons may stabilize or maintain the price of the securities by bidding for or purchasing securities in the open market or by imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may be reclaimed if securities sold by them are repurchased in connection with stabilization transactions. The effect of these transactions may be to stabilize or maintain the market price of the securities at a level above that which might otherwise prevail in the open market. These transactions may be discontinued at any time.
From time to time, we may engage in transactions with these underwriters, dealers, and agents in the ordinary course of business.
If indicated in the prospectus supplement, we may authorize underwriters or other persons acting as our agents to solicit offers by institutions to purchase securities from us pursuant to contracts providing for payment and delivery on a future date. Institutions with which we may make these delayed delivery contracts include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others. The obligations of any purchaser under any such delayed delivery contract will be subject to the condition that the purchase of the securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which the purchaser is subject. The underwriters and other agents will not have any responsibility with regard to the validity or performance of these delayed delivery contracts.
Direct Sales and Sales through Agents
We may sell the securities directly. In this case, no underwriters or agents would be involved. We may also sell the securities through agents designated by us from time to time. In the applicable prospectus
supplement, we will name any agent involved in the offer or sale of the offered securities, and we will describe any commissions payable to the agent. Unless we inform you otherwise in the applicable prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act with respect to any sale of those securities. We will describe the terms of any sales of these securities in the applicable prospectus supplement.
Remarketing Arrangements
Securities may also be offered and sold, if so indicated in the applicable prospectus supplement, in connection with a remarketing upon their purchase, in accordance with a redemption or repayment pursuant to their terms, or otherwise, by one or more remarketing firms, acting as principals for their own accounts or as agents for us. Any remarketing firm will be identified and the terms of its agreements, if any, with us and its compensation will be described in the applicable prospectus supplement.
Delayed Delivery Contracts
If we so indicate in the applicable prospectus supplement, we may authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities from us at the public offering price under delayed delivery contracts. These contracts would provide for payment and delivery on a specified date in the future. The contracts would be subject only to those conditions described in the applicable prospectus supplement. The applicable prospectus supplement will describe the commission payable for solicitation of those contracts.
General Information
We may have agreements with the underwriters, dealers, agents and remarketing firms to indemnify them against certain civil liabilities, including liabilities under the Securities Act, or to contribute with respect to payments that the underwriters, dealers, agents or remarketing firms may be required to make. Underwriters, dealers, agents and remarketing firms may be customers of, engage in transactions with or perform services for us in the ordinary course of their businesses.
LEGAL MATTERS
The validity of the securities issued under this prospectus will be passed upon for us by Hunton Andrews Kurth LLP and, with respect to matters of Maryland law, by Venable LLP. The validity of any securities issued under this prospectus will be passed upon for any underwriters by counsel named in the applicable prospectus supplement.
EXPERTS
The consolidated financial statements and schedule of Pebblebrook Hotel Trust as of December 31, 2023 and 2022, and for each of the years in the three-year period ended December 31, 2023, and management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2023, have been incorporated by reference herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
Common Shares
Preferred Shares
Debt Securities
Warrants
Units
PROSPECTUS
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses of the sale and distribution of the securities being registered, all of which are being borne by the registrant.
| |
SEC registration fee
|
|
|
|
$ |
*
|
|
|
| |
Printing fees
|
|
|
|
|
**
|
|
|
| |
Legal fees and expenses
|
|
|
|
|
**
|
|
|
| |
Accounting fees and expenses
|
|
|
|
|
**
|
|
|
| |
Miscellaneous expenses
|
|
|
|
|
**
|
|
|
| |
Total
|
|
|
|
$ |
**
|
|
|
*
Deferred in accordance with Rules 456(b) and 457(r) under the Securities Act of 1933. SEC registration fees are determined based upon the aggregate initial offering price of the securities being offered from time to time.
**
These fees and expenses are based on the number and size of issuances and accordingly cannot be estimated at this time.
Item 15. Indemnification of Trustees and Officers.
Maryland law permits a Maryland real estate investment trust to include in its declaration of trust a provision eliminating the liability of its trustees and officers to the real estate investment trust and its shareholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our declaration of trust contains a provision which limits the liability of our trustees and officers to the maximum extent permitted by Maryland law.
Our declaration of trust permits us and our bylaws obligate us, to the maximum extent permitted by Maryland law, to indemnify and to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any present or former trustee or officer of ours or (b) any individual who, while a trustee or officer of ours and at our request, serves or has served another real estate investment trust, corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise as a trustee, director, officer, partner, member, manager, employee or agent and who is made or is threatened to be made a party to, or witness in, the proceeding by reason of his or her service in any such capacity, from and against any claim or liability to which that individual may become subject or which that individual may incur by reason of his or her service in any such capacity. Our declaration of trust and bylaws also permit us, with the approval of our board of trustees, to indemnify and advance expenses to any person who served a predecessor of our company in any of the capacities described above and to any employee or agent of our company or a predecessor of our company. Maryland law requires us (unless our declaration of trust provides otherwise, which ours does not) to indemnify a trustee or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity.
Maryland law permits a Maryland real estate investment trust to indemnify and advance expenses to its trustees, officers, employees and agents to the same extent as permitted for directors and officers of Maryland corporations. The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be a made or threatened to be made a party or witness by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was a result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any
criminal proceeding, the director or officer has reasonable cause to believe that the act or omission was unlawful. However, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right if the corporation or if the director or officer was adjudged to be liable for an improper personal benefit, unless in either case a court orders indemnification and then only for expenses. In accordance with the MGCL, as a condition to advancing expenses, we must obtain (a) a written affirmation by the trustee or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification and (b) a written statement by or on his or her behalf to repay the amount paid or reimbursed by us if it shall ultimately be determined that the standard of conduct was not met.
We have entered into indemnification agreements with our trustees and our executive officers providing for procedures for indemnification by us to the fullest extent permitted by law and advancements by us of certain expenses and costs relating to claims, suits or proceedings arising from their service to us.
We have obtained an insurance policy under which our trustees and executive officers will be insured, subject to the limits of the policy, against certain losses arising from claims made against such trustees and officers by reason of any acts or omissions covered under such policy in their respective capacities as trustees or officers, including certain liabilities under the Securities Act of 1933.
We have been advised that the SEC has expressed the opinion that indemnification of trustees, officers or persons otherwise controlling a company for liabilities arising under the Securities Act of 1933 is against public policy and is therefore unenforceable.
Item 16. Exhibits.
The list of exhibits following the signature page of this Registration Statement on Form S-3 is incorporated herein by reference.
Item 17. Undertakings.
(a)
The undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
Provided, however, That paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i)
If the registrant is relying on Rule 430B:
(A)
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(5)
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b)
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a trustee, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(d)
The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act.
EXHIBIT INDEX
The following exhibits are filed as part of, or incorporated by reference into, this Registration Statement on Form S-3:
| |
Exhibit
Number
|
|
|
Exhibit Description
|
|
| |
1.1*
|
|
|
Form of Underwriting Agreement.
|
|
| |
3.1
|
|
|
Declaration of Trust of the Registrant, as amended and supplemented through July 23, 2021 (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on July 29, 2021 (File No. 001-34571)).
|
|
| |
3.2
|
|
|
Bylaws of the Registrant, as amended and restated on February 17, 2023 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 24, 2023 (File No. 001-34571)).
|
|
| |
3.3
|
|
|
Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of December 13, 2013 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 17, 2013 (File No. 001-34571)).
|
|
| |
3.4
|
|
|
First Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of September 30, 2014 (incorporated by reference to Exhibit 3.4 to the Registrant’s Annual Report on Form 10-K filed on February 17, 2015 (File No. 001-34571)).
|
|
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3.5
|
|
|
Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of June 8, 2016 (incorporated by reference to Exhibit 3.5 to the Registrant’s Current Report on Form 8-K filed on June 8, 2016 (File No. 001-34571)).
|
|
| |
3.6
|
|
|
Third Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of November 30, 2018 (incorporated by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 3, 2018 (File No. 001-34571)).
|
|
| |
3.7
|
|
|
Fourth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of May 12, 2021 (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 12, 2021 (File No. 001-34571)).
|
|
| |
3.8
|
|
|
Fifth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of July 23, 2021 (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 27, 2021 (File No. 001-34571)).
|
|
| |
3.9
|
|
|
Sixth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel., L.P., dated as of May 11, 2022 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 12, 2022 (File No. 001-34571)).
|
|
| |
4.1
|
|
|
Indenture, dated December 15, 2020, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on December 16, 2020 (File No. 001-34571)).
|
|
| |
4.2
|
|
|
First Supplemental Indenture, dated December 15, 2020, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on December 16, 2020 (File No. 001-34571)).
|
|
| |
4.3
|
|
|
Form of 1.75% Convertible Senior Notes Due 2026 of the Registrant (incorporated by reference to Exhibit A to the First Supplemental Indenture filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on December 16, 2020 (File No. 001-34571)).
|
|
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4.4**
|
|
|
Indenture (for Subordinated Debt Securities).
|
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| |
Exhibit
Number
|
|
|
Exhibit Description
|
|
| |
4.5*
|
|
|
Articles Supplementary with respect to any additional series of preferred shares issued pursuant to this registration statement.
|
|
| |
4.6*
|
|
|
Form of Warrant Agreement.
|
|
| |
4.7*
|
|
|
Form of Warrant Certificate.
|
|
| |
4.8*
|
|
|
Form of Unit Agreement.
|
|
| |
4.9*
|
|
|
Form of Unit Certificate.
|
|
| |
5.1a**
|
|
|
|
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| |
5.1b**
|
|
|
|
|
| |
8.1**
|
|
|
|
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| |
23.1**
|
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| |
23.2
|
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|
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| |
23.3
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|
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| |
23.4
|
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|
|
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| |
24.1
|
|
|
|
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| |
25.1**
|
|
|
|
|
| |
25.2***
|
|
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Statement of Eligibility of any other trustee on Form T-1.
|
|
| |
25.3***
|
|
|
Statement of Eligibility of the Trustee under the Indenture (for Subordinated Debt Securities) on Form T-1.
|
|
| |
107**
|
|
|
|
|
*
To be filed by amendment or as an exhibit to a report filed under the Exchange Act and incorporated herein by reference.
**
Filed herewith.
***
Where applicable, to be incorporated by reference to a subsequent filing in accordance with Section 305(b)(2) of the Trust Indenture Act of 1939, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Bethesda, state of Maryland, on February 21, 2024.
PEBBLEBROOK HOTEL TRUST
By:
/s/ JON E. BORTZ
Jon E. Bortz
Chairman of the Board and Chief
Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints each of Jon E. Bortz, Raymond D. Martz, Thomas C. Fisher and Andrew H. Dittamo his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, and any additional related registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (including post-effective amendments to the registration statement and any such related registration statements), and to file the same, with all exhibits thereto, and any other documents in connection therewith, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| |
Signature
|
|
|
Title
|
|
|
Date
|
|
| |
/s/ JON E. BORTZ
Jon E. Bortz
|
|
|
Chairman of the Board and Chief Executive Officer
(principal executive officer)
|
|
|
February 21, 2024
|
|
| |
/s/ RAYMOND D. MARTZ
Raymond D. Martz
|
|
|
Co-President, Chief Financial Officer, Treasurer and Secretary
(principal financial officer and principal accounting officer)
|
|
|
February 21, 2024
|
|
| |
/s/ CYDNEY C. DONNELL
Cydney C. Donnell
|
|
|
Trustee
|
|
|
February 21, 2024
|
|
| |
/s/ RON E. JACKSON
Ron E. Jackson
|
|
|
Trustee
|
|
|
February 21, 2024
|
|
| |
/s/ PHILLIP M. MILLER
Phillip M. Miller
|
|
|
Trustee
|
|
|
February 21, 2024
|
|
| |
/s/ MICHAEL J. SCHALL
Michael J. Schall
|
|
|
Trustee
|
|
|
February 21, 2024
|
|
| |
Signature
|
|
|
Title
|
|
|
Date
|
|
| |
/s/ BONNY W. SIMI
Bonny W. Simi
|
|
|
Trustee
|
|
|
February 21, 2024
|
|
| |
/s/ EARL E. WEBB
Earl E. Webb
|
|
|
Trustee
|
|
|
February 21, 2024
|
|
Exhibit 4.4
—————————————————————————
Pebblebrook
Hotel Trust
TO
____________________,
Trustee
——————
Indenture
(For Subordinated
Debt Securities)
Dated as of
, 20__
—————————————————————————
TABLE OF CONTENTS†
Page
| RECITAL OF THE COMPANY |
1 |
| ARTICLE I DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION |
1 |
| Section 1.01. |
Definitions |
1 |
| Section 1.02. |
Compliance Certificates and Opinions |
8 |
| Section 1.03. |
Form of Documents Delivered to Trustee |
8 |
| Section 1.04. |
Acts of Holders |
9 |
| Section 1.05. |
Notices, Etc. to Trustee and Company |
11 |
| Section 1.06. |
Notice to Holders of Debt Securities; Waiver |
12 |
| Section 1.07. |
Conflict with Trust Indenture Act |
12 |
| Section 1.08. |
Effect of Headings and Table of Contents |
12 |
| Section 1.09. |
Successors and Assigns |
12 |
| Section 1.10. |
Separability Clause |
12 |
| Section 1.11. |
Benefits of Indenture |
13 |
| Section 1.12. |
Governing Law |
13 |
| Section 1.13. |
Legal Holidays |
13 |
| ARTICLE II DEBT SECURITY FORMS
|
13 |
| Section 2.01. |
Forms Generally |
13 |
| Section 2.02. |
Form of Trustee’s Certificate of Authentication |
14 |
| Section 2.03. |
Debt Securities Issuable in the Form of a Global
Security |
14 |
| ARTICLE III THE DEBT SECURITIES |
16 |
| Section 3.01. |
Amount Unlimited; Issuable in Series |
16 |
| Section 3.02. |
Denominations |
20 |
| Section 3.03. |
Execution, Authentication, Delivery and Dating |
20 |
| Section 3.04. |
Temporary Debt Securities |
22 |
| Section 3.05. |
Registration, Registration of Transfer and Exchange |
23 |
| Section 3.06. |
Mutilated, Destroyed, Lost and Stolen Debt Securities |
24 |
| Section 3.07. |
Payment of Interest and Additional Interest; Interest
Rights Preserved |
25 |
| Section 3.08. |
Persons Deemed Owners |
26 |
| Section 3.09. |
Cancellation by Debt Security Registrar |
26 |
| Section 3.10. |
Computation of Interest |
27 |
| Section 3.11. |
Payment to be in Proper Currency |
27 |
| Section 3.12. |
Extension of Interest Payment |
27 |
| ARTICLE IV REDEMPTION OF DEBT SECURITIES |
27 |
| Section 4.01. |
Applicability of Article |
27 |
| Section 4.02. |
Election to Redeem; Notice to Trustee |
28 |
| Section 4.03. |
Selection of Debt Securities to be Redeemed |
28 |
| Section 4.04. |
Notice of Redemption |
28 |
| Section 4.05. |
Debt Securities Payable on Redemption Date |
30 |
| Section 4.06. |
Debt Securities Redeemed in Part |
30 |
| ARTICLE V SINKING FUNDS |
30 |
| Section 5.01. |
Applicability of Article |
30 |
| Section 5.02. |
Satisfaction of Sinking Fund Payments with Debt Securities |
31 |
| Section 5.03. |
Redemption of Debt Securities for Sinking Fund |
31 |
| † | This
table of contents shall not, for any purpose, be deemed to be a part of the Indenture. |
| ARTICLE VI COVENANTS |
32 |
| Section 6.01. |
Payment of Principal, Premium and
Interest |
32 |
| Section 6.02. |
Maintenance of Office or Agency |
32 |
| Section 6.03. |
Money for Debt Securities Payments to be Held in Trust |
33 |
| Section 6.04. |
Corporate Existence |
34 |
| Section 6.05. |
Maintenance of Properties |
34 |
| Section 6.06. |
Annual Officer’s Certificate as to Compliance |
34 |
| Section 6.07. |
Waiver of Certain Covenants |
35 |
| ARTICLE VII SATISFACTION AND DISCHARGE |
35 |
| Section 7.01. |
Satisfaction and Discharge of Debt Securities |
35 |
| Section 7.02. |
Satisfaction and Discharge of Indenture |
37 |
| Section 7.03. |
Application of Trust Money |
38 |
| ARTICLE VIII EVENTS OF DEFAULT;
REMEDIES |
39 |
| Section 8.01. |
Events of Default |
39 |
| Section 8.02. |
Acceleration of Maturity; Rescission and Annulment |
40 |
| Section 8.03. |
Collection of Indebtedness and Suits for Enforcement
by Trustee |
41 |
| Section 8.04. |
Trustee May File Proofs of Claim |
42 |
| Section 8.05. |
Trustee May Enforce Claims without Possession
of Debt Securities |
42 |
| Section 8.06. |
Application of Money Collected |
43 |
| Section 8.07. |
Limitation on Suits |
43 |
| Section 8.08. |
Unconditional Right of Holders to Receive Principal,
Premium and Interest |
44 |
| Section 8.09. |
Restoration of Rights and Remedies |
44 |
| Section 8.10. |
Rights and Remedies Cumulative |
44 |
| Section 8.11. |
Delay or Omission Not Waiver |
44 |
| Section 8.12. |
Control by Holders of Debt Securities |
45 |
| Section 8.13. |
Waiver of Past Defaults |
45 |
| Section 8.14. |
Undertaking for Costs |
46 |
| Section 8.15. |
Waiver of Stay or Extension Laws |
46 |
| ARTICLE IX THE TRUSTEE |
46 |
| Section 9.01. |
Certain Duties and Responsibilities |
46 |
| Section 9.02. |
Notice of Defaults |
47 |
| Section 9.03. |
Certain Rights of Trustee |
48 |
| Section 9.04. |
Not Responsible for Recitals or Issuance of Debt Securities |
49 |
| Section 9.05. |
May Hold Debt Securities |
49 |
| Section 9.06. |
Money Held in Trust |
49 |
| Section 9.07. |
Compensation and Reimbursement |
49 |
| Section 9.08. |
Disqualification; Conflicting Interests |
50 |
| Section 9.09. |
Corporate Trustee Required; Eligibility |
50 |
| Section 9.10. |
Resignation and Removal; Appointment of Successor |
51 |
| Section 9.11. |
Acceptance of Appointment by Successor |
53 |
| Section 9.12. |
Merger, Conversion, Consolidation or Succession to
Business |
54 |
| Section 9.13. |
Preferential Collection of Claims Against Company |
54 |
| Section 9.14. |
Co-Trustees and Separate Trustees |
54 |
| Section 9.15. |
Appointment of Authenticating Agent |
56 |
| † | This
table of contents shall not, for any purpose, be deemed to be a part of the Indenture. |
| ARTICLE X HOLDERS’ LISTS
AND REPORTS BY TRUSTEE AND COMPANY |
57 |
| Section 10.01. |
Lists of Holders |
57 |
| Section 10.02. |
Reports by Trustee and Company |
58 |
| ARTICLE XI CONSOLIDATION, MERGER,
CONVEYANCE OR OTHER TRANSFER |
58 |
| Section 11.01. |
Company May Consolidate, Etc., Only on Certain
Terms |
58 |
| Section 11.02. |
Successor Corporation Substituted |
59 |
| ARTICLE XII SUPPLEMENTAL INDENTURES |
59 |
| Section 12.01. |
Supplemental Indentures Without Consent of Holders |
59 |
| Section 12.02. |
Supplemental Indentures With Consent of Holders |
61 |
| Section 12.03. |
Execution of Supplemental Indentures |
62 |
| Section 12.04. |
Effect of Supplemental Indentures |
63 |
| Section 12.05. |
Conformity With Trust Indenture Act |
63 |
| Section 12.06. |
Reference in Debt Securities to Supplemental Indentures |
63 |
| Section 12.07. |
Modification without Supplemental Indenture |
63 |
| ARTICLE XIII MEETINGS OF HOLDERS;
ACTION WITHOUT MEETING |
63 |
| Section 13.01. |
Purposes for which Meetings may be Called |
63 |
| Section 13.02. |
Call, Notice and Place of Meetings |
64 |
| Section 13.03. |
Persons Entitled to Vote at Meetings |
64 |
| Section 13.04. |
Quorum; Action |
65 |
| Section 13.05. |
Attendance at Meetings; Determination of Voting Rights;
Conduct and Adjournment of Meetings |
65 |
| Section 13.06. |
Counting Votes and Recording Action of Meetings |
66 |
| Section 13.07. |
Action Without Meeting |
67 |
| ARTICLE XIV IMMUNITY OF INCORPORATORS,
SHAREHOLDERS, OFFICERS AND TRUSTEES |
67 |
| Section 14.01. |
Liability Solely Corporate |
67 |
| ARTICLE XV SUBORDINATION OF SECURITIES |
67 |
| Section 15.01. |
Securities Subordinate to Senior Indebtedness |
67 |
| Section 15.02. |
Payment Over of Proceeds of Securities |
68 |
| Section 15.03. |
Disputes with Holders of Certain Senior Indebtedness |
69 |
| Section 15.04. |
Subrogation |
70 |
| Section 15.05. |
Unconditional Obligation of the Company |
70 |
| Section 15.06. |
Priority of Senior Indebtedness Upon Maturity |
71 |
| Section 15.07. |
Trustee as Holder of Senior Indebtedness |
71 |
| Section 15.08. |
Notice to Trustee to Effectuate Subordination |
71 |
| Section 15.09. |
Modification, Extension, Etc. of Senior Indebtedness |
72 |
| Section 15.10. |
Trustee Has No Fiduciary Duty to Holders of Senior
Indebtedness |
72 |
| Section 15.11. |
Paying Agents other than the Trustee |
72 |
| Section 15.12. |
Rights of Holders of Senior Indebtedness Not Impaired |
72 |
| Section 15.13. |
This Article Not To Prevent Events of Default |
72 |
| Section 15.14. |
Effect of Subordination Provisions; Termination |
73 |
| † | This
table of contents shall not, for any purpose, be deemed to be a part of the Indenture. |
Pebblebrook
Hotel Trust
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939
AND INDENTURE, DATED AS OF __________, 20_____
| Trust Indenture Act Section |
Indenture Section |
| §310 |
(a)(1) |
9.09 |
| |
(a)(2) |
9.09 |
| |
(a)(3) |
9.14 |
| |
(a)(4) |
Not Applicable |
| |
(b) |
9.08, 9.10 |
| §311 |
(a) |
9.13 |
| |
(b) |
9.13 |
| |
(c) |
9.13 |
| §312 |
(a) |
10.01 |
| |
(b) |
10.01 |
| |
(c) |
10.01 |
| §313 |
(a) |
10.02 |
| |
(b) |
10.02 |
| |
(c) |
10.02 |
| |
(d) |
10.02 |
| §314 |
(a) |
10.02 |
| |
(a)(4) |
6.06 |
| |
(b) |
Not Applicable |
| |
(c)(1) |
1.02 |
| |
(c)(2) |
1.02 |
| |
(c)(3) |
Not Applicable |
| |
(d) |
Not Applicable |
| |
(e) |
1.02 |
| §315 |
(a) |
9.01, 9.03 |
| |
(b) |
9.02 |
| |
(c) |
9.01 |
| |
(d) |
9.01 |
| |
(e) |
8.14 |
| §316 |
(a) |
8.12, 8.13 |
| |
(a)(1)(A) |
8.02, 8.12 |
| |
(a)(1)(B) |
813 |
| |
(a)(2) |
Not Applicable |
| |
(b) |
8.08 |
| |
(c) |
1.04(g) |
| §317 |
(a)(1) |
8.03 |
| |
(a)(2) |
8.04 |
| |
(b) |
6.03 |
| §318 |
(a) |
1.07 |
INDENTURE (FOR
SUBORDINATED DEBT SECURITIES), dated as of __________, 20_____, between Pebblebrook Hotel
Trust, a real estate investment trust duly organized and existing under the laws of the State of Maryland (herein called the “Company”),
having its principal office at 4747 Bethesda Avenue, Suite 1100, Bethesda, MD 20814, and [TRUSTEE], a __________, having its principal
corporate trust office at _____________________________________, as Trustee (herein called the “Trustee”).
RECITAL
OF THE COMPANY
The Company has
duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of certain of its subordinated
debentures, notes or other evidences of indebtedness (herein called the “Debt Securities”), in an unlimited aggregate
principal amount, to be issued in one or more series as contemplated herein; and all acts necessary to make this Indenture a valid agreement
of the Company have been performed.
For all purposes
of this Indenture, except as otherwise expressly provided or unless the context otherwise requires, capitalized terms used herein shall
have the meanings assigned to them in Article I of this Indenture.
NOW, THEREFORE,
THIS INDENTURE WITNESSETH:
For and in consideration
of the premises and the purchase of the Debt Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Debt Securities or of series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
| Section 1.01. |
Definitions. |
For all purposes
of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(a) the
terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(b) all
terms used herein without definition that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all
accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles
in the United States, and, except as otherwise herein expressly provided, the term “generally accepted accounting principles”
with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the
United States at the date of such computation or, at the election of the Company from time to time, at the date of the execution and
delivery of this Indenture; provided, however, that in determining generally accepted accounting principles applicable
to the Company, the Company shall, to the extent required, conform to any order, rule or regulation of any administrative agency,
regulatory authority or other governmental body having jurisdiction over the Company; and
(d) the
words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section or other subdivision.
Certain terms, used
principally in Article IX, are defined in that Article.
“Act”
when used with respect to any Holder of a Debt Security, has the meaning specified in Section 1.04.
“Additional
Interest” means the interest, if any, that shall accrue on any interest on the Debt Securities of any series, the payment of
which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined
as specified in such Debt Security.
“Affiliate”
of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified
Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative
to the foregoing.
“Authenticating
Agent” means any Person (other than the Company or an Affiliate of the Company) authorized by the Trustee pursuant to Section 9.15
to act on behalf of the Trustee to authenticate one or more series of Debt Securities or Tranche thereof.
“Authorized
Officer” means the Chairman of the Board, the President, the Chief Financial Officer, any Vice President, the Treasurer or
any other duly authorized officer of the Company.
“Board
of Trustees” means either the board of trustees of the Company or any committee thereof duly authorized to act or any trustee
or trustees and/or officer or officers of the Company to whom that board or committee shall have duly delegated its authority in respect
of matters relating to this Indenture.
“Board
Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Trustees and to be in full force and effect on the date of such certification, and delivered to the Trustee.
“Business
Day,” when used with respect to a Place of Payment or any other particular location specified in the Debt Securities or this
Indenture, means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in such
Place of Payment or other location are generally authorized or required by law, regulation or executive order to remain closed, except
as may be otherwise specified as contemplated by Section 3.01.
“Commission”
means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after
the date of execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body, if any, performing such duties at such time.
“Company”
means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.
“Company
Request” or “Company Order” means a written request or order signed in the name of the Company by an Authorized
Officer and delivered to the Trustee.
“Corporate
Trust Office” means the office of the Trustee at which at any particular time this Indenture shall be principally administered,
which office at the date of execution and delivery of this Indenture is located at ________________________________.
“Corporation”
means a real estate investment trust, corporation, association, company, limited liability company, joint stock company or business trust.
“Debt Securities”
has the meaning stated in the first recital of this Indenture and more particularly means any securities authenticated and delivered
under this Indenture.
“Debt Security
Register” and “Debt Security Registrar” have the respective meanings specified in Section 3.05.
“Defaulted
Interest” has the meaning specified in Section 3.07.
“Depositary”
shall mean, with respect to Debt Securities of any series, for which the Company shall determine that such Debt Securities will be issued
as a Global Security, The Depository Trust Company, New York, New York, another clearing agency or any successor registered as a clearing
agency under the Exchange Act or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant
to Section 2.03(c).
“Discount
Debt Security” means any Debt Security that provides for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to Section 8.02.
“Dollar”
or “$” means a dollar or other equivalent unit in such coin or currency of the United States as at the time shall
be legal tender for the payment of public and private debts.
“Eligible
Obligations” means:
(a) with
respect to Debt Securities denominated in Dollars, Government Obligations; or
(b) with
respect to Debt Securities denominated in a currency other than Dollars or in a composite currency, such other obligations or instruments
as shall be specified with respect to such Debt Securities, as contemplated by Section 3.01.
“Event
of Default” has the meaning specified in Section 8.01.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Global
Security” means, with respect to the Debt Securities, a Debt Security executed by the Company and delivered by the Trustee
to the Depositary or pursuant to the Depositary’s instruction, all in accordance with this Indenture, which shall be registered
in the name of the Depositary or its nominee.
“Governmental
Authority” means the government of the United States or of any state or territory thereof or of the District of Columbia or
of any county, municipality or other political subdivision of any thereof, or any department, agency, authority or other instrumentality
of any of the foregoing.
“Government
Obligations” means:
(a) direct
obligations of, or obligations the timely payment of principal of and interest on which are unconditionally guaranteed by, the United
States entitled to the benefit of the full faith and credit thereof; and
(b) certificates,
depositary receipts or other instruments that evidence a direct ownership interest in obligations described in clause (a) above
or in any specific interest or principal payments due in respect thereof; provided, however, that the custodian of such
obligations or specific interest or principal payments shall be a bank or trust company (which may include the Trustee or any Paying
Agent) subject to federal or state supervision or examination with a combined capital and surplus of at least $100,000,000; and provided,
further, that except as may be otherwise required by law, such custodian shall be obligated to pay to the holders of such certificates,
depositary receipts or other instruments the full amount received by such custodian in respect of such obligations or specific payments
and shall not be permitted to make any deduction therefrom.
“Holder”
means a Person in whose name a Debt Security is registered in the Debt Security Register.
“Indenture”
means this instrument as originally executed and delivered and as it may from time to time be supplemented or amended by one or more
indentures or Officer’s Certificates supplemental hereto entered into pursuant to the applicable provisions hereof and shall include
the terms of particular series of Debt Securities established as contemplated by Section 3.01.
“Interest”
with respect to a Discount Debt Security means interest, if any, borne by such Debt Security at a Stated Interest Rate.
“Interest
Payment Date,” when used with respect to any Debt Security, means the Stated Maturity of an installment of interest on such
Debt Security.
“Maturity,”
when used with respect to any Debt Security, means the date on which the principal of such Debt Security or an installment of principal
becomes due and payable as provided in such Debt Security or in this Indenture, whether at the Stated Maturity, by declaration of acceleration,
upon call for redemption or otherwise.
“Officer’s
Certificate” means a certificate signed by an Authorized Officer and delivered to the Trustee.
“Opinion
of Counsel” means a written opinion of counsel, who may be counsel for the Company, or other counsel acceptable to the Trustee.
“Outstanding,”
when used with respect to Debt Securities, means, as of the date of determination, all Debt Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Debt
Securities theretofore canceled by the Trustee or the Debt Security Registrar or delivered to the Trustee or the Debt Security Registrar
for cancellation;
(b) Debt
Securities deemed to have been paid in accordance with Section 7.01; and
(c) Debt
Securities that have been paid pursuant to Section 3.06 or in exchange for or in lieu of which other Debt Securities have
been authenticated and delivered pursuant to this Indenture, other than any such Debt Securities in respect of which there shall have
been presented to the Trustee proof satisfactory to it and the Company that such Debt Securities are held by a bona fide purchaser or
purchasers in whose hands such Debt Securities are valid obligations of the Company;
provided, however, that
in determining whether or not the Holders of the requisite principal amount of the Debt Securities Outstanding under this Indenture,
or the Outstanding Debt Securities of any series or Tranche, have given any request, demand, authorization, direction, notice, consent
or waiver hereunder or whether or not a quorum is present at a meeting of Holders of Debt Securities,
(x) Debt
Securities owned by the Company or any other obligor upon the Debt Securities or any Affiliate of the Company or of such other obligor
(unless the Company, such Affiliate or such obligor owns all Debt Securities Outstanding under this Indenture, or all Outstanding Debt
Securities of each such series and each such Tranche, as the case may be, determined without regard to this clause (x)) shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver or upon any such determination as to the presence of a quorum, only Debt
Securities that the Trustee knows to be so owned shall be so disregarded; provided, however, that Debt Securities so owned
that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee’s right so to act with respect to such Debt Securities and that the pledgee is not the Company or any other obligor upon
the Debt Securities or any Affiliate of the Company or of such other obligor; and
(y) the
principal amount of a Discount Debt Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal
thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof
pursuant to Section 8.02;
provided, further, that,
in the case of any Debt Security the principal of which is payable from time to time without presentment or surrender, the principal
amount of such Debt Security that shall be deemed to be Outstanding at any time for all purposes of this Indenture shall be the original
principal amount thereof less the aggregate amount of principal thereof theretofore paid.
“Paying
Agent” means any Person, including the Company, authorized by the Company to pay the principal of and premium, if any, or interest
(including Additional Interest), if any, on any Debt Securities on behalf of the Company.
“Periodic
Offering” means an offering of Debt Securities of a series from time to time any or all of the specific terms of which Debt
Securities, including without limitation the rate or rates of interest (including Additional Interest), if any, thereon, the Stated Maturity
or Maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents
upon the issuance of such Debt Securities.
“Person”
means any individual, Corporation, partnership, joint venture, trust or unincorporated organization or any Governmental Authority.
“Place
of Payment,” when used with respect to the Debt Securities of any series, or Tranche thereof, means the place or places, specified
as contemplated by Section 3.01, at which, subject to Section 6.02, principal of and premium, if any, and interest
(including Additional Interest), if any, on the Debt Securities of such series or Tranche are payable.
“Predecessor
Debt Security” of any particular Debt Security means every previous Debt Security evidencing all or a portion of the same debt
as that evidenced by such particular Debt Security; and, for the purposes of this definition, any Debt Security authenticated and delivered
under Section 3.06 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Debt Security shall be deemed (to
the extent lawful) to evidence the same debt as the mutilated, destroyed, lost or stolen Debt Security.
“Redemption
Date,” when used with respect to any Debt Security to be redeemed, means the date fixed for such redemption by or pursuant
to this Indenture.
“Redemption
Price,” when used with respect to any Debt Security to be redeemed, means the price at which it is to be redeemed pursuant
to this Indenture.
“Regular
Record Date” for the interest payable on any Interest Payment Date on the Debt Securities of any series means the date specified
for that purpose as contemplated by Section 3.01.
“Required
Currency” has the meaning specified in Section 3.11.
“Responsible
Officer,” when used with respect to the Trustee, means the officer of the Trustee at its Corporate Trust Office assigned by
the Trustee to administer this Indenture, and any other duly authorized officer of the Trustee to whom a matter arising under this Indenture
may be referred.
“Senior
Indebtedness” means all (i) obligations (other than non-recourse obligations and the indebtedness issued under this Indenture)
of, or guaranteed or assumed by, the Company for borrowed money, including both senior and subordinated indebtedness for borrowed money
(other than the Debt Securities), or for the payment of money relating to any lease that is capitalized on the consolidated balance sheet
of the Company and its subsidiaries in accordance with generally accepted accounting principles as in effect from time to time, (ii)indebtedness
evidenced by bonds, debentures, notes or other similar instruments, (iii) obligations with respect to letters of credit, bankers’
acceptances or similar facilities issued for the account of the Company, (iv) obligations issued or assumed as the deferred purchase
price of property or services, but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business,
(v) obligations for claims, as defined in Section 101(5) of the United States Bankruptcy Code of 1978, as amended, in
respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; and
(vi) obligations of the type referred to in each of the preceding clauses (i) through (v) of another Person, the payment
of which the Company has guaranteed or is responsible or liable for directly or indirectly, as obligor or otherwise; and in each case,
amendments, renewals, extensions, modifications and refundings of any such indebtedness or obligations, whether existing as of the date
of this Indenture or subsequently incurred by the Company.
“Special
Record Date” for the payment of any Defaulted Interest on the Debt Securities of any series means a date fixed by the Trustee
pursuant to Section 3.07.
“Stated
Interest Rate” means a rate (whether fixed or variable) at which an obligation by its terms is stated to bear interest. Any
calculation or other determination to be made under this Indenture by reference to the Stated Interest Rate on a Debt Security shall
be made without regard to the effective interest cost to the Company of such Debt Security and without regard to the Stated Interest
Rate on, or the effective cost to the Company of, any other indebtedness in respect of which the Company’s obligations are evidenced
or secured in whole or in part by such Debt Security.
“Stated
Maturity,” when used with respect to any obligation or any installment of principal thereof or interest thereon, means the
date on which the principal of such obligation or such installment of principal or interest is stated to be due and payable (without
regard to any provisions for redemption, prepayment, acceleration, purchase or extension).
“Tranche”
means a group of Debt Securities that (a) are of the same series and (b) have identical terms except as to principal amount.
“Trust
Indenture Act” means the Trust Indenture Act of 1939, as amended, as in force and effect as of the date of execution of this
Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is succeeded by another statute or is amended
after such date, “Trust Indenture Act” shall mean such successor statute or the Trust Indenture Act of 1939, as so amended,
to the extent such successor statute or amendment is applicable to this Indenture or to the actions of the Company or the Trustee under
or pursuant to this Indenture.
“Trustee”
means the Person named as the “Trustee” in the first paragraph of this Indenture until a successor Trustee shall have become
such with respect to one or more series of Debt Securities pursuant to the applicable provisions of this Indenture, and thereafter “Trustee”
shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, “Trustee”
as used with respect to the Debt Securities of any series shall mean the Trustee with respect to Debt Securities of that series.
“United
States” means the United States of America, its territories, its possessions and other areas subject to its political jurisdiction.
| Section 1.02. |
Compliance Certificates and Opinions. |
Except as otherwise
expressly provided in this Indenture, upon any application or request by the Company to the Trustee to take any action under any provision
of this Indenture, the Company shall furnish to the Trustee an Officer’s Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application
or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be furnished.
Every certificate
or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
(a) a
statement that each Person signing such certificate or opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a
brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a
statement that, in the opinion of each such Person, such Person has made such examination or investigation as is necessary to enable
such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a
statement as to whether, in the opinion of each such Person, such condition or covenant has been complied with.
| Section 1.03. |
Form of Documents Delivered to Trustee. |
In any case where
several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate
or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer’s certificate or opinion are based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer
or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless
such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect
to such matters are erroneous.
Where any Person
is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one instrument.
Whenever, subsequent
to the receipt by the Trustee of any Board Resolution, Officer’s Certificate, Opinion of Counsel or other document or instrument,
a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument
may be substituted therefor in corrected form with the same force and effect as if originally filed in the corrected form and, irrespective
of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have
been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted.
Anything in this Indenture to the contrary notwithstanding, if any such corrective document or instrument indicates that action has been
taken by or at the request of the Company which could not have been taken had the original document or instrument not contained such
error or omission, the action so taken shall not be invalidated or otherwise rendered ineffective but shall be and remain in full force
and effect (except to the extent that such action was a result of willful misconduct or bad faith or had or could be expected to have
a material adverse effect on the Holders of any Debt Securities issued hereunder).
Without limiting
the generality of the foregoing, any Debt Securities issued under the authority of such defective document or instrument shall nevertheless
be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Debt
Securities.
| Section 1.04. |
Acts of Holders. |
(a) Any
request, demand, authorization, direction, notice, consent, election, waiver or other action provided by this Indenture to be made, given
or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders
in person or by an agent duly appointed in writing or, alternatively, may be embodied in and evidenced by the record of Holders voting
in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders duly called and held in accordance
with the provisions of Article XIII, or a combination of such instruments and any such record. Except as herein otherwise
expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument
or instruments and so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent,
or of the holding by any Person of a Debt Security, shall be sufficient for any purpose of this Indenture and (subject to Section 9.01)
conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. The record of any meeting of Holders
shall be proved in the manner provided in Section 13.06.
(b) The
fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution
or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof or may be proved in any other manner that the Trustee and
the Company deem sufficient. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate
or affidavit shall also constitute sufficient proof of his authority.
(c) The
principal amount (except as otherwise contemplated in clause (y) of the proviso to the definition of Outstanding) and serial numbers
of Debt Securities held by any Person, and the date of holding the same, shall be proved by the Debt Security Register.
(d) Any
request, demand, authorization, direction, notice, consent, election, waiver or other Act of a Holder shall bind every future Holder
of the same Debt Security and the Holder of every Debt Security issued upon the registration of transfer thereof or in exchange therefor
or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether
or not notation of such action is made upon such Debt Security.
(e) Until
such time as written instruments shall have been delivered to the Trustee with respect to the requisite percentage of principal amount
of Debt Securities for the action contemplated by such instruments, any such instrument executed and delivered by or on behalf of a Holder
may be revoked with respect to any or all of such Debt Securities by written notice by such Holder or any subsequent Holder, proven in
the manner in which such instrument was proven.
(f) Debt
Securities of any series, or any Tranche thereof, authenticated and delivered after any Act of Holders may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any action taken by such Act of Holders. If the Company shall so determine,
new Debt Securities of any series, or any Tranche thereof, so modified as to conform, in the opinion of the Trustee and the Company,
to such action may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding
Debt Securities of such series or Tranche.
(g) If
the Company shall solicit from Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company
may, at its option, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only
the Holders of record at the close of business on the record date shall be deemed to be Holders for the purposes of determining whether
Holders of the requisite proportion of the Outstanding Debt Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Debt Securities shall be computed
as of the record date.
| Section 1.05. |
Notices, Etc. to Trustee and Company. |
Any request, demand,
authorization, direction, notice, consent, election, waiver or Act of Holders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with, the Trustee by any Holder or by the Company, or the Company by the Trustee or
by any Holder, shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and delivered
personally to an officer or other responsible employee of the addressee, or transmitted by facsimile transmission or other direct written
electronic means to such telephone number or other electronic communications address as the parties hereto shall from time to time designate,
or transmitted by certified or registered mail, charges prepaid, to the applicable address set opposite such party’s name below
or to such other address as either party hereto may from time to time designate:
If to the Trustee, to:
[Trustee]
[Address]
Attention:
Telephone:
Facsimile:
| |
If to the Company, to: |
With copy to: |
Pebblebrook Hotel Trust
4747 Bethesda Avenue, Suite 1100
Bethesda, MD 20814
| | Attention: |
Attention: |
| | Telephone: |
Telephone: |
| | Facsimile: |
Facsimile: |
Any communication
contemplated herein shall be deemed to have been made, given, furnished and filed if personally delivered, on the date of delivery, if
transmitted by facsimile transmission or other direct written electronic means, upon date of receipt of the transmission, and if transmitted
by certified or registered mail, on the date of receipt.
| Section 1.06. |
Notice to Holders of Debt Securities; Waiver. |
Except as otherwise
expressly provided herein, where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given,
and shall be deemed given, to Holders if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at
the address of such Holder as it appears in the Debt Security Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice.
In case by reason
of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders by
mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose
hereunder. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.
Any notice required
by this Indenture may be waived in writing by the Person entitled to receive such notice, either before or after the event otherwise
to be specified therein, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
| Section 1.07. |
Conflict with Trust Indenture Act. |
If any provision
of this Indenture limits, qualifies or conflicts with another provision hereof that is required or deemed to be included in this Indenture
by, or is otherwise governed by, any of the provisions of the Trust Indenture Act, such other provision shall control; and if any provision
hereof otherwise conflicts with the Trust Indenture Act, the Trust Indenture Act shall control.
| Section 1.08. |
Effect of Headings and Table of Contents. |
The Article and
Section headings in this Indenture and the Table of Contents are for convenience only and shall not affect the construction hereof.
| Section 1.09. |
Successors and Assigns. |
All covenants and
agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
| Section 1.10. |
Separability Clause. |
In case any provision
in this Indenture or the Debt Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
| Section 1.11. |
Benefits of Indenture. |
Nothing in this
Indenture or the Debt Securities, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder,
the Holders, and so long as the notice described in Section 15.14 hereof has not been given, the holders of Senior Indebtedness,
any benefit or any legal or equitable right, remedy or claim under this Indenture.
| Section 1.12. |
Governing Law. |
This Indenture and
the Debt Securities shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts
of law principles thereof, except to the extent that the law of any other jurisdiction shall be mandatorily applicable.
| Section 1.13. |
Legal Holidays. |
In any case where
any Interest Payment Date, Redemption Date or Stated Maturity of any Debt Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Debt Securities other than a provision in Debt Securities of any
series, or any Tranche thereof, or in the indenture supplemental hereto, Board Resolution or Officer’s Certificate that establishes
the terms of the Debt Securities of such series or Tranche, which specifically states that such provision shall apply in lieu of this
Section) payment of interest or principal and premium, if any, need not be made at such Place of Payment on such date, but may be made
on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity, and, if such payment is made or duly provided for on such Business Day, no interest shall
accrue on the amount so payable for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be, to such Business Day.
ARTICLE II
DEBT SECURITY FORMS
| Section 2.01. |
Forms Generally. |
The definitive Debt
Securities of each series shall be in substantially the form or forms thereof established in the indenture supplemental hereto establishing
such series or in a Board Resolution establishing such series, or in an Officer’s Certificate pursuant to such supplemental indenture
or Board Resolution, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by
the officers executing such Debt Securities, as evidenced by their execution of the Debt Securities. If the form or forms of Debt Securities
of any series are established in a Board Resolution or in an Officer’s Certificate pursuant to an indenture supplement hereto or
to a Board Resolution, such Board Resolution and Officer’s Certificate, if any, shall be delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 3.03 for the authentication and delivery of such Debt Securities.
Unless otherwise
specified as contemplated by Sections 3.01 or 12.01(g), the Debt Securities of each series shall be issuable in registered
form without coupons. The definitive Debt Securities shall be produced in such manner as shall be determined by the officers executing
such Debt Securities, as evidenced by their execution thereof.
| Section 2.02. |
Form of Trustee’s Certificate of Authentication. |
The Trustee’s
certificate of authentication shall be in substantially the form set forth below:
This is one of the
Debt Securities of the series designated therein referred to in the within-mentioned Indenture.
Dated:
___________________________,
as Trustee
By: ________________________________
Authorized Representative
| Section 2.03. |
Debt Securities Issuable in the Form of a Global Security. |
(a) If
the Company shall establish pursuant to Section 3.01 that the Debt Securities of a particular series are to be issued in
whole or in part in the form of one or more Global Securities, then the Company shall execute and the Trustee shall, in accordance with
Section 3.03 and the Company Order delivered to the Trustee thereunder, authenticate and deliver such Global Security or
Securities, which (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of the Outstanding
Debt Securities of such series to be represented by such Global Security or Securities, (ii) may provide that the aggregate amount
of Outstanding Debt Securities represented thereby may from time to time be increased or reduced to reflect exchanges, (iii) shall
be registered in the name of the Depositary for such Global Security or Securities or its nominee, (iv) shall be delivered by the
Trustee to the Depositary or pursuant to the Depositary’s instruction and (v) shall bear a legend in accordance with the requirements
of the Depositary. The Trustee shall enter into any agreement with the Depositary related to such Global Securities as the Company may
direct in such Company Order.
(b) Notwithstanding
any other provision of this Section or of Section 3.05, except as contemplated by the provisions of paragraph (c) below,
unless the terms of a Global Security expressly permit such Global Security to be exchanged in whole or in part for individual Debt Securities,
a Global Security may be transferred, in whole but not in part and in the manner provided in Section 3.05, only to a nominee
of the Depositary for such Global Security, or to the Depositary, or to a successor Depositary for such Global Security selected or approved
by the Company, or to a nominee of such successor Depositary.
(c) (1) If
at any time the Depositary for a Global Security notifies the Company that it is unwilling or unable to continue as the Depositary for
such Global Security or if at any time the Depositary for the Debt Securities for such series shall no longer be eligible or in good
standing under the Exchange Act, or other applicable statute or regulation, the Company shall appoint a successor Depositary with respect
to such Global Security. If a successor Depositary for such Global Security is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility, the Company will execute, and the Trustee, upon receipt of a Company
Order for the authentication and delivery of Debt Securities of such series in the form of definitive certificates in exchange for such
Global Security, will authenticate and deliver Debt Securities of such series in the form of definitive certificates of like tenor and
terms in an aggregate principal amount equal to the principal amount of the Global Security in exchange for such Global Security. Such
Debt Securities will be issued to and registered in the name of such Person or Persons as are specified by the Depositary.
(2) To
the extent legally permitted and subject to the rules and regulations of the acting Depositary, the Company may at any time and
in its sole discretion determine that the Debt Securities of any series issued or issuable in the form of one or more Global Securities
shall no longer be represented by such Global Security or Securities. In any such event the Company will execute, and the Trustee, upon
receipt of a Company Request for the authentication and delivery of Debt Securities in the form of definitive certificates in exchange
in whole or in part for such Global Security, will authenticate and deliver without service charge to each Person specified by the Depositary
Debt Securities in the form of definitive certificates of like tenor and terms in an aggregate principal amount equal to the principal
amount of such Global Security representing such series, or the aggregate principal amount of such Global Securities representing such
series, in exchange for such Global Security or Securities.
(3) If
specified by the Company pursuant to Section 3.01 with respect to Debt Securities issued or issuable in the form of a Global
Security, the Depositary for such Global Security may surrender such Global Security in exchange in whole or in part for Debt Securities
in the form of definitive certificates of like tenor and terms on such terms as are acceptable to the Company and such Depositary. Thereupon
the Company shall execute, and the Trustee shall authenticate and deliver, without service charge, (A) to each Person specified
by such Depositary a new Debt Security or Securities of the same series of like tenor and terms and any authorized denomination as requested
by such Person in an aggregate principal amount equal to and in exchange for such Person’s beneficial interest in the Global Security
and (B) to such Depositary a new Global Security of like tenor and terms and in an authorized denomination equal to the difference,
if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Debt Securities delivered
to Holders thereof.
(4) In
any exchange provided for in any of the preceding three subparagraphs, the Company shall execute and the Trustee shall authenticate and
deliver Debt Securities in the form of definitive certificates in authorized denominations. Upon the exchange of the entire principal
amount of a Global Security for Debt Securities in the form of definitive certificates, such Global Security shall be canceled by the
Trustee. Except as provided in the immediately preceding subparagraph, Debt Securities issued in exchange for a Global Security pursuant
to this Section shall be registered in such names and in such authorized denominations as the Depositary for such Global Security,
acting pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. Provided that the
Company and the Trustee have so agreed, the Trustee shall deliver such Debt Securities to the Persons in whose names the Debt Securities
are so to be registered.
(5) Any
endorsement of a Global Security to reflect the principal amount thereof, or any increase or decrease in such principal amount, or changes
in the rights of Holders of Outstanding Debt Securities represented thereby shall be made in such manner and by such Person or Persons
as shall be specified in or pursuant to any applicable letter of representations or other arrangement entered into with, or procedures
of, the Depositary with respect to such Global Security or in the Company Order delivered or to be delivered pursuant to Section 3.03
with respect thereto. Subject to the provisions of Section 3.03, the Trustee shall deliver and redeliver any such Global
Security in the manner and upon instructions given by the Person or Persons specified in or pursuant to any applicable letter of representations
or other arrangement entered into with, or procedures of, the Depositary with respect to such Global Security or in any applicable Company
Order. If a Company Order pursuant to Section 3.03 is so delivered, any instructions by the Company with respect to such
Global Security contained therein shall be in writing but need not be accompanied by or contained in an Officer’s Certificate and
need not be accompanied by an Opinion of Counsel.
(6) The
Depositary or, if there be one, its nominee, shall be the Holder of a Global Security for all purposes under this Indenture; and beneficial
owners with respect to such Global Security shall hold their interests pursuant to applicable procedures of such Depositary. The Company,
the Trustee and the Debt Security Registrar shall be entitled to deal with such Depositary for all purposes of this Indenture relating
to such Global Security (including the payment of principal, premium, if any, and interest (including Additional Interest) and the giving
of instructions or directions by or to the beneficial owners of such Global Security as the sole Holder of such Global Security, and
shall have no obligations to the beneficial owners thereof (including any direct or indirect participants in such Depositary). None of
the Company, the Trustee, any Paying Agent or the Debt Security Registrar shall have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership interests of a Global Security in or pursuant to any applicable
letter of representations or other arrangement entered into with, or procedures of, the Depositary with respect to such Global Security
or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
ARTICLE III
THE DEBT SECURITIES
| Section 3.01. |
Amount Unlimited; Issuable in Series. |
The aggregate principal
amount of Debt Securities that may be authenticated and delivered under this Indenture is unlimited.
The Debt Securities
may be issued in one or more series. Subject to the last paragraph of this Section, prior to the authentication and delivery of Debt
Securities of any series there shall be established by specification in a supplemental indenture or in a Board Resolution, or in an Officer’s
Certificate pursuant to a supplemental indenture or a Board Resolution:
(a) the
title of the Debt Securities of such series (which shall distinguish the Debt Securities
of such series from Debt Securities of all other series);
(b) any
limit upon the aggregate principal amount of the Debt Securities of such series that may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Debt Securities
of the series pursuant to Section 3.04, 3.05, 3.06, 4.06 or 12.06 and, except for any Debt Securities
that, pursuant to Section 3.03, are deemed never to have been authenticated and delivered hereunder);
(c) the
Person or Persons (without specific identification) to whom interest on Debt Securities of such series, or any Tranche thereof, shall
be payable on any Interest Payment Date, if other than the Persons in whose names such Debt Securities (or one or more Predecessor Debt
Securities) are registered at the close of business on the Regular Record Date for such interest;
(d) the
date or dates on which the principal of the Debt Securities of such series, or any Tranche thereof, is payable or any formulary or other
method or other means by which such date or dates shall be determined, by reference to an index or other fact or event ascertainable
outside of this Indenture or otherwise (without regard to any provisions for redemption, prepayment, acceleration, purchase or extension);
(e) the
rate or rates at which the Debt Securities of such series, or any Tranche thereof, shall bear interest, if any (including the rate or
rates at which overdue principal shall bear interest, if different from the rate or rates at which such Debt Securities shall bear interest
prior to Maturity, (ii) and, if applicable, the rate or rates at which overdue premium shall bear interest, if any, and (iii) the
rate or rates and the extent to which Additional Interest, if any, shall be payable), the period or periods during which such rate or
rates shall be applicable, or any formulary or other method or other means by which such rate or rates, and any period or periods, shall
be determined, by reference to an index or other fact or event ascertainable outside of this Indenture or otherwise; the date or dates
from which such interest shall accrue; the Interest Payment Dates on which such interest shall be payable and the Regular Record Date,
if any, for the interest payable on such Debt Securities on any Interest Payment Date; the right of the Company, if any, to extend the
interest payment periods and the duration of any such extension as contemplated by Section 3.12; and the basis of computation
of interest, if other than as provided in Section 3.10;
(f) the
place or places at which or methods by which (1) the principal of and premium, if any, and interest (including Additional Interest),
if any, on Debt Securities of such series, or any Tranche thereof, shall be payable, (2) registration of transfer of Debt Securities
of such series, or any Tranche thereof, may be effected, (3) exchanges of Debt Securities of such series, or any Tranche thereof,
may be effected and (4) notices and demands to or upon the Company in respect of the Debt Securities of such series, or any Tranche
thereof, and this Indenture may be served; the Debt Security Registrar for such series; and if such is the case, that the principal of
such Debt Securities shall be payable without presentment or surrender thereof;
(g) the
period or periods within which, or the date or dates on which, the price or prices at which and the terms and conditions upon which the
Debt Securities of such series, or any Tranche thereof, may be redeemed, in whole or in part, at the option of the Company and any restrictions
on such redemptions, including but not limited to a restriction on a partial redemption by the Company of the Debt Securities of any
series, or any Tranche thereof, resulting in delisting of such Debt Securities from any national exchange;
(h) the
obligation or obligations, if any, of the Company to redeem or purchase the Debt Securities of such series, or any Tranche thereof, pursuant
to any sinking fund or other mandatory redemption or tender provisions or at the option of a Holder thereof and the period or periods
within which or the date or dates on which, the price or prices at which and the terms and conditions upon which such Debt Securities
shall be redeemed or purchased, in whole or in part, pursuant to such obligation, and applicable exceptions to the requirements of Section 4.04
in the case of mandatory redemption or redemption at the option of the Holder;
(i) the
denominations in which Debt Securities of such series, or any Tranche thereof, shall be issuable if other than denominations of $1,000
and any integral multiple thereof;
(j) the
currency or currencies, including composite currencies, in which payment of the principal of and premium, if any, and interest (including
Additional Interest), if any, on the Debt Securities of such series, or any Tranche thereof, shall be payable (if other than in Dollars);
(k) if
the principal of or premium, if any, or interest (including Additional Interest), if any, on the Debt Securities of such series, or any
Tranche thereof, are to be payable, at the election of the Company or a Holder thereof, in a coin or currency other than that in which
the Debt Securities are stated to be payable, the period or periods within which and the terms and conditions upon which, such election
may be made;
(l) if
the principal of or premium, if any, or interest (including Additional Interest), if any, on the Debt Securities of such series, or any
Tranche thereof, are to be payable, or are to be payable at the election of the Company or a Holder thereof, in securities or other property,
the type and amount of such securities or other property, or the formulary or other method or other means by which such amount shall
be determined, and the period or periods within which, and the terms and conditions upon which, any such election may be made;
(m) if
the amount payable in respect of principal of or premium, if any, or interest, if any, on the Debt Securities of such series, or any
Tranche thereof, may be determined with reference to an index or other fact or event ascertainable outside this Indenture, the manner
in which such amounts shall be determined to the extent not established pursuant to clause (e) of this paragraph;
(n) if
other than the principal amount thereof, the portion of the principal amount of Debt Securities of such series, or any Tranche thereof,
that shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 8.02;
(o) any
Events of Default, in addition to those specified in Section 8.01, with respect to the Debt Securities of such series, and
any covenants of the Company for the benefit of the Holders of the Debt Securities of such series, or any Tranche thereof, in addition
to those set forth in Article VI;
(p) the
terms, if any, pursuant to which the Debt Securities of such series, or any Tranche thereof, may be converted into or exchanged for shares
of beneficial interest or other securities of the Company or any other Person;
(q) the
obligations or instruments, if any, that shall be considered to be Eligible Obligations in respect of the Debt Securities of such series,
or any Tranche thereof, denominated in a currency other than Dollars or in a composite currency, and any additional or alternative provisions
for the reinstatement of the Company’s indebtedness in respect of such Debt Securities after the satisfaction and discharge thereof
as provided in Section 7.01;
(r) whether
the Debt Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities; the terms and conditions,
if any, upon which such Global Security or Securities may be exchanged in whole or in part for certificated Debt Securities of such series
and of like tenor of any authorized denomination and the circumstances under which such exchange may occur, if other than in the manner
provided for in Section 2.03; the Depositary for such Global Security or Securities; and the form of any legend or legends
to be borne by any such Global Security in addition to or in lieu of the legend referred to in Section 2.03;
(s) if
the Debt Securities of such series, or any Tranche thereof, are to be issuable in bearer form, any and all matters incidental thereto
that are not specifically addressed in a supplemental indenture as contemplated by Section 12.01(g);
(t) to
the extent not established pursuant to clause (r) of this paragraph, any limitations on the rights of the Holders of the Debt Securities
of such series, or any Tranche thereof, to transfer or exchange such Debt Securities or to obtain the registration of transfer thereof;
and if a service charge will be made for the registration of transfer or exchange of Debt Securities of such series, or any Tranche thereof,
the amount or terms thereof;
(u) any
exceptions to Section 1.13, or variation in the definition of Business Day, with respect to the Debt Securities of such series,
or any Tranche thereof;
(v) any
collateral security, assurance or guarantee for such series of Debt Securities;
(w) any
credit enhancement applicable to the Debt Securities of such series; and
(x) any
other terms of the Debt Securities of such series, or any Tranche thereof, not inconsistent with the provisions of this Indenture.
The Debt Securities
of each series, or any Tranche thereof, shall be subordinated in the right of payment to Senior Indebtedness as provided in Article XV.
With respect to
Debt Securities of a series subject to a Periodic Offering, the indenture supplemental hereto or the Board Resolution that establishes
such series, or the Officer’s Certificate pursuant to such supplemental indenture or Board Resolution, as the case may be, may
provide general terms or parameters for Debt Securities of such series and provide either that the specific terms of Debt Securities
of such series, or any Tranche thereof, shall be specified in a Company Order or that such terms shall be determined by the Company or
its agents in accordance with procedures specified in a Company Order as contemplated by clause (b) of the third paragraph of Section 3.03.
| Section 3.02. |
Denominations. |
Unless otherwise
provided as contemplated by Section 3.01 with respect to any series of Debt Securities, or any Tranche thereof, the Debt
Securities of each series shall be issuable in denominations of $1,000 and any integral multiple thereof.
| Section 3.03. |
Execution, Authentication, Delivery and Dating. |
Unless otherwise
provided as contemplated by Section 3.01 with respect to any series of Debt Securities, or any Tranche thereof, the Debt
Securities shall be executed on behalf of the Company by an Authorized Officer and may have the corporate seal of the Company affixed
thereto or reproduced thereon attested by any other Authorized Officer. The signature of any or all of these officers on the Debt Securities
may be manual or facsimile.
Debt Securities
bearing the manual or facsimile signatures of individuals who were at the time of execution Authorized Officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and
delivery of such Debt Securities or did not hold such offices at the date of such Debt Securities.
The Trustee shall
authenticate and deliver Debt Securities of a series, for original issue, at one time or from time to time in accordance with the Company
Order referred to below, upon receipt by the Trustee of:
(a) the
instrument or instruments establishing the form or forms and terms of such series, as provided in Sections 2.01 and 3.01;
(b) a
Company Order requesting the authentication and delivery of such Debt Securities and, to the extent that the terms of such Debt Securities
shall not have been established in an indenture supplemental hereto or in a Board Resolution, or in an Officer’s Certificate pursuant
to a supplemental indenture or Board Resolution, all as contemplated by Sections 2.01 and 3.01, either (i) establishing
such terms or (ii) in the case of Debt Securities of a series subject to a Periodic Offering, specifying procedures, acceptable
to the Trustee, by which such terms are to be established (which procedures may provide, to the extent acceptable to the Trustee, for
authentication and delivery pursuant to oral or electronic instructions from the Company or any agent or agents thereof, which oral instructions
are to be promptly confirmed electronically or in writing), in either case in accordance with the instrument or instruments delivered
pursuant to clause (a) above;
(c) the
Debt Securities of such series, executed on behalf of the Company by an Authorized Officer;
(d) an
Opinion of Counsel to the effect that:
(i) the
form or forms of such Debt Securities have been duly authorized by the Company and have been established in conformity with the provisions
of this Indenture;
(ii) the
terms of such Debt Securities have been duly authorized by the Company and have been established in conformity with the provisions of
this Indenture; and
(iii) assuming
authentication and delivery by the Trustee and subject to any conditions specified in such Opinion of Counsel, such Debt Securities will
have been duly issued under this Indenture and will be legal, valid and binding obligations of the Company, enforceable in accordance
with their terms, subject, as to enforcement, to laws relating to or affecting generally the enforcement of creditors’ rights,
including, without limitation, bankruptcy and insolvency laws and to general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law);
provided, however, that,
with respect to Debt Securities of a series subject to a Periodic Offering, the Trustee shall be entitled to receive such Opinion of
Counsel only once at or prior to the time of the first authentication of such Debt Securities (provided that such Opinion of Counsel
addresses the authentication and delivery of all Debt Securities of such series) and that in lieu of the opinions described in clauses
(ii) and (iii) above Counsel may opine that:
(x) when
the terms of such Debt Securities shall have been established pursuant to a Company Order or Orders or pursuant to such procedures (acceptable
to the Trustee) as may be specified from time to time by a Company Order or Orders, all as contemplated by and in accordance with the
instrument or instruments delivered pursuant to clause (a) above, such terms will have been duly authorized by the Company and will
have been established in conformity with the provisions of this Indenture; and
(y) such
Debt Securities, when authenticated and delivered by the Trustee in accordance with this Indenture and the Company Order or Orders or
specified procedures referred to in paragraph (x) above and issued and delivered by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will have been duly issued under this Indenture and will constitute valid and legally
binding obligations of the Company, entitled to the benefits provided by the Indenture, and enforceable in accordance with their terms,
subject, as to enforcement, to laws relating to or affecting generally the enforcement of creditors’ rights, including, without
limitation, bankruptcy and insolvency laws and to general principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
With respect to
Debt Securities of a series subject to a Periodic Offering, the Trustee may conclusively rely, as to the authorization by the Company
of any of such Debt Securities, the form and terms thereof and the legality, validity, binding effect and enforceability thereof, upon
the Opinion of Counsel and other documents delivered pursuant to Sections 2.01 and 3.01 and this Section, as applicable,
at or prior to the time of the first authentication of Debt Securities of such series unless and until such opinion or other documents
have been superseded or revoked or expire by their terms. In connection with the authentication and delivery of Debt Securities of a
series subject to a Periodic Offering, the Trustee shall be entitled to assume that the Company’s instructions to authenticate
and deliver such Debt Securities do not violate any rules, regulations or orders of any Governmental Authority having jurisdiction over
the Company.
If the form or terms
of the Debt Securities of any series have been established by or pursuant to a Board Resolution or an Officer’s Certificate as
permitted by Sections 2.01 or 3.01, the Trustee shall not be required to authenticate such Debt Securities if the issuance
of such Debt Securities pursuant to this Indenture will materially or adversely affect the Trustee’s own rights, duties or immunities
under the Debt Securities and this Indenture or otherwise in a manner that is not reasonably acceptable to the Trustee.
Unless otherwise
specified as contemplated by Section 3.01 with respect to any series of Debt Securities, or any Tranche thereof, each Debt
Security shall be dated the date of its authentication.
Unless otherwise
specified as contemplated by Section 3.01 with respect to any series of Debt Securities, or any Tranche thereof, no Debt
Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such
Debt Security a certificate of authentication substantially in the form provided for herein executed by the Trustee or its agent by manual
signature, and such certificate upon any Debt Security shall be conclusive evidence, and the only evidence, that such Debt Security has
been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if
any Debt Security shall have been authenticated and delivered hereunder to the Company, or any Person acting on its behalf, but shall
never have been issued and sold by the Company, and the Company shall deliver such Debt Security to the Debt Security Registrar for cancellation
as provided in Section 3.09 together with a written statement (which need not comply with Section 1.02 and need
not be accompanied by an Opinion of Counsel) stating that such Debt Security has never been issued and sold by the Company, for all purposes
of this Indenture such Debt Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled
to the benefits hereof.
| Section 3.04. |
Temporary Debt Securities. |
Pending the preparation
of definitive Debt Securities of any series, or any Tranche thereof, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Debt Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced,
in any authorized denomination, substantially of the tenor of the definitive Debt Securities in lieu of which they are issued, with such
appropriate insertions, omissions, substitutions and other variations as the officers executing such Debt Securities may determine, as
evidenced by their execution of such Debt Securities; provided, however, that temporary Debt Securities need not recite
specific redemption, sinking fund, conversion or exchange provisions.
Unless otherwise
specified as contemplated by Section 3.01 with respect to the Debt Securities of any series, or any Tranche thereof, after
the preparation of definitive Debt Securities of such series or Tranche, the temporary Debt Securities of such series or Tranche shall
be exchangeable, without charge to the Holder thereof, for definitive Debt Securities of such series or Tranche, upon surrender of such
temporary Debt Securities at the office or agency of the Company maintained pursuant to Section 6.02 in a Place of Payment
for such Debt Securities. Upon such surrender of temporary Debt Securities, the Company shall, except as aforesaid, execute and the Trustee
shall authenticate and deliver in exchange therefor definitive Debt Securities of the same series and Tranche, of authorized denominations
and of like tenor and aggregate principal amount.
Until exchanged
in full as hereinabove provided, temporary Debt Securities shall in all respects be entitled to the same benefits under this Indenture
as definitive Debt Securities of the same series and Tranche and of like tenor authenticated and delivered hereunder.
| Section 3.05. |
Registration, Registration of Transfer and Exchange. |
The Company shall
cause to be kept in each office designated pursuant to Section 6.02, with respect to the Debt Securities of each series or
any Tranche thereof, a register (all registers kept in accordance with this Section being collectively referred to as the “Debt
Security Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the
registration of Debt Securities of such series or Tranche and the registration of transfer thereof. The Company shall designate one Person
to maintain the Debt Security Register for the Debt Securities of each series on a consolidated basis, and such Person is referred to
herein, with respect to such series, as the “Debt Security Registrar.” Anything herein to the contrary notwithstanding,
the Company may designate one or more of its offices as an office in which the Debt Security Register shall be maintained, and the Company
may designate itself the Debt Security Registrar with respect to one or more of such series. The Debt Security Register shall be open
for inspection by the Trustee and the Company at all reasonable times.
Except as otherwise
specified as contemplated by Section 3.01 with respect to the Debt Securities of any series, or any Tranche thereof, upon
surrender for registration of transfer of any Debt Security of such series or Tranche at the office or agency of the Company maintained
pursuant to Section 6.02 in a Place of Payment for such series or Tranche, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or transferees, one or more new Debt Securities of the same series
and Tranche, of authorized denominations and of like tenor and aggregate principal amount.
Except as otherwise
specified as contemplated by Section 3.01 with respect to the Debt Securities of any series, or any Tranche thereof, any
Debt Security of such series or Tranche may be exchanged at the option of the Holder for one or more new Debt Securities of the same
series and Tranche, of authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Debt Securities
to be exchanged at any such office or agency. Whenever any Debt Securities are so surrendered for exchange, the Company shall execute,
and the Trustee shall authenticate and deliver, the Debt Securities that the Holder making the exchange is entitled to receive.
All Debt Securities
delivered upon any registration of transfer or exchange of Debt Securities shall be valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the Debt Securities surrendered upon such registration of transfer
or exchange.
Every Debt Security
presented or surrendered for registration of transfer or for exchange shall (if so required by the Company, the Trustee or the Debt Security
Registrar) be duly endorsed or shall be accompanied by a written instrument of transfer in form satisfactory to the Company, the Trustee
or the Debt Security Registrar, as the case may be, duly executed by the Holder thereof or his attorney duly authorized in writing.
Unless otherwise
specified as contemplated by Section 3.01 with respect to Debt Securities of any series, or any Tranche thereof, no service
charge shall be made for any registration of transfer or exchange of Debt Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Debt
Securities, other than exchanges pursuant to Section 3.04, 4.06 or 12.06 not involving any transfer.
The Company shall
not be required to execute or to provide for the registration of transfer of or the exchange of (a) Debt Securities of any series,
or any Tranche thereof, during a period of 15 days immediately preceding the day the mailing of a notice of redemption of the Debt Securities
of such series or Tranche is to be made or (b) any Debt Security so selected for redemption in whole or in part, except the unredeemed
portion of any Debt Security being redeemed in part.
None of the Company,
the Trustee, any Paying Agent or the Debt Security Registrar will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
| Section 3.06. |
Mutilated, Destroyed, Lost and Stolen Debt Securities. |
If any mutilated
Debt Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor
a new Debt Security of the same series, and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be
delivered to the Company and the Trustee (a) evidence to their satisfaction of the ownership of and the destruction, loss or theft
of any Debt Security and (b) such security or indemnity as may be reasonably required by them to save each of them and any agent
of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Debt Security is held by a Person
purporting to be the owner of such Debt Security, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Debt Security, a new Debt Security of the same series and Tranche, and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
Notwithstanding
the foregoing, in case any such mutilated, destroyed, lost or stolen Debt Security has become or is about to become due and payable,
the Company in its discretion may, instead of issuing a new Debt Security, pay such Debt Security.
Upon the issuance
of any new Debt Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Debt Security
of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Debt Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debt Security shall be at any time enforceable
by anyone other than the Holder of such new Debt Security, and any such new Debt Security shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Debt Securities of such series duly issued hereunder.
The provisions of
this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Debt Securities.
| Section 3.07. |
Payment of Interest and Additional Interest; Interest Rights Preserved. |
Unless otherwise
specified as contemplated by Section 3.01 with respect to the Debt Securities of any series, or any Tranche thereof, interest
and Additional Interest, if any, on any Debt Security that is payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Debt Security (or one or more Predecessor Debt Securities) is registered at the close
of business on the Regular Record Date for such interest.
Subject to Section 3.12
any interest on any Debt Security of any series that is payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the related
Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in
each case, as provided in clause (a) or (b) below:
(a) The
Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Debt Securities of such series (or their
respective Predecessor Debt Securities) are registered at the close of business on a date (herein called a “Special Record Date”)
for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each Debt Security of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect
of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not
more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall promptly cause notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Debt Securities of such series at the address of such
Holder as it appears in the Debt Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Debt Securities of such series (or their respective Predecessor Debt Securities) are registered at the close of business
on such Special Record Date.
(b) The
Company may make payment of any Defaulted Interest on the Debt Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Debt Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing
provisions of this Section and Section 3.05, each Debt Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Debt Security shall carry the rights to interest (including any Additional Interest)
accrued and unpaid, and to accrue, that were carried by such other Debt Security.
| Section 3.08. |
Persons Deemed Owners. |
Prior to due presentment
of a Debt Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person
in whose name such Debt Security is registered as the absolute owner of such Debt Security for the purpose of receiving payment of principal
of and premium, if any, and (subject to Sections 3.05 and 3.07) interest, if any, on such Debt Security and for all other
purposes whatsoever, whether or not such Debt Security is overdue, and neither the Company, the Trustee nor any agent of the Company
or the Trustee shall be affected by notice to the contrary.
| Section 3.09. |
Cancellation by Debt Security Registrar. |
All Debt Securities
surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Debt Security
Registrar, be delivered to the Debt Security Registrar and, if not theretofore canceled, shall be promptly canceled by the Debt Security
Registrar. The Company may at any time deliver to the Debt Security Registrar for cancellation any Debt Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner whatsoever or which the Company shall not have issued and sold,
and all Debt Securities so delivered shall be promptly canceled by the Debt Security Registrar. No Debt Securities shall be authenticated
in lieu of or in exchange for any Debt Securities canceled as provided in this Section, except as expressly permitted by this Indenture.
All certificates representing canceled Debt Securities held by the Debt Security Registrar shall be disposed of in accordance with the
customary practices of the Debt Security Registrar at the time in effect, and the Debt Security Registrar shall not be required to destroy
any such certificates. The Debt Security Registrar, if other than the Trustee, shall promptly deliver a certificate of disposition with
respect to such disposed certificates to the Trustee and the Company unless, by a Company Order, similarly delivered, the Company shall
direct that canceled Debt Securities be returned to it. The Debt Security Registrar shall promptly deliver evidence of any cancellation
of a Debt Security in accordance with this Section to the Trustee and the Company. If the Trustee is the entity acting as Debt Security
Registrar, it shall promptly deliver to the Company a certificate of disposition with respect to any certificates disposed of and/or
evidence of any cancellation of a Debt Security, in each case in accordance with this Section, if so requested by a Company Order.
| Section 3.10. |
Computation of Interest. |
Except as otherwise
specified as contemplated by Section 3.01 for Debt Securities of any series, or any Tranche thereof, interest on the Debt
Securities of each series shall be computed on the basis of a 360-day year consisting of twelve 30-day months and on the basis of the
actual number of days elapsed within any month in relation to the deemed 30 days of such month.
| Section 3.11. |
Payment to be in Proper Currency. |
In the case of the
Debt Securities of any series, or any Tranche thereof, denominated in any currency other than Dollars or in a composite currency (the
“Required Currency”), except as otherwise specified with respect to such Debt Securities as contemplated by Section 3.01,
the obligation of the Company to make any payment of the principal thereof, or the premium or interest thereon, shall not be discharged
or satisfied by any tender by the Company, or recovery by the Trustee, in any currency other than the Required Currency, except to the
extent that such tender or recovery shall result in the Trustee timely holding the full amount of the Required Currency then due and
payable. If any such tender or recovery is in a currency other than the Required Currency, the Trustee may take such actions as it considers
appropriate to exchange such currency for the Required Currency. The costs and risks of any such exchange, including without limitation
the risks of delay and exchange rate fluctuation, shall be borne by the Company, the Company shall remain fully liable for any shortfall
or delinquency in the full amount of Required Currency then due and payable, and in no circumstances shall the Trustee be liable therefor
except in the case of its negligence or willful misconduct.
| Section 3.12. |
Extension of Interest Payment. |
The Company shall
have the right at any time, so long as the Company is not in default in the payment of interest on the Debt Securities of any series
hereunder, to extend interest payment periods on all Debt Securities of one or more series, or Tranches thereof, if so specified as contemplated
by Section 3.01 with respect to such Debt Securities and upon such terms as may be specified as contemplated by Section 3.01
with respect to such Debt Securities.
ARTICLE IV
REDEMPTION OF DEBT SECURITIES
| Section 4.01. |
Applicability of Article. |
Debt Securities
of any series, or any Tranche thereof, that are redeemable before their Stated Maturity shall be redeemable in accordance with their
terms and (except as otherwise specified as contemplated by Section 3.01 for Debt Securities of such series or Tranche) in
accordance with this Article.
| Section 4.02. |
Election to Redeem; Notice to Trustee. |
The election of
the Company to redeem any Debt Securities shall be evidenced by a Board Resolution and/or an Officer’s Certificate. The Company
shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee in writing of such Redemption Date and of the principal amount of such Debt Securities to be redeemed. In the case
of any redemption of Debt Securities (a) prior to the expiration of any restriction on such redemption provided in the terms of
such Debt Securities or elsewhere in this Indenture or (b) pursuant to an election of the Company that is subject to a condition
specified in the terms of such Debt Securities, the Company shall furnish the Trustee with an Officer’s Certificate evidencing
compliance with such restriction or condition.
| Section 4.03. |
Selection of Debt Securities to be Redeemed. |
If less than all
the Debt Securities of any series, or any Tranche thereof, are to be redeemed, the particular Debt Securities to be redeemed shall be
selected by the Trustee from the Outstanding Debt Securities of such series or Tranche not previously called for redemption, by such
method as shall be provided for any particular series, or, in the absence of any such provision, by such method of random selection as
the Trustee shall deem fair and appropriate and which may, in any case, provide for the selection for redemption of portions (equal to
the minimum authorized denomination for Debt Securities of such series or Tranche or any integral multiple thereof) of the principal
amount of Debt Securities of such series or Tranche of a denomination larger than the minimum authorized denomination for Debt Securities
of such series or Tranche; provided, however, that if, as indicated in an Officer’s Certificate, the Company shall
have offered to purchase all or any principal amount of the Debt Securities then Outstanding of any series, or any Tranche thereof, and
less than all of such Debt Securities as to which such offer was made shall have been tendered to the Company for such purchase, the
Trustee, if so directed by Company Order, shall select for redemption all or any principal amount of such Debt Securities that have not
been so tendered.
If the Debt Securities
are then held in the form of a Global Security, the Debt Securities to be redeemed shall be selected in accordance with the customary
procedures of the Depositary.
The Trustee shall
promptly notify the Company and the Debt Security Registrar in writing of the Debt Securities selected for redemption and, in the case
of any Debt Securities selected to be redeemed in part, the principal amount thereof to be redeemed.
For all purposes
of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Debt Securities shall relate,
in the case of any Debt Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Debt Securities
that has been or is to be redeemed.
| Section 4.04. |
Notice of Redemption. |
Notice of redemption
shall be given in the manner provided in Section 1.06 to the Holders of the Debt Securities to be redeemed not less than
30 nor more than 60 days prior to the Redemption Date.
All notices of redemption
shall state:
(a) the
Redemption Date,
(b) the
Redemption Price,
(c) if
less than all the Debt Securities of any series or Tranche are to be redeemed, the identification of the particular Debt Securities to
be redeemed and the portion of the principal amount of any Debt Security to be redeemed in part,
(d) that
on the Redemption Date, the Redemption Price, together with accrued interest (including Additional Interest), if any, to the Redemption
Date, will become due and payable upon each such Debt Security to be redeemed and, if applicable and provided that the Redemption Price
is received by the Paying Agent or Agents on or prior to the Redemption Date, that interest (including any Additional Interest) thereon
will cease to accrue on and after said date,
(e) the
place or places where such Debt Securities are to be surrendered for payment of the Redemption Price and accrued interest, if any, unless
it shall have been specified as contemplated by Section 3.01 with respect to such Debt Securities that such surrender shall
not be required,
(f) that
the redemption is for a sinking or other fund, if such is the case, and
(g) such
other matters as the Company shall deem desirable or appropriate (including CUSIP numbers with respect to such Debt Securities, if the
Company shall so elect, in which event such notice of redemption may contain a disclaimer as to the correctness of such numbers either
as printed on the Debt Securities or on such notice of redemption).
Unless otherwise
specified with respect to any Debt Securities in accordance with Section 3.01, with respect to any notice of redemption of
Debt Securities at the election of the Company, unless, upon the giving of such notice, such Debt Securities shall be deemed to have
been paid in accordance with Section 7.01, such notice may state that such redemption shall be conditional upon the receipt
by the Paying Agent or Agents for such Debt Securities, on or prior to the date fixed for such redemption, of money sufficient to pay
the principal of and premium, if any, and interest (including Additional Interest), if any, on such Debt Securities and that if such
money shall not have been so received such notice shall be of no force or effect and the Company shall not be required to redeem such
Debt Securities. In the event that such notice of redemption contains such a condition and such money is not so received, the redemption
shall not be made and within a reasonable time thereafter notice shall be given, in the manner in which the notice of redemption was
given, that such money was not so received and such redemption was not required to be made, and the Paying Agent or Agents for the Debt
Securities otherwise to have been redeemed shall promptly return to the Holders thereof any of such Debt Securities that had been surrendered
for payment upon such redemption.
Notice of redemption
of Debt Securities to be redeemed at the election of the Company, and any notice of non-satisfaction of a condition for redemption as
aforesaid, shall be given by the Company or, at the Company’s request, by the Debt Security Registrar in the name and at the expense
of the Company. Notice of mandatory redemption of Debt Securities shall be given by the Debt Security Registrar in the name and at the
expense of the Company.
Section 4.05. Debt
Securities Payable on Redemption Date.
Notice of redemption
having been given as aforesaid, and the conditions, if any, set forth in such notice having been satisfied, the Debt Securities or portions
thereof so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and
after such date (unless, in the case of an unconditional notice of redemption, the Company shall default in the payment of the Redemption
Price and accrued interest (including Additional Interest), if any) such Debt Securities or portions thereof, if interest-bearing, shall
cease to bear interest. Upon surrender of any such Debt Security for redemption in accordance with such notice, such Debt Security or
portion thereof shall be paid by the Company at the Redemption Price, together with accrued interest (including Additional Interest),
if any, to the Redemption Date; provided, however, that no such surrender shall be a condition to such payment if so specified
as contemplated by Section 3.01 with respect to such Debt Security; and provided, further, that except as otherwise
specified as contemplated by Section 3.01 with respect to such Debt Security, any installment of interest on any Debt Security
the Stated Maturity of which installment is on or prior to the Redemption Date shall be payable to the Holder of such Debt Security,
or one or more Predecessor Debt Securities, registered as such at the close of business on the related Regular Record Date according
to the terms of such Debt Security and subject to the provisions of Section 3.07.
Section 4.06. Debt
Securities Redeemed in Part.
Upon the surrender
of any Debt Security that is to be redeemed only in part at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), the Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Debt Security, without service charge, a new Debt Security or Debt Securities of the same series and Tranche, of any authorized
denomination requested by such Holder and of like tenor and in aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Debt Security so surrendered.
ARTICLE V
SINKING FUNDS
Section 5.01. Applicability
of Article.
The
provisions of this Article shall be applicable to any sinking fund for the retirement of the Debt Securities of any series, or any
Tranche thereof, except as otherwise specified as contemplated by Section 3.01 for Debt Securities of such series or Tranche.
The
minimum amount of any sinking fund payment provided for by the terms of Debt Securities of any series, or any Tranche thereof, is herein
referred to as a “mandatory sinking fund payment,” and any payment in excess of such minimum amount provided for by the terms
of Debt Securities of any series, or any Tranche thereof, is herein referred to as an “optional sinking fund payment.” If
provided for by the terms of Debt Securities of any series, or any Tranche thereof, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 5.02. Each sinking fund payment shall be applied to the redemption of Debt Securities
of the series or Tranche in respect of which it was made as provided for by the terms of such Debt Securities.
Section 5.02. Satisfaction
of Sinking Fund Payments with Debt Securities.
The
Company (a) may deliver to the Trustee Outstanding Debt Securities (other than any previously called for redemption) of a series
or Tranche in respect of which a mandatory sinking fund payment is to be made and (b) may apply as a credit Debt Securities of such
series or Tranche that have been purchased by the Company or redeemed either at the election of the Company pursuant to the terms of
such Debt Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Debt Securities,
in each case in satisfaction of all or any part of such mandatory sinking fund payment; provided, however, that no Debt
Securities shall be applied in satisfaction of a mandatory sinking fund payment if such Debt Securities shall have been previously so
applied. Debt Securities so applied shall be received and credited for such purpose by the Trustee at the Redemption Price specified
in such Debt Securities for redemption through operation of the sinking fund and the amount of such mandatory sinking fund payment shall
be reduced accordingly.
Section 5.03. Redemption
of Debt Securities for Sinking Fund.
Not
less than 45 days prior to each sinking fund payment date for the Debt Securities of any series, or any Tranche thereof, the Company
shall deliver to the Trustee an Officer’s Certificate specifying:
(a) the
amount of the next succeeding mandatory sinking fund payment for such series or Tranche;
(b) the
amount, if any, of the optional sinking fund payment to be made together with such mandatory sinking fund payment;
(c) the
aggregate sinking fund payment;
(d) the
portion, if any, of such aggregate sinking fund payment that is to be satisfied by the payment of cash; and
(e) the
portion, if any, of such aggregate sinking fund payment that is to be satisfied by delivering and crediting Debt Securities of such series
or Tranche pursuant to Section 5.02 and stating the basis for such credit and that such Debt Securities have not previously
been so credited, and, if it has not already done so, the Company shall also deliver to the Trustee any Debt Securities to be so delivered.
If
the Company shall not have delivered such Officer’s Certificate and, to the extent applicable, all such Debt Securities, on or
prior to the 45th day prior to such sinking fund payment date, the sinking fund payment for such series or Tranche in respect of such
sinking fund payment date shall be made entirely in cash in the amount of the mandatory sinking fund payment. Not less than 30 days before
each such sinking fund payment date the Trustee shall select the Debt Securities to be redeemed upon such sinking fund payment date in
the manner specified in Section 4.03 and the Debt Security Registrar shall cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in Section 4.04. Such notice having been duly given,
the redemption of such Debt Securities shall be made upon the terms and in the manner stated in Sections 4.05 and 4.06.
ARTICLE VI
COVENANTS
Section 6.01. Payment
of Principal, Premium and Interest.
The Company shall
pay the principal of and premium, if any, and interest, if any, on the Debt Securities of each series in accordance with the terms of
such Debt Securities and this Indenture.
Section 6.02. Maintenance
of Office or Agency.
The Company shall
maintain in each Place of Payment for the Debt Securities of each series, or any Tranche thereof, an office or agency where payment of
such Debt Securities shall be made, where the registration of transfer or exchange of such Debt Securities may be effected and where
notices and demands to or upon the Company in respect of such Debt Securities and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the location, of each such office or agency and prompt notice
to the Holders of any such change in the manner specified in Section 1.06. If at any time the Company shall fail to maintain
any such required office or agency in respect of Debt Securities of any series, or any Tranche thereof, or shall fail to furnish the
Trustee with the address thereof, payment of such Debt Securities shall be made, registration of transfer or exchange thereof may be
effected and notices and demands in respect thereof may be served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent for all such purposes in any such event.
The Company may
also from time to time designate one or more other offices or agencies with respect to the Debt Securities of one or more series, or
any Tranche thereof, for any or all of the foregoing purposes and may from time to time rescind such designations; provided, however,
that, unless otherwise specified as contemplated by Section 3.01 with respect to the Debt Securities of such series or Tranche
no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency for such
purposes in each Place of Payment for such Debt Securities in accordance with the requirements set forth above. The Company shall give
prompt written notice to the Trustee, and prompt notice to the Holders in the manner specified in Section 1.06, of any such
designation or rescission and of any change in the location of any such other office or agency.
Anything herein
to the contrary notwithstanding, any office or agency required by this Section may be maintained at an office of the Company, in
which event the Company shall perform all functions to be performed at such office or agency.
Section 6.03. Money
for Debt Securities Payments to be Held in Trust.
If the Company shall
at any time act as its own Paying Agent with respect to the Debt Securities of any series, or any Tranche thereof, it shall, on or before
each due date of the principal of and premium, if any, and interest (including Additional Interest), if any, on any of such Debt Securities,
segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and premium or interest
(including Additional Interest) so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided.
The Company shall promptly notify the Trustee of any failure by the Company (or any other obligor on such Debt Securities) to make any
payment of principal of or premium, if any, or interest (including Additional Interest), if any, on such Debt Securities.
Whenever the Company
shall have one or more Paying Agents for the Debt Securities of any series, or any Tranche thereof, it shall, on or before each due date
of the principal of and premium, if any, and interest (including Additional Interest), if any, on such Debt Securities, deposit with
such Paying Agents sums sufficient (without duplication) to pay the principal and premium or interest (including Additional Interest)
so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest (including
Additional Interest), and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of any failure by it
so to act.
The Company shall
cause each Paying Agent for the Debt Securities of any series, or any Tranche thereof, other than the Company or the Trustee, to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent shall:
(a) hold
all sums held by it for the payment of the principal of and premium, if any, or interest (including Additional Interest), if any, on
such Debt Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give
the Trustee notice of any failure by the Company (or any other obligor upon such Debt Securities) to make any payment of principal of
or premium, if any, or interest, (including Additional Interest) if any, on such Debt Securities; and
(c) at
any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent and furnish to the Trustee such information as it possesses regarding the names and addresses of the
Persons entitled to such sums.
The Company may
at any time pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying
Agent and, if so stated in a Company Order delivered to the Trustee, in accordance with the provisions of Article VII; and,
upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited
with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of and premium, if any,
or interest (including Additional Interest), if any, on any Debt Security and remaining unclaimed for two years after such principal
and premium, if any, or interest (including Additional Interest) has become due and payable shall be paid to the Company on Company Request,
or, if then held by the Company, shall be discharged from such trust; and, upon such payment or discharge, the Holder of such Debt Security
shall, as an unsecured general creditor and not as a Holder of an Outstanding Debt Security, look only to the Company for payment of
the amount so due and payable and remaining unpaid, and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee
or such Paying Agent, before being required to make any such payment to the Company, may at the expense of the Company cause to be mailed,
on one occasion only, notice to such Holder that such money remains unclaimed and that, after a date specified therein, which shall not
be less than 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be paid to the Company.
Section 6.04. Corporate
Existence.
Subject to the rights
of the Company under Article XI, the Company shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence.
Section 6.05. Maintenance
of Properties.
The Company shall
cause (or, with respect to property owned in common with others, make reasonable effort to cause) all its properties used or useful in
the conduct of its business to be maintained and kept in good condition, repair and working order and shall cause (or, with respect to
property owned in common with others, make reasonable effort to cause) to be made all necessary repairs, renewals, replacements, betterments
and improvements thereof, all as, in the judgment of the Company, may be necessary so that the business carried on in connection therewith
may be properly conducted; provided, however, that nothing in this Section shall prevent the Company from discontinuing,
or causing the discontinuance of, the operation and maintenance of any of its properties if such discontinuance is, in the judgment of
the Company, desirable in the conduct of its business.
Section 6.06. Annual
Officer’s Certificate as to Compliance.
Not later than _______________
in each year, commencing _______________, the Company shall deliver to the Trustee an Officer’s Certificate, which need not comply
with Section 1.02, executed by the principal executive officer, the principal financial officer or the principal accounting
officer of the Company, stating whether, to such officer’s knowledge, the Company is in compliance with all conditions and covenants
under this Indenture, such compliance to be determined without regard to any period of grace or requirement of notice under this Indenture,
and making any other statements as may be required by the provisions of Section 314(a)(4) of the Trust Indenture Act.
Section 6.07. Waiver
of Certain Covenants.
The Company may
omit in any particular instance to comply with any term, provision or condition set forth in (a) Section 6.02 or any
additional covenant or restriction specified with respect to the Debt Securities of any series, or any Tranche thereof, as contemplated
by Section 3.01 if before the time for such compliance the Holders of at least a majority in aggregate principal amount of
the Outstanding Debt Securities of all series and Tranches with respect to which compliance with Section 6.02 or such additional
covenant or restriction is to be omitted, considered as one class, shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such term, provision or condition and (b) Sections 6.04, 6.05, 6.06
or Article XI if before the time for such compliance the Holders of at least a majority in principal amount of Debt Securities
Outstanding under this Indenture shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance
with such term, provision or condition; but, in the case of (a) or (b), no such waiver shall extend to or affect such term, provision
or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company
and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.
ARTICLE VII
SATISFACTION AND DISCHARGE
Section 7.01. Satisfaction
and Discharge of Debt Securities.
Any Debt Security
or Debt Securities, or any portion of the principal amount thereof, shall be deemed to have been paid for all purposes of this Indenture,
and the entire indebtedness of the Company in respect thereof shall be deemed to have been satisfied and discharged, if there shall have
been irrevocably deposited with the Trustee or any Paying Agent (other than the Company), in trust:
(a) money
in an amount that shall be sufficient, or
(b) in
the case of a deposit made prior to the Maturity of such Debt Securities or portions thereof, Eligible Obligations, which shall not contain
provisions permitting the redemption or other prepayment thereof at the option of the issuer thereof, the principal of and the interest
on that when due, without any regard to reinvestment thereof, will provide moneys which, together with the money, if any, deposited with
or held by the Trustee or such Paying Agent, shall be sufficient, or
(c) a
combination of (a) or (b) that shall be sufficient,
to pay when due the principal of and
premium, if any, and interest (including Additional Interest), if any, due and to become due on such Debt Securities or portions thereof
on or prior to Maturity; provided, however, that in the case of the provision for payment or redemption of less than all
the Debt Securities of any series or Tranche, such Debt Securities or portions thereof shall have been selected by the Trustee as provided
herein and, in the case of a redemption, the notice requisite to the validity of such redemption shall have been given or irrevocable
authority shall have been given by the Company to the Trustee to give such notice, under arrangements satisfactory to the Trustee; and
provided, further, that the Company shall have delivered to the Trustee and such Paying Agent:
(x) if
such deposit shall have been made prior to the Maturity of such Debt Securities, a Company Order stating that the money and Eligible
Obligations deposited in accordance with this Section shall be held in trust, as provided in Section 7.03;
(y) if
Eligible Obligations shall have been deposited, an Opinion of Counsel that the obligations so deposited constitute Eligible Obligations
and do not contain provisions permitting the redemption or other prepayment at the option of the issuer thereof, and an opinion of an
independent public accountant of nationally recognized standing, selected by the Company, to the effect that the requirements set forth
in clause (b) above have been satisfied; and
(z) if
such deposit shall have been made prior to the Maturity of such Debt Securities, an Officer’s Certificate stating the Company’s
intention that, upon delivery of such Officer’s Certificate, its indebtedness in respect of such Debt Securities or portions thereof
will have been satisfied and discharged as contemplated in this Section.
If the Company shall
make any deposit of money and/or Eligible Obligations with respect to any Debt Securities, or any portion of the principal amount thereof,
as contemplated by this section, the Company shall not deliver an Officer’s Certificate described in clause (z) above unless
the Company shall also deliver to the Trustee, together with such Officer’s Certificate, an Opinion of Counsel to the effect that,
as a result of a change in law occurring after the date of this Indenture, the Holders of such Debt Securities, or portions thereof,
will not recognize income, gain or loss for United States federal income tax purposes as a result of the satisfaction and discharge of
the Company’s indebtedness in respect thereof and will be subject to United States federal income tax on the same amounts, at the
same times and in the same manner as if such satisfaction and discharge had not been effected.
Upon the deposit
of money or Eligible Obligations, or both, in accordance with this Section, together with the documents required by clauses (x), (y) and
(z) above, the Trustee shall, upon receipt of a Company Request, acknowledge in writing that the Debt Security or Debt Securities
or portions thereof with respect to which such deposit was made are deemed to have been paid for all purposes of this Indenture and that
the entire indebtedness of the Company in respect thereof has been satisfied and discharged as contemplated in this Section. In the event
that all of the conditions set forth in the first paragraph of this Section shall have been satisfied in respect of any Debt Securities
or portions thereof except that, for any reason, the Officer’s Certificate specified in clause (z) shall not have been delivered,
such Debt Securities or portions thereof shall nevertheless be deemed to have been paid for all purposes of this Indenture, and the Holders
of such Debt Securities or portions thereof shall nevertheless be no longer entitled to the benefits of this Indenture or of any of the
covenants of the Company under Article VI (except the covenants contained in Sections 6.02 and 6.03) or any
other covenants made in respect of such Debt Securities or portions thereof as contemplated by Section 3.01, but the indebtedness
of the Company in respect of such Debt Securities or portions thereof shall not be deemed to have been satisfied and discharged prior
to Maturity for any other purpose, and the Holders of such Debt Securities or portions thereof shall continue to be entitled to look
to the Company for payment of the indebtedness represented thereby; and, upon receipt of a Company Request, the Trustee shall acknowledge
in writing that such Debt Securities or portions thereof are deemed to have been paid for all purposes of this Indenture.
If payment at Stated
Maturity of less than all of the Debt Securities of any series, or any Tranche thereof, is to be provided for in the manner and with
the effect provided in this Section, the Trustee shall select such Debt Securities, or portions of principal amount thereof, in the manner
specified by Section 4.03 for selection for redemption of less than all the Debt Securities of a series or Tranche.
In the event that
Debt Securities that shall be deemed to have been paid for purposes of this Indenture, and, if such is the case, in respect of which
the Company’s indebtedness shall have been satisfied and discharged, all as provided in this Section, do not mature and are not
to be redeemed within the 60 day period commencing with the date of the deposit of moneys or Eligible Obligations, as aforesaid, the
Company shall, as promptly as practicable, give a notice, in the same manner as a notice of redemption with respect to such Debt Securities,
to the Holders of such Debt Securities to the effect that such deposit has been made and the effect thereof.
Notwithstanding
that any Debt Securities shall be deemed to have been paid for purposes of this Indenture, as aforesaid, the obligations of the Company
and the Trustee in respect of such Debt Securities under Sections 3.04, 3.05, 3.06, 4.04, 5.03 (as
to notice of redemption), 6.02, 6.03, 9.07, 9.14 and 9.15 and this Article shall survive.
The Company shall
pay, and shall indemnify the Trustee or any Paying Agent with which Eligible Obligations shall have been deposited as provided in this
Section against any tax, fee or other charge imposed on or assessed against such Eligible Obligations or the principal or interest
received in respect of such Eligible Obligations, including, but not limited to, any such tax payable by any entity deemed, for tax purposes,
to have been created as a result of such deposit.
Anything herein
to the contrary notwithstanding, (a) if, at any time after a Debt Security would be deemed to have been paid for purposes of this
Indenture, and, if such is the case, the Company’s indebtedness in respect thereof would be deemed to have been satisfied or discharged,
pursuant to this Section (without regard to the provisions of this paragraph), the Trustee or any Paying Agent, as the case may
be, shall be required to return the money or Eligible Obligations, or combination thereof, deposited with it as aforesaid to the Company
or its representative under any applicable federal or state bankruptcy, insolvency or other similar law, such Debt Security shall thereupon
be deemed retroactively not to have been paid and any satisfaction and discharge of the Company’s indebtedness in respect thereof
shall retroactively be deemed not to have been effected, and such Debt Security shall be deemed to remain Outstanding and (b) any
satisfaction and discharge of the Company’s indebtedness in respect of any Debt Security shall be subject to the provisions of
the last paragraph of Section 6.03.
Section 7.02. Satisfaction
and Discharge of Indenture.
This Indenture shall
upon Company Request cease to be of further effect (except as hereinafter expressly provided), and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
(a) no
Debt Securities remain Outstanding hereunder; and
(b) the
Company has paid or caused to be paid all other sums payable hereunder by the Company;
provided, however, that
if, in accordance with the last paragraph of Section 7.01, any Debt Security, previously deemed to have been paid for purposes
of this Indenture, shall be deemed retroactively not to have been so paid, this Indenture shall thereupon be deemed retroactively not
to have been satisfied and discharged, as aforesaid, and to remain in full force and effect, and the Company shall execute and deliver
such instruments as the Trustee shall reasonably request to evidence and acknowledge the same.
Notwithstanding
the satisfaction and discharge of this Indenture as aforesaid, the obligations of the Company and the Trustee under Sections 3.04,
3.05, 3.06, 4.04, 5.03 (as to notice of redemption), 6.02, 6.03, 9.07, 9.14 and
9.15 and this Article shall survive.
Upon satisfaction
and discharge of this Indenture as provided in this Section, the Trustee shall assign, transfer and turn over to the Company, subject
to the lien provided by Section 9.07, any and all money, securities and other property then held by the Trustee for the benefit
of the Holders of the Debt Securities other than money and Eligible Obligations held by the Trustee pursuant to Section 7.03.
Section 7.03. Application
of Trust Money.
Neither the Eligible
Obligations nor the money deposited pursuant to Section 7.01, nor the principal or interest payments on any such Eligible
Obligations, shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of,
and premium, if any, and interest (including Additional Interest), if any, on, the Debt Securities or portions of principal amount thereof
in respect of which such deposit was made, all subject, however, to the provisions of Section 6.03; provided, however,
that, so long as there shall not have occurred and be continuing an Event of Default, or an event that, with the giving of notice or
the passage of time, would become an Event of Default, any cash received from such principal or interest payments on such Eligible Obligations,
if not then needed for such purpose, shall, to the extent practicable, be invested in Eligible Obligations of the type described in Section 7.01(b) maturing
at such times and in such amounts as shall be sufficient to pay when due the principal of and premium, if any, and interest (including
Additional Interest), if any, due and to become due on such Debt Securities or portions thereof on and prior to the Maturity thereof,
and interest earned from such reinvestment shall be paid over to the Company as received, free and clear of any trust, lien or pledge
under this Indenture except the lien provided by Section 9.07; and provided, further, that, so long as there
shall not have occurred and be continuing an Event of Default, or an event that, with the giving of notice or the passage of time, would
become an Event of Default, any moneys held in accordance with this Section on the Maturity of all such Debt Securities in excess
of the amount required to pay the principal of and premium, if any, and interest (including Additional Interest), if any, then due on
such Debt Securities shall be paid over to the Company free and clear of any trust, lien or pledge under this Indenture except the lien
provided by Section 9.07; and provided, further, that if an Event of Default, or an event that, with the giving
of notice or the passage of time, would become an Event of Default, shall have occurred and be continuing, moneys to be paid over to
the Company pursuant to this Section shall be held until such Event of Default, or event that, with the giving of notice or the
passage of time, would become an Event of Default, shall have been waived or cured.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.01. Events
of Default.
“Event
of Default,” wherever used herein with respect to Debt Securities of any series, means any one of the following events:
(a) failure
to pay interest (including Additional Interest), if any, on any Debt Security of such series within 30 days after the same becomes due
and payable (whether or not payment is prohibited by the provisions of Article XV hereof); provided, however,
that a valid extension of the interest payment period by the Company as contemplated in Section 3.12 of this Indenture shall
not constitute a failure to pay interest for this purpose; or
(b) failure
to pay the principal of or premium, if any, on any Debt Security of such series when due and payable under this Indenture (whether or
not payment is prohibited by the provisions of Article XV hereof); or
(c) failure
to make any sinking fund payment with respect to such series when due; or
(d) failure
to perform or breach of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in the
performance of which or breach of which is elsewhere in this Section specifically dealt with or which has expressly been included
in this Indenture solely for the benefit of one or more series of Debt Securities other than such series) for a period of 60 days after
there has been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by the Holders
of at least 33% in principal amount of the Outstanding Debt Securities of such series, a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder, unless the Trustee, or the
Trustee and the Holders of a principal amount of Debt Securities of such series not less than the principal amount of Debt Securities
the Holders of which gave such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration;
provided, however, that the Trustee, or the Trustee and the Holders of such principal amount of Debt Securities of such
series, as the case may be, shall be deemed to have agreed to an extension of such period for a maximum of one hundred twenty (120) days
if corrective action is initiated by the Company within such period and is being diligently pursued; or
(e) the
entry by a court having jurisdiction in the premises of (1) a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (2) a decree
or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition by one or more Persons other than the
Company seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable federal or
state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official for the Company
or for any substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order for
relief or any such other decree or order shall have remained unstayed and in effect for a period of 90 consecutive days; or
(f) the
commencement by the Company of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization
or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in a case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by
it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or of any substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the authorization
of such action by the Board of Trustees; or
(g) any
other Event of Default specified with respect to Debt Securities of such series.
Section 8.02. Acceleration
of Maturity; Rescission and Annulment.
If an Event of Default
due to the default in payment of principal of, or premium, if any, or interest (including Additional Interest) on, any series of Debt
Securities or due to the default in the performance or breach of any other covenant or warranty of the Company applicable to the Debt
Securities of such series but not applicable to all Outstanding Debt Securities shall have occurred and be continuing, either the Trustee
or the Holders of not less than 33% in principal amount of the Debt Securities of such series may then declare the principal amount (or,
if any of the Debt Securities of such series are Discount Debt Securities, such portion of the principal amount as may be specified in
the terms thereof as contemplated by Section 3.01) of all Debt Securities of such series and premium, if any, and interest
(including Additional Interest) accrued thereon to be due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders). If an Event of Default due to default in the performance of any other of the covenants or warranties
herein applicable to all Outstanding Debt Securities or an Event of Default specified in Sections 8.01(e) or (f) shall
have occurred and be continuing, either the Trustee or the Holders of not less than 33% in principal amount of all Debt Securities then
Outstanding (considered as one class), and not the Holders of the Debt Securities of any one of such series, may declare the principal
amount (or, if any of the Debt Securities are Discount Debt Securities, such portion of the principal amount of such Debt Securities
as may be specified in the terms thereof as contemplated by Section 3.01) of all Debt Securities and premium, if any, and
interest accrued thereon to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the
Holders). As a consequence of each such declaration (herein referred to as a declaration of acceleration) with respect to Debt Securities
of any series, the principal amount (or portion thereof in the case of Discount Debt Securities) of such Debt Securities, premium, if
any, and interest (including Additional Interest) accrued thereon shall become due and payable immediately (provided that the payment
of principal of such Debt Securities shall remain subordinated to the extent provided in Article XV hereof).
With respect to
a series of Debt Securities to which a credit enhancement is applicable, the applicable supplemental indenture may provide that the provider
of such credit enhancement may, if default has occurred and is continuing with respect to such series, and subject to certain conditions,
have all the rights with respect to remedies that would otherwise have been exercisable by the Holders of Debt Securities of that series.
At any time after
such a declaration of acceleration with respect to Debt Securities of any series shall have been made and before a judgment or decree
for payment of the money due shall have been obtained by the Trustee as hereinafter in this Article provided, the Event or Events
of Default giving rise to such declaration of acceleration shall, without further act, be deemed to have been waived, and such declaration
and its consequences shall, without further act, be deemed to have been rescinded and annulled, if
(a) the
Company shall have paid or deposited with the Trustee a sum sufficient to pay
(1) all
overdue interest on all Debt Securities of such series;
(2) the
principal of and premium, if any, on any Debt Securities of such series that have become due otherwise than by such declaration of acceleration
and interest (including Additional Interest) thereon at the rate or rates prescribed therefor in such Debt Securities;
(3) to
the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Debt
Securities;
(4) all
amounts due to the Trustee under Section 9.07; and
(b) any
other Event or Events of Default with respect to Debt Securities of such series, other than the non-payment of the principal of Debt
Securities of such series that shall have become due solely by reason of such declaration of acceleration, shall have been cured or waived
as provided in Section 8.13.
No such rescission shall affect any
subsequent Event of Default or impair any right consequent thereon.
Section 8.03. Collection
of Indebtedness and Suits for Enforcement by Trustee.
If an Event of Default
described in clause (a), (b) or (c) of Section 8.01 shall have occurred and be continuing, the Company shall, upon
demand of the Trustee, pay to it, for the benefit of the Holders of the Debt Securities of the series with respect to which such Event
of Default shall have occurred, the whole amount then due and payable on such Debt Securities for principal and premium, if any, and
interest, if any, and, to the extent permitted by law, (i) interest on premium, if any, (ii) interest on any overdue principal
and (iii) Additional Interest, at the rate or rates prescribed therefor in such Debt Securities, and, in addition thereto, such
further amount as shall be sufficient to cover any amounts due to the Trustee under Section 9.07.
If the Company shall
fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Debt Securities and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the Company or any other obligor upon such Debt Securities, wherever situated.
If an Event of Default
with respect to Debt Securities of any series shall have occurred and be continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Debt Securities of such series under the Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
Section 8.04. Trustee
May File Proofs of Claim.
In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding
relative to the Company or any other obligor upon the Debt Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Debt Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue
principal or interest (including Additional Interest)) shall be entitled and empowered, by intervention in such proceeding or otherwise,
(a) to
file and prove a claim for the whole amount of principal, premium, if any, and interest (including Additional Interest), if any, owing
and unpaid in respect of the Debt Securities and to file such other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for amounts due to the Trustee under Section 9.07) and of the Holders
allowed in such judicial proceeding, and
(b) to
collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same,
and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amounts due it under Section 9.07.
Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Debt Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
Section 8.05. Trustee
May Enforce Claims without Possession of Debt Securities.
All rights of action
and claims under this Indenture or the Debt Securities may be prosecuted and enforced by the Trustee without the possession of any of
the Debt Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall
be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the
Holders in respect of which such judgment has been recovered.
Section 8.06. Application
of Money Collected.
Subject to the provisions
of Article XV, any money collected by the Trustee pursuant to this Article shall be applied in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or premium, if any,
or interest (including Additional Interest), if any, upon presentation of the Debt Securities in respect of which or for the benefit
of which such money shall have been collected and the notation thereon of the payment if only partially paid and upon surrender thereof
if fully paid:
FIRST: To the payment
of all amounts due the Trustee under Section 9.07;
SECOND: To the payment
of the amounts then due and unpaid upon the Debt Securities for principal of and premium, if any, and interest (including Additional
Interest), if any, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority
of any kind, according to the amounts due and payable on such Debt Securities for principal, premium, if any, and interest (including
Additional Interest), if any, respectively; and
THIRD: To the payment
of the remainder, if any, to the Company, or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction
may direct.
Section 8.07. Limitation
on Suits.
No Holder shall
have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:
(a) such
Holder shall have previously given written notice to the Trustee of a continuing Event of Default with respect to the Debt Securities
of such series;
(b) the
Holders of not less than a majority in aggregate principal amount of the Outstanding Debt Securities of all series in respect of which
an Event of Default shall have occurred and be continuing, considered as one class, shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(c) such
Holder or Holders shall have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the
Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceeding;
and
(e) no
direction inconsistent with such written request shall have been given to the Trustee during such 60-day period by the Holders of a majority
in aggregate principal amount of the Outstanding Debt Securities of all series in respect of which an Event of Default shall have occurred
and be continuing, considered as one class;
it being understood and intended that
no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture
to affect, disturb or prejudice the rights of any other of such Holders or to obtain or to seek to obtain priority or preference over
any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable
benefit of all of such Holders.
Section 8.08. Unconditional
Right of Holders to Receive Principal, Premium and Interest.
Notwithstanding
any other provision in this Indenture, the Holder of any Debt Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and premium, if any, and (subject to Section 3.07 and 3.12) interest (including
Additional Interest), if any, on such Debt Security on the Stated Maturity or Maturities expressed in such Debt Security (or, in the
case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not
be impaired without the consent of such Holder.
Section 8.09. Restoration
of Rights and Remedies.
If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding shall have been discontinued
or abandoned for any reason, or shall have been determined adversely to the Trustee or to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company, Trustee and such Holder shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding
had been instituted.
Section 8.10. Rights
and Remedies Cumulative.
Except as otherwise
provided in the last paragraph of Section 3.06, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment
of any other appropriate right or remedy.
Section 8.11. Delay
or Omission Not Waiver.
No delay or omission
of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or
by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or
by the Holders, as the case may be.
Section 8.12. Control
by Holders of Debt Securities.
If an Event of Default
shall have occurred and be continuing in respect of a series of Debt Securities, the Holders of a majority in principal amount of the
Outstanding Debt Securities of such series shall have the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Debt Securities of
such series; provided, however, that if an Event of Default shall have occurred and be continuing with respect to more
than one series of Debt Securities, the Holders of a majority in aggregate principal amount of the Outstanding Debt Securities of all
such series, considered as one class, shall have the right to make such direction, and not the Holders of the Debt Securities of any
one of such series; and provided, further, that
(a) such
direction shall not be in conflict with any rule of law or with this Indenture, and may not involve the Trustee in personal liability
in circumstances where indemnity would not in the Trustee’s reasonable discretion be adequate, and
(b) the
Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
Before proceeding
to exercise any right or power hereunder at the direction of such Holders, the Trustee shall be entitled to receive from such Holders
reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with any such
direction.
Section 8.13. Waiver
of Past Defaults.
The Holders of not
less than a majority in principal amount of the Outstanding Debt Securities of any series may on behalf of the Holders of all the Debt
Securities of such series waive any past default hereunder with respect to such series and its consequences, except a default
(a) in
the payment of the principal of or premium, if any, or interest (including Additional Interest), if any, on any Debt Security of such
series, or
(b) in
respect of a covenant or provision hereof that under Section 12.02 cannot be modified or amended without the consent of the
Holder of each Outstanding Debt Security of such series affected.
Upon any such waiver,
such default shall cease to exist, and any and all Events of Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 8.14. Undertaking
for Costs.
The Company and
the Trustee agree, and each Holder by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require,
in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant
in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions
of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted
by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Debt Securities
of all series in respect of which such suit may be brought, considered as one class, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of or premium, if any, or interest (including Additional Interest), if any, on any Debt Security
on or after the Stated Maturity or Maturities expressed in such Debt Security (or, in the case of redemption, on or after the Redemption
Date).
Section 8.15. Waiver
of Stay or Extension Laws.
The Company covenants
(to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE IX
THE TRUSTEE
Section 9.01. Certain
Duties and Responsibilities.
(a) The
Trustee shall have and be subject to all the duties and responsibilities specified with respect to an indenture trustee in the Trust
Indenture Act, and no implied covenants or obligations shall be read into this Indenture against the Trustee.
(b) The
Trustee, prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default that may have occurred,
undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default of
which a Responsible Officer of the Trustee has knowledge has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of such person’s own affairs.
(c) No
provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that prior to the occurrence of an Event of Default and after the curing or waiving
of all Events of Default that may have occurred
(i) the
duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not
be liable except for the performance of, or failure to perform, such duties and obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) in
the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture; but, in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of
this Indenture.
(d) The
Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith, in accordance with the direction
of the Holders of Debt Securities pursuant to Section 8.12, relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture.
(e) No
provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that it is not reasonably assured of receiving (i) repayment of such funds or (ii) indemnity, in an amount deemed
adequate to the Trustee in its reasonable judgment, against such risk or liability.
(f) Notwithstanding
anything contained in this Indenture to the contrary, the duties and responsibilities of the Trustee under this Indenture shall be subject
to the protections, exculpations and limitations on liability afforded to the Trustee under the provisions of the Trust Indenture Act,
including those provisions of such Act deemed by such Act to be included herein.
(g) Whether
or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
Section 9.02. Notice
of Defaults.
The Trustee shall
give the Holders notice of any default hereunder with respect to the Debt Securities of any series to the Holders of Debt Securities
of such series of which it has knowledge (within the meaning of Section 9.03(h)) in the manner and to the extent required
to do so by the Trust Indenture Act, unless such default shall have been cured or waived; provided, however, that in the
case of any default of the character specified in Section 8.01(d), no such notice to Holders shall be given until at least
60 days after the occurrence thereof. For the purpose of this Section, the term “default” means any event that is, or after
notice or lapse of time, or both, would become, an Event of Default.
Section 9.03. Certain
Rights of Trustee.
Subject to the provisions
of Section 9.01 and to the applicable provisions of the Trust Indenture Act:
(a) the
Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(b) any
request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order, or as otherwise
expressly provided herein, and any resolution of the Board of Trustees may be sufficiently evidenced by a Board Resolution;
(c) whenever
in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officer’s Certificate;
(d) the
Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the
Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction
of any Holder pursuant to this Indenture, unless such Holder shall have offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction;
(f) the
Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall (subject to applicable legal requirements)
be entitled to examine, during normal business hours, the books, records and premises of the Company, personally or by agent or attorney;
(g) the
Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder; and
(h) the
Trustee shall not be charged with knowledge of any default or Event of Default with respect to the Debt Securities of any series for
which it is acting as Trustee unless either (1) a Responsible Officer of the Trustee shall have knowledge of the default or Event
of Default or (2) written notice of such default or Event of Default shall have been given to the Trustee by the Company, any other
obligor on such Debt Securities or by any Holder of such Debt Securities.
Section 9.04. Not
Responsible for Recitals or Issuance of Debt Securities.
The recitals contained
herein and in the Debt Securities (except the Trustee’s certificates of authentication) shall be taken as the statements of the
Company, and neither the Trustee nor any Authenticating Agent assumes responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Debt Securities. Neither the Trustee nor any Authenticating Agent shall
be accountable for the use or application by the Company of Debt Securities or the proceeds thereof. The Trustee shall not incur any
liability for non-performance or breach of any obligation hereunder to the extent that the Trustee is delayed in performing, unable to
perform or breaches such obligation because of acts of God, war, terrorism, fire, floods, electrical outages or other causes reasonably
beyond its control; provided, however, that the Trustee shall use commercially reasonable efforts consistent with accepted practices
for corporate trustees to maintain performance without delay or resume performance as soon as reasonably practicable under the circumstances.
Section 9.05. May Hold
Debt Securities.
Each of the Trustee,
any Authenticating Agent, any Paying Agent, any Debt Security Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Debt Securities and, subject to Sections 9.08 and 9.13, may otherwise deal
with the Company with the same rights it would have if it were not the Trustee, Authenticating Agent, Paying Agent, Debt Security Registrar
or such other agent.
Section 9.06. Money
Held in Trust.
Money held by the
Trustee in trust hereunder need not be segregated from other funds, except to the extent required by law. The Trustee shall be under
no liability for interest on investment of any money received by it hereunder except as expressly provided herein or otherwise agreed
with, and for the sole benefit of, the Company.
Section 9.07. Compensation
and Reimbursement.
The Company shall
(a) pay
to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express trust);
(b) except
as otherwise expressly provided herein, reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances
reasonably incurred or made by the Trustee in accordance with any provision of this Indenture, including the costs of collection (including
the reasonable compensation and the expenses and disbursements of its agents and counsel), except to the extent that any such expense,
disbursement or advance may be attributable to its negligence, willful misconduct or bad faith; and
(c) indemnify
the Trustee and hold it harmless from and against any and all losses, demands, claims, liabilities, causes of action or expenses (including
reasonable attorneys’ fees and expenses) incurred by it arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder or the performance of its duties hereunder, including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, demand, claim, liability, cause of action or expense may be attributable to its negligence, willful misconduct
or bad faith and may assume the defense of the Trustee with counsel acceptable to the Trustee, unless the Trustee shall have been advised
by counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the
Company, in which case the Trustee may engage separate counsel, and the fees and expenses of such counsel shall be assumed by the Company.
As security for
the performance of the obligations of the Company under this Section, the Trustee shall have a lien prior to the Debt Securities upon
all property and funds held or collected by the Trustee as such other than property and funds held in trust for the payment of principal,
premium, if any, and interest on Debt Securities. “Trustee” for purposes of this Section shall include any predecessor
Trustee; provided, however, that the negligence, willful misconduct or bad faith of any Trustee hereunder shall not affect
the rights of any other Trustee hereunder. When a Trustee incurs expenses or renders services in connection with an Event of Default
specified in Sections 8.01(e) or (f), the expenses (including the reasonable charges and expenses of its counsel)
and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law. The provisions of this Section shall survive termination of this Indenture and the resignation
or removal of the Trustee.
Section 9.08. Disqualification;
Conflicting Interests.
If the Trustee shall
have or acquire any conflicting interest within the meaning of the Trust Indenture Act, it shall either eliminate such conflicting interest
or resign to the extent, in the manner and with the effect, and subject to the conditions, provided in the Trust Indenture Act and this
Indenture. For purposes of Section 310(b)(1) of the Trust Indenture Act and to the extent permitted thereby, the Trustee shall
not be deemed to have a conflicting interest by virtue of being a Trustee under (i) this Indenture with respect to Debt Securities
of one or more series or (ii) any other indenture to which the Trustee and the Company are a party, if any, or with respect to the
securities issued thereunder, if any.
Section 9.09. Corporate
Trustee Required; Eligibility.
There shall at all
times be a Trustee hereunder which shall be
(a) a
corporation organized and doing business under the laws of the United States, any state or territory thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $100,000,000 and subject
to supervision or examination by federal or state authority, or
(b) if
and to the extent permitted by the Commission by rule, regulation or order upon application, a corporation or other Person organized
and doing business under the laws of a foreign government, authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $100,000,000 or the Dollar equivalent of the applicable foreign currency and subject to supervision or
examination by authority of such foreign government or a political subdivision thereof substantially equivalent to supervision or examination
applicable to United States institutional trustees, and, in either case, qualified and eligible under this Article and the
Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of
such supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article.
Section 9.10. Resignation
and Removal; Appointment of Successor.
(a) No
resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 9.11.
(b) The
Trustee may resign at any time with respect to the Debt Securities of one or more series by giving written notice thereof to the Company.
If the instrument of acceptance by a successor Trustee required by Section 9.11 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the Debt Securities of such series.
(c) The
Trustee may be removed at any time with respect to the Debt Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Debt Securities of such series delivered to the Trustee and to the Company.
(d) If
at any time:
(1) the
Trustee shall fail to comply with Section 9.08 after written request therefor by the Company or by any Holder who has been
a bona fide Holder for at least six months, or
(2) the
Trustee shall cease to be eligible under Section 9.09 and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(3) the
Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case, (x) the Company by a Board Resolution may remove the Trustee
with respect to all Debt Securities or (y) subject to Section 8.14, any Holder who has been a bona fide Holder for at
least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee with respect to all Debt Securities and the appointment of a successor Trustee or Trustees.
(e) If
the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause
(other than as contemplated in clause (y) in Subsection (d) of this Section), with respect to the Debt Securities of one
or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Debt Securities
of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Debt Securities of
one or more or all of such series and that at any time there shall be only one Trustee with respect to the Debt Securities of any particular
series) and shall comply with the applicable requirements of Section 9.11. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Debt Securities of any series shall be appointed
by Act of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series delivered to the Company and
the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with
the applicable requirements of Section 9.11, become the successor Trustee with respect to the Debt Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Debt Securities
of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 9.11,
any Holder who has been a bona fide Holder of a Debt Security of such series for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the
Debt Securities of such series.
(f) So
long as no event that is, or after notice or lapse of time, or both, would become, an Event of Default shall have occurred and be continuing,
and except with respect to a Trustee appointed by Act of the Holders of a majority in principal amount of the Outstanding Debt Securities
pursuant to Subsection (e) of this Section, if the Company shall have delivered to the Trustee (i) a Board Resolution
appointing a successor Trustee, effective as of a date specified therein, and (ii) an instrument of acceptance of such appointment,
effective as of such date, by such successor Trustee in accordance with Section 9.11, the Trustee shall be deemed to have
resigned as contemplated in Subsection (b) of this Section, the successor Trustee shall be deemed to have been appointed by
the Company pursuant to Subsection (e) of this Section and such appointment shall be deemed to have been accepted as contemplated
in Section 9.11, all as of such date, and all other provisions of this Section and Section 9.11 shall be
applicable to such resignation, appointment and acceptance except to the extent inconsistent with this Subsection (f).
(g) The
Company or, should the Company fail so to act promptly, the successor Trustee, at the expense of the Company, shall give notice of each
resignation and each removal of the Trustee with respect to the Debt Securities of any series and each appointment of a successor Trustee
with respect to the Debt Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to all
Holders of Debt Securities of such series as their names and addresses appear in the Debt Security Register. Each notice shall include
the name of the successor Trustee with respect to the Debt Securities of such series and the address of its corporate trust office.
Section 9.11. Acceptance
of Appointment by Successor.
(a) In
case of the appointment hereunder of a successor Trustee with respect to the Debt Securities of all series, every such successor Trustee
so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon payment of all sums owed to it, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
(b) In
case of the appointment hereunder of a successor Trustee with respect to the Debt Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the Debt Securities of one or more series shall execute and
deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series to which the appointment
of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Debt Securities, shall contain
such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Debt Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested
in the retiring Trustee and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in
such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee
of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture, the resignation or removal of the retiring Trustee shall become effective
to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series to which
the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee, upon
payment of all sums owed to it, shall duly assign, transfer and deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee
relates.
(c) Upon
request of any such successor Trustee, the Company shall execute any instruments that fully vest in and confirm to such successor Trustee
all such rights, powers and trusts referred to in Subsection (a) or (b) of this Section, as the case may be.
(d) No
successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
Section 9.12. Merger,
Conversion, Consolidation or Succession to Business.
Any corporation
into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified
and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto.
In case any Debt Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Debt Securities so authenticated
with the same effect as if such successor Trustee had itself authenticated such Debt Securities.
Section 9.13. Preferential
Collection of Claims Against Company.
If the Trustee shall
be or become a creditor of the Company or any other obligor upon the Debt Securities (other than by reason of a relationship described
in Section 311(b) of the Trust Indenture Act), the Trustee shall be subject to any and all applicable provisions of the Trust
Indenture Act regarding the collection of claims against the Company or such other obligor. For purposes of Section 311(b) of
the Trust Indenture Act:
(a) the
term “cash transaction” means any transaction in which full payment for goods or securities sold is made within seven days
after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand;
and
(b) the
term “self-liquidating paper” means any draft, bill of exchange, acceptance or obligation that is made, drawn, negotiated
or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods,
wares or merchandise and that is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise
or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided
the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the
making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.
Section 9.14. Co-Trustees
and Separate Trustees.
At any time or times,
for the purpose of meeting the legal requirements of any applicable jurisdiction, the Company and the Trustee shall have power to appoint,
and, upon the written request of the Trustee or of the Holders of at least 33% in principal amount of the Debt Securities then Outstanding,
the Company shall for such purpose join with the Trustee in the execution and delivery of all instruments and agreements necessary or
proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, or to act as separate
trustee, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons,
in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this
Section. If the Company does not join in such appointment within 15 days after the receipt by it of a request so to do, or if an Event
of Default shall have occurred and be continuing, the Trustee alone shall have power to make such appointment.
Should any written
instrument or instruments from the Company be required by any co-trustee or separate trustee so appointed to more fully confirm to such
co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged
and delivered by the Company.
Every co-trustee
or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following conditions:
(a) the
Debt Securities shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody
of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be
exercised solely, by the Trustee;
(b) the
rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed either by the Trustee or by the Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under
any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform
such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate
trustee;
(c) the
Trustee at any time, by an instrument in writing executed by it, with the concurrence of the Company, may accept the resignation of or
remove any co-trustee or separate trustee appointed under this Section, and, if an Event of Default shall have occurred and be continuing,
the Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence
of the Company. Upon the written request of the Trustee, the Company shall join with the Trustee in the execution and delivery of all
instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee
so resigned or removed may be appointed in the manner provided in this Section;
(d) no
co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such
trustee hereunder, and the Trustee shall have no liability, personally or in its capacity as Trustee, for any act or omission of any
co-trustee or separate trustee hereunder; and
(e) any
Act of Holders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee.
Section 9.15. Appointment
of Authenticating Agent.
The Trustee may
appoint an Authenticating Agent or Agents with respect to the Debt Securities of one or more series, or any Tranche thereof, which shall
be authorized to act on behalf of the Trustee to authenticate Debt Securities of such series or Tranche issued upon original issuance,
exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.06, and Debt Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Debt Securities by the Trustee or the Trustee’s
certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall
be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States,
any state or territory thereof or the District of Columbia or the Commonwealth of Puerto Rico, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state
authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time
an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation
into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from
any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate
agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation
shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
An Authenticating
Agent may resign at any time by giving 45 days written notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent that shall be acceptable
to the Company. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights,
powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees
to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section.
The provisions of
Sections 3.08, 9.04 and 9.05 shall be applicable to each Authenticating Agent.
If an appointment
with respect to the Debt Securities of one or more series, or any Tranche thereof, shall be made pursuant to this Section, the Debt Securities
of such series or Tranche may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternate certificate
of authentication substantially in the following form:
This is one of the
Debt Securities of the series designated therein referred to in the within-mentioned Indenture.
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By: |
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As Trustee |
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By: |
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As Authenticating Agent |
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By: |
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Authorized Signatory |
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If all of the Debt
Securities of a series may not be originally issued at one time, and if the Trustee does not have an office capable of authenticating
Debt Securities upon original issuance located in a Place of Payment where the Company wishes to have Debt Securities of such series
authenticated upon original issuance, the Trustee, if so requested by the Company in writing (which writing need not comply with Section 1.02
and need not be accompanied by an Opinion of Counsel), shall appoint, in accordance with this Section and in accordance with
such procedures as shall be acceptable to the Trustee, an Authenticating Agent having an office in a Place of Payment designated by the
Company with respect to such series of Debt Securities.
ARTICLE X
HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 10.01. Lists
of Holders.
Semiannually, not
later than _______________ and _______________ in each year, commencing with the year 20_____, and at such other times as the Trustee
may request in writing, the Company shall furnish or cause to be furnished to the Trustee information as to the names and addresses of
the Holders, and the Trustee shall preserve such information and similar information received by it in any other capacity and afford
to the Holders access to information so preserved by it, all to such extent, if any, and in such manner as shall be required by the Trust
Indenture Act; provided, however, that no such list need be furnished so long as the Trustee shall be the Debt Security
Registrar. Every holder of Debt Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of any such information
as to the names and addresses of the Holders of Debt Securities in accordance with Section 312 of the Trust Indenture Act, or any
successor Section of such Act, regardless of the source from which such information was derived, and that the Trustee shall not
be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture
Act, or any successor Section of such Act.
Section 10.02. Reports
by Trustee and Company.
Annually, not later
than _______________ in each year, commencing _______________, the Trustee shall transmit to the Holders, the Commission and each securities
exchange upon which any Debt Securities are listed, a report, dated as of the next preceding _______________, with respect to any events
and other matters described in Section 313(a) of the Trust Indenture Act, in such manner and to the extent required by the
Trust Indenture Act. The Trustee shall transmit to the Holders, the Commission and each securities exchange upon which any Debt Securities
are listed, and the Company shall file with the Trustee (within 30 days after filing with the Commission in the case of reports that
pursuant to the Trust Indenture Act must be filed with the Commission and furnished to the Trustee) and transmit to the Holders, such
other information, reports and other documents, if any, at such times and in such manner, as shall be required by the Trust Indenture
Act.
The Company shall
notify the Trustee of the listing of any Debt Securities on any securities exchange. Delivery of such reports, information and documents
by the Company to the Trustee is for informational purposes only, and the Trustee’s receipt of such shall not constitute constructive
notice of any information contained therein or determinable from information contained therein, including the Company’s compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).
ARTICLE XI
CONSOLIDATION, MERGER, CONVEYANCE OR OTHER TRANSFER
Section 11.01. Company
May Consolidate, Etc., Only on Certain Terms.
The Company shall
not consolidate with or merge into any other corporation, or convey or otherwise transfer or lease its properties and assets substantially
as an entirety to any Person, unless
(a) the
corporation formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or
that leases, the properties and assets of the Company substantially as an entirety shall be a Person organized and existing under the
laws of the United States, any state thereof or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of, and premium,
if any, and interest (including Additional Interest), if any, on all Outstanding Debt Securities and the performance of every covenant
of this Indenture on the part of the Company to be performed or observed;
(b) immediately
after giving effect to such transaction and treating any indebtedness for borrowed money that becomes an obligation of the Company as
a result of such transaction as having been incurred by the Company at the time of such transaction, no Event of Default, and no event
that, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and
(c) the
Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, or other transfer or lease and such supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transactions have been complied with.
Section 11.02. Successor
Corporation Substituted.
Upon any consolidation
by the Company with or merger by the Company into any other corporation or any conveyance or other transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with Section 11.01, the successor corporation formed
by such consolidation or into which the Company is merged or the Person to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the Debt Securities Outstanding hereunder.
ARTICLE XII
SUPPLEMENTAL INDENTURES
Section 12.01. Supplemental
Indentures Without Consent of Holders.
Without the consent
of any Holders, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto,
in form satisfactory to the Trustee, for any of the following purposes:
(a) to
evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein
and in the Debt Securities, all as provided in Article XI; or
(b) to
add one or more covenants of the Company or other provisions for the benefit of all Holders or for the benefit of the Holders of, or
to remain in effect only so long as there shall be Outstanding, Debt Securities of one or more specified series, or one or more specified
Tranches thereof, or to surrender any right or power herein conferred upon the Company; or
(c) to
add any additional Events of Default with respect to all or any series of Debt Securities Outstanding hereunder; or
(d) to
change or eliminate any provision of this Indenture or to add any new provision to this Indenture; provided, however, that if
such change, elimination or addition shall adversely affect the interests of the Holders of Debt Securities of any series or Tranche
Outstanding on the date of such indenture supplemental hereto in any material respect, such change, elimination or addition shall become
effective with respect to such series or Tranche only pursuant to the provisions of Section 12.02 hereof or when no Debt
Security of such series or Tranche remains Outstanding; or
(e) to
provide collateral security for the Debt Securities of any series or Tranche; or
(f) to
establish the form or terms of Debt Securities of any series or Tranche as contemplated by Sections 2.01 and 3.01; or
(g) to
provide for the authentication and delivery of bearer securities and coupons appertaining thereto representing interest, if any, thereon
and for the procedures for the registration, exchange and replacement thereof and for the giving of notice to, and the solicitation of
the vote or consent of, the holders thereof, and for any and all other matters incidental thereto; or
(h) to
evidence and provide for the acceptance of appointment hereunder by a separate or successor Trustee with respect to the Debt Securities
of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 9.11(b); or
(i) to
provide for the procedures required to permit the Company to utilize, at its option, a non-certificated system of registration for all,
or any series or Tranche of, the Debt Securities; or to provide for the authentication and delivery of bearer securities and coupons
appertaining thereto representing interest, if any, thereon and for the procedures for the registration, exchange and replacement thereof
and for the giving of notice to, and the solicitation of the vote or consent of, the holders thereof, and for any and all other matters
incidental thereto; or
(j) to
change any place or places where (1) the principal of and premium, if any, and interest (including Additional Interest), if any,
on all or any series of Debt Securities, or any Tranche thereof, shall be payable, (2) all or any series of Debt Securities, or
any Tranche thereof, may be surrendered for registration of transfer, (3) all or any series of Debt Securities, or any Tranche thereof,
may be surrendered for exchange and (4) notices and demands to or upon the Company in respect of all or any series of Debt Securities,
or any Tranche thereof, and this Indenture may be served; or
(k) to
cure any ambiguity or to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein;
provided that no such changes or additions shall adversely affect the interests of the Holders of Debt Securities of any series or Tranche
in any material respect.
Without limiting
the generality of the foregoing, if the Trust Indenture Act as in effect at the date of the execution and delivery of this Indenture
or at any time thereafter shall be amended and
(x) if
any such amendment shall require one or more changes to any provisions hereof or the inclusion herein of any additional provisions, or
shall by operation of law be deemed to effect such changes or incorporate such provisions by reference or otherwise, this Indenture shall
be deemed to have been amended so as to conform to such amendment to the Trust Indenture Act, and the Company and the Trustee may, without
the consent of any Holders, enter into an indenture supplemental hereto to effect or evidence such changes or additional provisions;
or
(y) if
any such amendment shall permit one or more changes to, or the elimination of, any provisions hereof that, at the date of the execution
and delivery hereof or at any time thereafter, are required by the Trust Indenture Act to be contained herein, this Indenture shall be
deemed to have been amended to effect such changes or elimination, and the Company and the Trustee may, without the consent of any Holders,
enter into an indenture supplemental hereto to evidence such amendment hereof, provided such amendment does not have a material adverse
effect on any Holders.
Section 12.02. Supplemental
Indentures With Consent of Holders.
With the consent
of the Holders of not less than a majority in aggregate principal amount of the Debt Securities of all series then Outstanding under
this Indenture, considered as one class, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions
to, or changing in any manner or eliminating any of the provisions of, this Indenture; provided, however, that if there shall
be Debt Securities of more than one series Outstanding hereunder and if a proposed supplemental indenture shall directly affect the rights
of the Holders of Debt Securities of one or more, but less than all, of such series, then the consent only of the Holders of a majority
in aggregate principal amount of the Outstanding Debt Securities of all series so directly affected, considered as one class, shall be
required; and provided, further, that if the Debt Securities of any series shall have been issued in more than one Tranche and
if the proposed supplemental indenture shall directly affect the rights of the Holders of Debt Securities of one or more, but less than
all, of such Tranches, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Debt Securities
of all Tranches so directly affected, considered as one class, shall be required; and provided, further, that no such supplemental
indenture shall:
(a) change
the Stated Maturity of the principal of, or any installment of principal of or interest (including Additional Interest) on (except as
provided in Section 3.12) any Debt Security, or reduce the principal amount thereof or the rate of interest thereon (or the
amount of any installment of interest thereon) or change the method of calculating such rate or reduce any premium payable upon the redemption
thereof, or reduce the amount of the principal of a Discount Debt Security that would be due and payable upon a declaration of acceleration
of the Maturity thereof pursuant to Section 8.02, or change the coin or currency (or other property) in which any Debt Security
or any premium or the interest (including Additional Interest) thereon is payable, or impair the right to institute suit for the enforcement
of any such payment on or after the Stated Maturity of any Debt Security (or, in the case of redemption, on or after the Redemption Date),
without, in any such case, the consent of the Holder of such Debt Security, or
(b) reduce
the percentage in principal amount of the Outstanding Debt Securities of any series or any Tranche thereof, the consent of the Holders
of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance
with any provision of this Indenture or of any default hereunder and its consequences, or reduce the requirements of Section 13.04
for quorum or voting, without, in any such case, the consent of the Holders of each Outstanding Debt Security of such series or Tranche,
or
(c) modify
any of the provisions of this Section, Section 6.07 or Section 8.13 with respect to the Debt Securities of any
series, or any Tranche thereof (except to increase the percentages in principal amount referred to in this Section or such other
Sections or to provide that other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Debt Security affected thereby); provided, however, that this clause shall not be deemed to require the consent of
any Holder with respect to changes in the references to “the Trustee” and concomitant changes in this Section, or the deletion
of this proviso, in accordance with the requirements of Sections 9.11(b), 9.14 and 12.01(h).
A supplemental indenture
that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit
of one or more particular series of Debt Securities, or of one or more Tranches thereof, or that modifies the rights of the Holders of
Debt Securities of such series or Tranches with respect to such covenant or other provision, shall be deemed not to affect the rights
under this Indenture of the Holders of Debt Securities of any other series or Tranche.
Upon the request
of the Company, accompanied by a copy of the Board Resolution authorizing the execution of any such supplemental indenture, compliance
by the Company with Section 12.03 hereof, and the filing with the Trustee of evidence of the consent of the Holders of the
Debt Securities required hereunder with respect to the proposed supplemental indenture, the Trustee shall join with the Company in the
execution of such supplemental indenture unless the supplemental indenture affects the Trustee’s own rights, duties or immunities
under this Indenture, or otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into such supplemental
indenture.
It shall not be
necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof. A waiver by a Holder of such Holder’s right to consent under
this Section shall be deemed to be a consent of such Holder.
Section 12.03. Execution
of Supplemental Indentures.
In executing, or
accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be provided and (subject to Section 9.01) shall be fully protected
in relying upon an Officer’s Certificate and Opinion of Counsel, each stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture.
Section 12.04. Effect
of Supplemental Indentures.
Upon the execution
of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture
shall form a part of this Indenture for all purposes; and every Holder of Debt Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby. Any supplemental indenture permitted by this Article may restate this Indenture in its
entirety, and, upon the execution and delivery thereof, any such restatement shall supersede this Indenture as theretofore in effect
for all purposes.
Section 12.05. Conformity
With Trust Indenture Act.
Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 12.06. Reference
in Debt Securities to Supplemental Indentures.
Debt Securities
of any series, or any Tranche thereof, authenticated and delivered after the execution of any supplemental indenture pursuant to this
Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for
in such supplemental indenture. If the Company shall so determine, new Debt Securities of any series, or any Tranche thereof, so modified
as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for Outstanding Debt Securities of such series or Tranche.
Section 12.07. Modification
without Supplemental Indenture.
If the terms of
any particular series of Debt Securities shall have been established in a Board Resolution or an Officer’s Certificate pursuant
to a Board Resolution as contemplated by Section 3.01, and not in an indenture supplemental hereto, additions to, changes
in or the elimination of any of such terms may be effected by means of a supplemental Board Resolution or Officer’s Certificate,
as the case may be, delivered to, and accepted by, the Trustee; provided, however, that such supplemental Board Resolution
or Officer’s Certificate shall not be accepted by the Trustee or otherwise be effective unless all conditions set forth in this
Indenture that would be required to be satisfied if such additions, changes or elimination were contained in a supplemental indenture
shall have been appropriately satisfied. Upon the acceptance thereof by the Trustee, any such supplemental Board Resolution or Officer’s
Certificate shall be deemed to be a “supplemental indenture” for purposes of Sections 12.04 and 12.06.
ARTICLE XIII
MEETINGS OF HOLDERS; ACTION WITHOUT MEETING
Section 13.01. Purposes
for which Meetings may be Called.
A meeting of Holders
of Debt Securities of one or more, or all, series, or any Tranche or Tranches thereof, may be called at any time and from time to time
pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of Debt Securities of such series or Tranches.
Section 13.02. Call,
Notice and Place of Meetings.
(a) The
Trustee may at any time call a meeting of Holders of Debt Securities of one or more, or all, series, or any Tranche or Tranches thereof,
for any purpose specified in Section 13.01, to be held at such time and at such place in the Borough of Manhattan, The City
of New York, as the Trustee shall determine, or, with the approval of the Company, at any other place. Notice of every such meeting,
setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given,
in the manner provided in Section 1.06, not less than 21 nor more than 180 days prior to the date fixed for the meeting.
(b) If
the Trustee shall have been requested to call a meeting of the Holders of Debt Securities of one or more, or all, series, or any Tranche
or Tranches thereof, by the Company or by the Holders of at least 33% in aggregate principal amount of all of such series and Tranches,
considered as one class, for any purpose specified in Section 13.01, by written request setting forth in reasonable detail
the action proposed to be taken at the meeting, and the Trustee shall not have given the notice of such meeting within 21 days after
receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders
of Debt Securities of such series and Tranches in the amount above specified, as the case may be, may determine the time and the place
in the Borough of Manhattan, The City of New York, or in such other place as shall be determined or approved by the Company, for such
meeting and may call such meeting for such purposes by giving notice thereof as provided in Subsection (a) of this Section.
(c) Any
meeting of Holders of Debt Securities of one or more, or all, series, or any Tranche or Tranches thereof, shall be valid without notice
if the Holders of all Outstanding Debt Securities of such series or Tranches are present in person or by proxy and if representatives
of the Company and the Trustee are present, or if notice is waived in writing before or after the meeting by the Holders of all Outstanding
Debt Securities of such series, or by such of them as are not present at the meeting in person or by proxy, and by the Company and the
Trustee.
Section 13.03. Persons
Entitled to Vote at Meetings.
To be entitled to
vote at any meeting of Holders of Debt Securities of one or more, or all, series, or any Tranche or Tranches thereof, a Person shall
be (a) a Holder of one or more Outstanding Debt Securities of such series or Tranches, or (b) a Person appointed by an instrument
in writing as proxy for a Holder or Holders of one or more Outstanding Debt Securities of such series or Tranches by such Holder or Holders.
The only Persons who shall be entitled to attend any meeting of Holders of Debt Securities of any series or Tranche shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
Section 13.04. Quorum;
Action.
The Persons entitled
to vote a majority in aggregate principal amount of the Outstanding Debt Securities of the series and Tranches with respect to which
a meeting shall have been called as hereinbefore provided, considered as one class, shall constitute a quorum for a meeting of Holders
of Debt Securities of such series and Tranches; provided, however, that if any action is to be taken at such meeting that this
Indenture expressly provides may be taken by the Holders of a specified percentage, which is less than a majority, in principal amount
of the Outstanding Debt Securities of such series and Tranches, considered as one class, the Persons entitled to vote such specified
percentage in principal amount of the Outstanding Debt Securities of such series and Tranches, considered as one class, shall constitute
a quorum. In the absence of a quorum within one hour of the time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Debt Securities of such series and Tranches, be dissolved. In any other case the meeting may be adjourned for such
period as may be determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any
such adjourned meeting, such adjourned meeting may be further adjourned for such period as may be determined by the chairman of the meeting
prior to the adjournment of such adjourned meeting. Except as provided by Section 13.05(e), notice of the reconvening of
any meeting adjourned for more than 30 days shall be given as provided in Section 13.02(a) not less than ten days prior
to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly
the percentage, as provided above, of the principal amount of the Outstanding Debt Securities of such series and Tranches that shall
constitute a quorum.
Except as limited
by Section 12.02, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of the series and Tranches with respect to which such meeting shall have been called, considered as one class; provided,
however, that, except as so limited, any resolution with respect to any action that this Indenture expressly provides may be taken
by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Debt Securities of such
series and Tranches, considered as one class, may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum
is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Debt
Securities of such series and Tranches, considered as one class.
Any resolution passed
or decision taken at any meeting of Holders of Debt Securities duly held in accordance with this Section shall be binding on all
the Holders of Debt Securities of the series and Tranches with respect to which such meeting shall have been held, whether or not present
or represented at the meeting.
Section 13.05. Attendance
at Meetings; Determination of Voting Rights; Conduct and Adjournment of Meetings.
(a) Attendance
at meetings of Holders of Debt Securities may be in person or by proxy; and, to the extent permitted by law, any such proxy shall remain
in effect and be binding upon any future Holder of the Debt Securities with respect to which it was given unless and until specifically
revoked by the Holder or future Holder of such Debt Securities before being voted.
(b) Notwithstanding
any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Debt Securities in regard to proof of the holding of such Debt Securities and of the appointment of proxies and in regard
to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted
or required by any such regulations, the holding of Debt Securities shall be proved in the manner specified in Section 1.04
and the appointment of any proxy shall be proved in the manner specified in Section 1.04. Such regulations may provide that
written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 1.04
or other proof.
(c) The
Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders as provided in Section 13.02(b), in which case the Company or the Holders of Debt Securities of
the series and Tranches calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman
and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Debt Securities of all series and Tranches represented at the meeting, considered as one class.
(d) At
any meeting each Holder or proxy shall be entitled to one vote for each $1 principal amount of Debt Securities held or represented by
him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Debt Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Debt Security or proxy.
(e) Any
meeting duly called pursuant to Section 13.02 at which a quorum is present may be adjourned from time to time by Persons
entitled to vote a majority in aggregate principal amount of the Outstanding Debt Securities of all series and Tranches represented at
the meeting, considered as one class; and the meeting may be held as so adjourned without further notice.
Section 13.06. Counting
Votes and Recording Action of Meetings.
The vote upon any
resolution submitted to any meeting of Holders shall be by written ballots on which shall be subscribed the signatures of the Holders
or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Debt Securities, of the series and
Tranches with respect to which the meeting shall have been called, held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports of all votes cast at the meeting. A record of the proceedings
of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 13.02
and, if applicable, Section 13.04. Each copy shall be signed and verified by the affidavits of the permanent chairman and
secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee,
the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
Section 13.07. Action
Without Meeting.
In lieu of a vote
of Holders at a meeting as hereinbefore contemplated in this Article, any request, demand, authorization, direction, notice, consent,
waiver or other action may be made, given or taken by Holders by written instruments as provided in Section 1.04.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND TRUSTEES
Section 14.01. Liability
Solely Corporate.
No recourse shall
be had for the payment of the principal of or premium, if any, or interest (including Additional Interest), if any, on any Debt Securities,
or any part thereof, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon
any obligation, covenant or agreement under this Indenture, against any incorporator, shareholder, officer or trustee, as such, past,
present or future, of the Company or of any predecessor or successor corporation (either directly or through the Company or a predecessor
or successor corporation), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood that this Indenture and all the Debt Securities are solely
corporate obligations, and that no personal liability whatsoever shall attach to, or be incurred by, any incorporator, shareholder, officer
or trustee, past, present or future, of the Company or of any predecessor or successor corporation, either directly or indirectly through
the Company or any predecessor or successor corporation, because of the indebtedness hereby authorized or under or by reason of any of
the obligations, covenants or agreements contained in this Indenture or in any of the Debt Securities or to be implied herefrom or therefrom,
and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for,
the execution of this Indenture and the issuance of the Debt Securities.
ARTICLE XV
SUBORDINATION OF SECURITIES
Section 15.01. Securities
Subordinate to Senior Indebtedness.
The Company, for
itself, its successors and assigns, covenants and agrees, and each Holder of the Debt Securities of each series, by its acceptance thereof,
likewise covenants and agrees, that the payment of the principal of and premium, if any, and interest, if any, on each and all of the
Debt Securities is hereby expressly subordinated, to the extent and in the manner set forth in this Article, in right of payment to the
prior payment in full of all Senior Indebtedness.
Each Holder of the
Debt Securities of each series, by its acceptance thereof, authorizes and directs the Trustee on its behalf to take such action as may
be necessary or appropriate to effectuate the subordination as provided in this Article, and appoints the Trustee its attorney-in-fact
for any and all such purposes.
Without limiting
the generality of the foregoing, nothing contained in this Article shall restrict the right of the Trustee or the Holders of Debt
Securities to take any action to declare the Debt Securities to be due and payable prior to their stated maturity pursuant to Section 8.02
or to pursue any rights or remedies hereunder; provided, however, that all Senior Indebtedness then due and payable
shall first be paid in full before the Holders of the Debt Securities or the Trustee are entitled to receive any direct or indirect payment
from the Company of principal of, or premium, if any, or interest on the Debt Securities.
Section 15.02. Payment
Over of Proceeds of Securities.
In the event (a) of
any insolvency or bankruptcy proceedings or any receivership, liquidation, reorganization or other similar proceedings in respect of
the Company or a substantial part of its property, or of any proceedings for liquidation, dissolution or other winding up of the Company,
whether or not involving insolvency or bankruptcy, whether voluntary or involuntary or (b) subject to the provisions of Section 15.03,
that (i) a default shall have occurred with respect to the payment of principal of or interest on or other monetary amounts due
and payable on any Senior Indebtedness, or (ii) there shall have occurred a default (other than a default in the payment of principal
or interest or other monetary amounts due and payable) in respect of any Senior Indebtedness, as defined therein or in the instrument
under which the same is outstanding, permitting the holder or holders thereof to accelerate the maturity thereof (with notice or lapse
of time, or both), and such default shall have continued beyond the period of grace, if any, in respect thereof, and, in the cases of
subclauses (i) and (ii) of this clause (b), such default shall not have been cured or waived or shall not have ceased to exist,
and, in the case of subclause (ii) of this clause (b), the maturity of such Senior Indebtedness shall have been accelerated in accordance
with the default provisions thereof or (c) that the principal of and accrued interest on the Debt Securities of any series shall
have been declared due and payable pursuant to Section 8.01 and such declaration shall not have been rescinded and annulled
as provided in Section 8.02, then:
(1) the
holders of all Senior Indebtedness shall first be entitled to receive payment of the full amount due thereon, or provision shall be made
for such payment in money or money’s worth, before the Holders of any of the Debt Securities are entitled to receive a payment
on account of the principal of or interest on the indebtedness evidenced by the Debt Securities, including, without limitation, any payments
made pursuant to Articles IV and V;
(2) any
payment by, or distribution of assets of, the Company of any kind or character, whether in cash, property or securities, to which any
Holder or the Trustee would be entitled except for the provisions of this Article, shall be paid or delivered by the person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of
such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any
instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid
on account of such Senior Indebtedness held or represented by each, to the extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holder of the indebtedness evidenced by the Debt Securities or to the
Trustee under this Indenture; and
(3) in
the event that, notwithstanding the foregoing, any payment by, or distribution of assets of, the Company of any kind or character, whether
in cash, property or securities, in respect of principal of or interest on the Debt Securities or in connection with any repurchase by
the Company of the Debt Securities, shall be received by the Trustee or any Holder before all Senior Indebtedness is paid in full to
the extent required by Subsection (1) of this Section 15.02, or provision is made for such payment in money or
money’s worth, such payment or distribution in respect of principal of or interest on the Debt Securities or in connection with
any repurchase by the Company of the Debt Securities shall be paid over to the holders of such Senior Indebtedness or their representative
or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness
may have been issued, ratably as aforesaid, for application to the payment of all Senior Indebtedness remaining unpaid until all such
Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution (or provision therefor)
to the holders of such Senior Indebtedness.
Notwithstanding
the foregoing, at any time after the 123rd day following the date of deposit of cash or Eligible Obligations pursuant to Section 7.01
(provided all conditions set out in such Section shall have been satisfied), the funds so deposited and any interest thereon
will not be subject to any rights of holders of Senior Indebtedness, including, without limitation, those arising under this Article;
provided that no event described in clauses (e) and (f) of Section 8.01 with respect to the Company has occurred
during such 123-day period.
For purposes of
this Article only, the words “cash, property or securities” shall not be deemed to include shares of beneficial interest
of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization
or readjustment that are subordinate in right of payment to all Senior Indebtedness that may at the time be outstanding to the same extent
as, or to a greater extent than, the Debt Securities are so subordinated as provided in this Article. The consolidation of the Company
with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance
or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided
for in Article XI hereof shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of
this Section 15.02 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article XI hereof. Nothing in Section 15.01 or in this Section 15.02
shall apply to claims of, or payments to, the Trustee under or pursuant to Section 9.07.
Section 15.03. Disputes
with Holders of Certain Senior Indebtedness.
Any failure by the
Company to make any payment on or perform any other obligation in respect of Senior Indebtedness, other than any indebtedness incurred
by the Company or assumed or guaranteed, directly or indirectly, by the Company for money borrowed (or any deferral, renewal, extension
or refunding thereof) or any other obligation as to which the provisions of this Section shall have been waived by the Company in
the instrument or instruments by which the Company incurred, assumed, guaranteed or otherwise created such indebtedness or obligation,
shall not be deemed a default under clause (b) of Section 15.02 if (i) the Company shall be disputing its obligation
to make such payment or perform such obligation and (ii) either (A) no final judgment relating to such dispute shall have been
issued against the Company that is in full force and effect and is not subject to further review, including a judgment that has become
final by reason of the expiration of the time within which a party may seek further appeal or review, or (B) in the event that a
judgment that is subject to further review or appeal has been issued, the Company shall in good faith be prosecuting an appeal or other
proceeding for review and a stay of execution shall have been obtained pending such appeal or review.
Section 15.04. Subrogation.
Senior Indebtedness
shall not be deemed to have been paid in full unless the holders thereof shall have received cash (or securities or other property satisfactory
to such holders) in full payment of such Senior Indebtedness then outstanding. Upon the payment in full of all Senior Indebtedness, the
Holders of the Debt Securities shall be subrogated to the rights of the holders of Senior Indebtedness to receive any further payments
or distributions of cash, property or securities of the Company applicable to the holders of the Senior Indebtedness until all amounts
owing on the Debt Securities shall be paid in full; and such payments or distributions of cash, property or securities received by the
Holders of the Debt Securities, by reason of such subrogation, which otherwise would be paid or distributed to the holders of such Senior
Indebtedness shall, as between the Company, its creditors other than the holders of Senior Indebtedness, and the Holders, be deemed to
be a payment by the Company to or on account of Senior Indebtedness, it being understood that the provisions of this Article are
and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
If any payment or
distribution to which the Holders of the Debt Securities would otherwise have been entitled but for the provisions of this Article shall
have been applied, pursuant to the provisions of this Article, to the payment of amounts payable under Senior Indebtedness, then and
in such case, the Holders of the Debt Securities shall be entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of the amount required to make payment to the extent required
by Section 15.02, or provision for payment, of such Senior Indebtedness.
Section 15.05. Unconditional
Obligation of the Company.
Nothing contained
in this Article or elsewhere in this Indenture or in the Debt Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness and the Holders, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders the principal of and interest on the Debt Securities as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders
of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders
of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy.
Upon any payment
or distribution of assets or securities of the Company referred to in this Article, the Trustee and the Holders shall be entitled to
rely upon any order or decree of a court of competent jurisdiction in which such bankruptcy, dissolution, winding up, liquidation or
reorganization proceedings are pending or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee agent or other
person making such payment or distribution delivered to the Trustee or to the Holders for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon, and all other facts pertinent thereto or to this Article.
Section 15.06. Priority
of Senior Indebtedness Upon Maturity.
Upon the maturity
of the principal of any Senior Indebtedness by lapse of time, acceleration or otherwise, all matured principal of Senior Indebtedness
and interest and premium, if any, thereon shall first be paid in full before any payment of principal or premium or interest, if any,
is made upon the Debt Securities or before any Debt Securities can be acquired by the Company or any sinking fund payment is made with
respect to the Debt Securities (except that required sinking fund payments may be reduced by Debt Securities acquired before such maturity
of such Senior Indebtedness).
Section 15.07. Trustee
as Holder of Senior Indebtedness.
The Trustee shall
be entitled to all rights set forth in this Article with respect to any Senior Indebtedness at any time held by it, to the same
extent as any other holder of Senior Indebtedness. Nothing in this Article shall deprive the Trustee of any of its rights as such
holder.
Section 15.08. Notice
to Trustee to Effectuate Subordination.
The Company shall
give prompt written notice to the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the
Trustee in respect of the Debt Securities pursuant to the provisions of this Article. Notwithstanding the provisions of this Article or
any other provision of the Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit
the making of any payment of moneys to or by the Trustee unless and until the Trustee shall have received written notice thereof from
the Company, from a Holder or from a holder of any Senior Indebtedness or from any representative or representatives of such holder and,
prior to the receipt of any such written notice, the Trustee shall be entitled, subject to Section 9.01, in all respects
to assume that no such facts exist; provided, however, that, if prior to the fifth Business Day preceding the date upon which
by the terms hereof any such moneys may become payable for any purpose, or in the event of the execution of an instrument pursuant to
Section 7.02 acknowledging satisfaction and discharge of this Indenture, then if prior to the second Business Day preceding
the date of such execution, the Trustee shall not have received with respect to such moneys the notice provided for in this Section,
then, anything herein contained to the contrary notwithstanding, the Trustee may, in its discretion, receive such moneys and/or apply
the same to the purpose for which they were received, and shall not be affected by any notice to the contrary, which may be received
by it on or after such date; provided, however, that no such application shall affect the obligations under this Article of
the persons receiving such moneys from the Trustee.
Section 15.09. Modification,
Extension, Etc. of Senior Indebtedness.
The holders of Senior
Indebtedness may, without affecting in any manner the subordination of the payment of the principal of and premium, if any, and interest,
if any, on the Debt Securities, at any time or from time to time and in their absolute discretion, agree with the Company to change the
manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any Senior Indebtedness, or amend or supplement
any instrument pursuant to which any Senior Indebtedness is issued, or exercise or refrain from exercising any other of their rights
under the Senior Indebtedness, including, without limitation, the waiver of default thereunder, all without notice to or assent from
the Holders or the Trustee.
Section 15.10. Trustee
Has No Fiduciary Duty to Holders of Senior Indebtedness.
With respect to
the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and objectives as are
specifically set forth in this Article, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall
be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness,
and shall not be liable to any such holders if it shall mistakenly pay over or deliver to the Holders or the Company or any other Person,
cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise.
Section 15.11. Paying
Agents other than the Trustee.
In case at any time
any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “Trustee”
as used in this Article shall in such case (unless the context shall otherwise require) be construed as extending to and including
such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that Sections 15.07, 15.08 and 15.10 shall not
apply to the Company if it acts as Paying Agent.
Section 15.12. Rights
of Holders of Senior Indebtedness Not Impaired.
No right of any
present or future holder of Senior Indebtedness to enforce the subordination herein shall at any time or in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with.
Section 15.13. This
Article Not To Prevent Events of Default.
The failure to make
a payment on account of principal of, or premium, if any, or interest on the Debt Securities by reason of any provision of this Article shall
not be construed as preventing the occurrence of an Event of Default specified in paragraph (a) or (b) of Section 8.01.
Section 15.14. Effect
of Subordination Provisions; Termination.
Notwithstanding
anything contained herein to the contrary, other than as provided in the immediately succeeding sentence, all the provisions of this
Indenture shall be subject to the provisions of this Article, so far as the same may be applicable thereto.
Notwithstanding
anything contained herein to the contrary, the provisions of this Article XV shall be of no further effect, and the Debt
Securities shall no longer be subordinated in right of payment to the prior payment of Senior Indebtedness, if the Company shall have
delivered to the Trustee a notice to such effect. Any such notice delivered by the Company shall not be deemed to be a supplemental indenture
for purposes of Article XII.
This instrument
may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
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Pebblebrook Hotel Trust |
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By: |
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Name: |
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Title: |
[SEAL]
[ATTEST]
[Trustee’s
signature page follows.]
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______________________________________, Trustee |
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By: |
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Authorized Representative |
[SEAL]
[ATTEST]
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| Authorized Representative |
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Exhibit 5.1a
 |
750 E. PRATT STREET SUITE 900 BALTIMORE,
MD 21202
T
410.244.7400 F 410.244.7742 www.Venable.com
|
February 21, 2024
Pebblebrook Hotel Trust
4747 Bethesda Avenue, Suite 1100
Bethesda, MD 20814
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have served as Maryland counsel to Pebblebrook
Hotel Trust, a Maryland real estate investment trust (the “Company”), in connection with certain matters of Maryland law arising
out of the registration of the following securities (collectively, the “Securities”): (i) common shares of beneficial
interest, $0.01 par value per share, of the Company (“Common Shares”); (ii) preferred shares of beneficial interest,
$0.01 par value per share, of the Company (“Preferred Shares”); (iii) debt securities of the Company (“Debt Securities”);
(iv) warrants to purchase Common Shares, Preferred Shares or Debt Securities (“Warrants”); and (v) units that include
any of the Securities (“Units”), each covered by the above-referenced Registration Statement, and all amendments thereto (the
“Registration Statement”), to be filed by the Company with the United States Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended (the “1933 Act”), on or about the date hereof.
In connection with our representation of the Company,
and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction,
of the following documents (collectively, the “Documents”):
1. The
Registration Statement and the related form of prospectus included therein;
2. The
declaration of trust of the Company (the “Declaration of Trust”), certified by the State Department of Assessments and Taxation
of Maryland (the “SDAT”);
3. The
Bylaws of the Company (the “Bylaws”), certified as of the date hereof by an officer of the Company;
4. A
certificate of the SDAT as to the good standing of the Company, dated as of a recent date;
5. Resolutions
(the “Resolutions”) adopted by the Board of Trustees of the Company (the “Board”) relating to the registration
of the Securities, certified as of the date hereof by an officer of the Company;
6. A
certificate executed by an officer of the Company, dated as of the date hereof; and
Pebblebrook Hotel Trust
February 21, 2024
Page 2
7. Such
other documents and matters as we have deemed necessary or appropriate to express the opinion set forth below, subject to the assumptions,
limitations and qualifications stated herein.
In expressing the opinion set forth below, we have
assumed the following:
1. Each
individual executing any of the Documents, whether on behalf of such individual or another person, is legally competent to do so.
2. Each
individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so.
3. Each
of the parties (other than the Company) executing any of the Documents has duly and validly executed and delivered each of the Documents
to which such party is a signatory, and such party’s obligations set forth therein are legal, valid and binding and are enforceable
in accordance with all stated terms.
4. All
Documents submitted to us as originals are authentic. The form and content of all Documents submitted to us as unexecuted drafts do not
differ in any respect relevant to this opinion from the form and content of such Documents as executed and delivered. All Documents submitted
to us as certified or photostatic copies conform to the original documents. All signatures on all Documents are genuine. All public records
reviewed or relied upon by us or on our behalf are true and complete. All representations, warranties, statements and information contained
in the Documents are true and complete. There has been no oral or written modification of or amendment to any of the Documents, and there
has been no waiver of any provision of any of the Documents, by action or omission of the parties or otherwise.
5. The
issuance of, and certain terms of, the Securities to be issued by the Company from time to time will be authorized and approved by the
Board, or a duly authorized committee thereof, in accordance with the Maryland REIT Law, the Declaration of Trust, the Bylaws and the
Resolutions (such approval referred to herein as the “Trust Proceedings”).
6. Articles
Supplementary creating and designating the number of shares and the terms of any class or series of Preferred Shares to be issued by
the Company will be filed with and accepted for record by the SDAT prior to the issuance of such Preferred Shares.
7. Upon
the issuance of any Securities that are Common Shares (“Common Securities”), including Common Securities which may be issued
upon conversion or exercise of any other Securities convertible into or exercisable for Common Securities, or as part of a Unit, the
total number of Common Shares issued and outstanding will not exceed the total number of Common Shares that the Company is then authorized
to issue under the Declaration of Trust.
Pebblebrook Hotel Trust
February 21, 2024
Page 3
8. Upon
the issuance of any Securities that are Preferred Shares (“Preferred Securities”), including Preferred Securities which may
be issued upon conversion or exercise of any other Securities convertible into or exercisable for Preferred Securities, or as part of
a Unit, the total number of Preferred Shares issued and outstanding, and the total number of issued and outstanding shares of the applicable
class or series of Preferred Shares designated pursuant to the Declaration of Trust, will not exceed the total number of Preferred Shares
or the number of shares of such class or series of Preferred Shares that the Company is then authorized to issue under the Declaration
of Trust.
9. The
Securities will not be issued or transferred in violation of the restrictions on transfer and ownership contained in Article VII
of the Declaration of Trust or any comparable provision in the Articles Supplementary creating any class or series of Preferred Shares.
10. The
Warrants will be duly converted or exercised in accordance with their terms.
Based upon the foregoing, and subject to the assumptions,
limitations and qualifications stated herein, it is our opinion that:
1. The
Company is a real estate investment trust duly formed and existing under and by virtue of the laws of the State of Maryland and is in
good standing with the SDAT.
2. Upon
the completion of all Trust Proceedings relating to the Common Securities, the issuance of the Common Securities will be duly authorized
and, when and if issued and delivered against payment therefor in accordance with the Registration Statement and the Trust Proceedings,
the Common Securities will be validly issued, fully paid and nonassessable.
3. Upon
the completion of all Trust Proceedings relating to the Preferred Securities, the issuance of the Preferred Securities will be duly authorized
and, when and if issued and delivered against payment therefor in accordance with the Registration Statement and the Trust Proceedings,
the Preferred Securities will be validly issued, fully paid and nonassessable.
4. Upon
the completion of all Trust Proceedings relating to the Securities that are Debt Securities, the issuance of the Debt Securities will
be duly authorized.
5. Upon
the completion of all Trust Proceedings relating to the Securities that are Warrants, the issuance of the Warrants will be duly authorized.
6. Upon
the completion of all Trust Proceedings relating to the Securities that are Units, the issuance of the Units will be duly authorized.
Pebblebrook Hotel Trust
February 21, 2024
Page 4
The foregoing opinion is limited to the laws of the
State of Maryland and we do not express any opinion herein concerning federal law or any other state law. We express no opinion as to
the applicability or effect of federal or state securities laws, including the securities laws of the State of Maryland, federal or state
laws regarding fraudulent transfers or the laws, codes or regulations of any municipality or other jurisdiction. To the extent that any
matter as to which our opinion is expressed herein would be governed by the laws of any jurisdiction other than the State of Maryland,
we do not express any opinion on such matter. The opinion expressed herein is subject to the effect of any judicial decision which may
permit the introduction of parol evidence to modify the terms or the interpretation of agreements.
The opinion expressed herein is limited to the matters
specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. We assume no obligation to supplement
this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed
herein after the date hereof.
This opinion is being furnished to you for submission
to the Commission as an exhibit to the Registration Statement. We hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of the name of our firm therein. In giving this consent, we do not admit that we are within the category of persons
whose consent is required by Section 7 of the 1933 Act.
| |
Very truly yours, |
| |
|
| |
/s/ Venable LLP |
Exhibit 5.1b
 |
Hunton Andrews Kurth LLP
File No: 076441.0000063 |
| |
|
| February 21, 2024 |
Board of Trustees
Pebblebrook Hotel Trust
4747 Bethesda Avenue, Suite 1100
Bethesda, Maryland 20814
| Re: | Registration Statement on Form S-3 Regarding the Registration of Indeterminate Amount of Securities |
Ladies and Gentlemen:
We have acted as counsel to
Pebblebrook Hotel Trust, a Maryland real estate investment trust (the “Company”), in connection with the registration by the
Company of (i) senior and subordinated debt securities of the Company (collectively, the “Debt Securities”), (ii) common
shares of beneficial ownership of the Company, $0.01 par value per share (the “Common Shares”), (iii) preferred
shares of beneficial ownership of the Company, $0.01 par value per share (the “Preferred Shares”), (iv) warrants
for the purchase of securities of the Company described in clauses (i) through (iii), and (v) units for the purchase of two
of more of the securities of the Company described in clauses (i) through (iv), in any combination (the “Units”
and, together with the Debt Securities, the Common Shares, the Preferred Shares and the Warrants, the “Offered Securities”),
having an indeterminate maximum aggregate offering price as set forth in the Registration Statement on Form S-3 filed by the Company
(the “Registration Statement”) on or about the date hereof with the United States Securities and Exchange Commission
(the “Commission”) pursuant to the Securities Act of 1933, as amended (the “Securities Act”).
The Debt Securities will be
issued pursuant to one or more indentures between the Company and trustees yet to be named (collectively, the “Indentures”),
the Warrants will be issued in one or more series pursuant to one or more warrant agreements (each, a “Warrant Agreement”)
between the Company and the warrant agent party thereto, and the Units will be issued pursuant to one or more unit agreements (each, a
“Unit Agreement”) between the Company and the unit agent party thereto.
This opinion is being furnished
to you for submission to the Commission as an exhibit to the Registration Statement in accordance with the requirements of Item 16 of
Form S-3 and Item 601(b)(5)(i) of Regulation S-K promulgated under the Securities Act.
ATLANTA AUSTIN BANGKOK BEIJING BOSTON BRUSSELS
CHARLOTTE DALLAS DUBAI HOUSTON
LONDON LOS ANGELES MIAMI NEW YORK RICHMOND SAN
FRANCISCO TOKYO TYSONS WASHINGTON, DC
www.HuntonAK.com
February 21, 2024
Page 2
In connection with the foregoing,
we have examined the following documents:
| (a) | the Registration Statement, including the Exhibits identified under Item 16 of the Registration Statement; |
| (b) | resolutions of the Board of Trustees of the Company dated February 15, 2024, adopted at a duly called
meeting of the Board of Trustees, relating to, among other things, the preparation and filing of the Registration Statement and the due
authorization of the Offered Securities; |
| (c) | the Declaration of Trust of the Company, as amended or supplemented from time to time (the “Declaration”),
certified by the State Department of Assessments and Taxation of Maryland (the “SDAT”); |
| (d) | the Amended and Restated Bylaws of the Company (the “Bylaws”), certified as of the
date hereof by an officer of the Company; and |
| (e) | a certificate of the SDAT as to the good standing of the Company, dated as of February 15, 2024. |
For purposes of the opinions
expressed below, we have assumed (i) the authenticity of all documents submitted to us as originals; (ii) the conformity to
the originals of all documents submitted as certified or photostatic copies and the authenticity of the originals thereof; (iii) the
legal capacity of natural persons; (iv) the genuineness of all signatures; and (v) the due authorization, execution and delivery
of all documents by all parties and the validity, binding effect and enforceability thereof (other than the authorization, execution and
delivery of documents by the Company and the validity, binding effect and enforceability thereof upon the Company).
We do not purport to express
any opinion as to the effect of any laws other than (a) the laws of the State of New York, (b) the Federal laws of the United
States of America and (c) the Maryland REIT Law. With respect to all matters of the Maryland REIT Law, we have relied upon the opinion,
dated the date hereof, of Venable LLP, and our opinion is subject to the same assumptions, qualifications and limitations with respect
to such matters as are contained in the opinion of Venable LLP.
February 21, 2024
Page 3
Based upon the foregoing and
such other information and documents as we have considered necessary for the purposes hereof, we are of the opinion that:
1. The
Company is a real estate investment trust duly formed and existing under and by virtue of the laws of the State of Maryland and is in
good standing with the SDAT.
2. When
(a) the terms of any class or series of Debt Securities have been authorized by appropriate corporate action of the Company, (b) the
Debt Securities have been issued and sold upon the terms and conditions set forth in the Registration Statement (as declared effective
by the Commission), the prospectus contained therein and any applicable prospectus supplement, (c) such Debt Securities have been
duly executed, authenticated and delivered in accordance with the applicable Indenture and (d) the Company has received full payment
therefor in accordance with appropriate corporate action of the Company, then such Debt Securities will be validly issued and will constitute
legal, valid and binding obligations of the Company, enforceable against the Company in accordance with the terms of such Debt Securities
and the terms of the applicable Indenture.
3. When
(a) the terms of any Warrants or Units have been authorized by appropriate corporate action of the Company, (b) such Warrants
or Units, as applicable, have been issued and sold upon the terms and conditions set forth in the Registration Statement (as declared
effective by the Commission), the prospectus contained therein and any applicable prospectus supplement, and any applicable Warrant Agreement
or Unit Agreement, (c) the certificates representing the Warrants or Units, as applicable, have been duly executed, issued and delivered
in accordance with the applicable Warrant Agreement or Unit Agreement, and (d) the Company has received full payment of the consideration
therefor in accordance with the appropriate corporate authorization, then such Warrants or Units, as applicable, will be validly issued
and will constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms
and the terms of the applicable Warrant Agreement or Unit Agreement.
In expressing the opinions
set forth above, we have assumed that (i) upon issuance of any Offered Securities (to the extent consisting of Warrants or Units),
the total number of Common Shares and Preferred Shares issued and reserved for issuance will not exceed the total number of Common Shares
or Preferred Shares, as the case may be, that the Company is authorized to issue under the Declaration, as then in effect, (ii) with
respect to Debt Securities, the applicable trustee will have been qualified under the Trust Indenture Act of 1939, as amended, and a Statement
of Eligibility of the Trustee on Form T-1 will have been properly filed with the Commission, and (iii) each of the applicable
Debt Security, Indenture, Warrant Agreement and Unit Agreement will be governed by and construed in accordance with the laws of the
State of New York.
February 21, 2024
Page 4
The opinions set forth above
are subject to the qualification that the validity, binding effect and enforceability of the Company’s obligations under the Indentures,
the Debt Securities, the Units, any Warrant Agreement to purchase Debt Securities, Warrants to purchase Debt Securities, any Unit Agreement
consisting of Debt Securities and the Units consisting of Debt Securities may be subject to (i) bankruptcy, insolvency, reorganization,
arrangement, moratorium, and other similar laws relating to or affecting the rights of creditors generally, including without limitation,
fraudulent conveyance or transfer laws (including but not limited to the common law trust fund doctrine and Section 548 of the United
States Bankruptcy Code), and preference and equitable subordination laws and principles; (ii) general principles of equity (whether
considered in a proceeding at law or in equity) and (iii) concepts of materiality, unconscionability, reasonableness, impracticability
or impossibility of performance, good faith and fair dealing.
We hereby consent to the filing
of this opinion as Exhibit 5.1b to the Registration Statement and to the reference to this firm under the heading “Legal Matters”
therein. In giving this consent, we do not admit that we are in the category of persons whose consent is required by Section 7 of
the Securities Act or the rules and regulations promulgated thereunder.
This opinion is limited to
the matters stated in this letter, and no opinions may be implied or inferred beyond the matters expressly stated in this letter. The
opinions expressed in this letter speak only as of its date. We do not undertake to advise you of any changes in the opinions expressed
herein from matters that might arise or be brought to our attention.
| |
Very truly yours, |
| |
|
| |
/s/ Hunton Andrews Kurth LLP |
Exhibit 8.1
 |
Hunton Andrews Kurth LLP
File No: 76441.63 |
| |
|
| February 21, 2024 |
|
Pebblebrook Hotel Trust
4747 Bethesda Avenue, Suite 1100
Bethesda, Maryland 20814
Pebblebrook Hotel Trust
Qualification as Real Estate Investment Trust
Ladies and Gentlemen:
We have acted as counsel to
Pebblebrook Hotel Trust, a Maryland real estate investment trust (the “Company”), in connection with the preparation
of a registration statement on Form S-3, filed by the Company with the Securities and Exchange Commission on February 21, 2024
(the “Registration Statement”), with respect to the offer and sale, from time to time, of common shares of beneficial
interest, par value $0.01 per share, of the Company (the “Common Shares”), preferred shares of beneficial interest,
par value $0.01 per share, of the Company (the “Preferred Shares”), debt securities of the Company, warrants to acquire
Common Shares or Preferred Shares, and units comprising one or more of the preceding securities of the Company. You have requested our
opinion regarding certain U.S. federal income tax matters.
In giving this opinion letter,
we have examined the following:
| 1. | the Registration Statement and the prospectus (the “Prospectus”) filed as part of the
Registration Statement; |
| 2. | the Company’s Declaration of Trust filed on October 2, 2009 with the Department of Assessments and Taxation of the State
of Maryland (“SDAT”), and the Company’s Articles of Amendment and Restatement, as amended and supplemented; |
| 3. | the Declaration of Trust of DC Hotel Trust, a Maryland real estate investment trust (“DC Hotel Trust”), filed on
May 11, 2010 with SDAT, and DC Hotel Trust’s Articles of Amendment and Restatement, as amended and supplemented; |
| 4. | the Declaration of Trust of Portland Hotel Trust, a Maryland real estate investment trust (“Portland Hotel Trust”),
filed on November 6, 2015 with SDAT; |
ATLANTA AUSTIN BANGKOK BEIJING BOSTON BRUSSELS CHARLOTTE DALLAS DUBAI HOUSTON
LONDON LOS ANGELES MIAMI NEW YORK RICHMOND SAN FRANCISCO
TOKYO TYSONS WASHINGTON, DC
www.HuntonAK.com
Pebblebrook Hotel Trust
February 21, 2024
Page 2
| 5. | the Declaration of Trust of Glass Houses, a Maryland real estate investment trust (“Glass Houses”), filed on April 30,
2008 with SDAT, and Glass Houses’ Articles of Amendment and Restatement, as amended and supplemented; |
| 7. | the Agreement of Limited Partnership, the First Amended and Restated Agreement of Limited Partnership, as amended and supplemented,
and the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P. (the “Operating Partnership”),
as amended and supplemented; |
| 8. | the Company’s taxable REIT subsidiary (“TRS”) elections with respect to Pebblebrook Hotel Lessee, Inc.
and LaSalle Hotel Lessee, Inc.; |
| 9. | DC Hotel Trust’s TRS election with respect to Pebblebrook Hotel Lessee, Inc.; |
| 10. | Portland Hotel Trust’s TRS election with respect to Pebblebrook Hotel Lessee, Inc.; |
| 11. | Glass Houses’ TRS elections with respect to LaSalle Hotel Lessee, Inc. and Pebblebrook Hotel Lessee, Inc.; and |
| 12. | such other documents as we have deemed necessary or appropriate for purposes of this opinion. |
In connection with the opinions
rendered below, we have assumed, with your consent, that:
1. each
of the documents referred to above has been duly authorized, executed and delivered; is authentic, if an original, or is accurate, if
a copy; and has not been amended;
2. during
their taxable years ending December 31, 2024, and future taxable years, the Company, Portland Hotel Trust, and Glass Houses will
operate in a manner that will make the factual representations contained in a certificate, dated the date hereof and executed by a duly
appointed officer of the Company, a certificate, dated the date hereof and executed by a duly appointed officer of Portland Hotel Trust,
and a certificate, dated the date hereof and executed by a duly appointed officer of Glass Houses (collectively, the “REIT Officer’s
Certificates”), true for such years;
3. none
of the Company, Portland Hotel Trust, or Glass Houses will make any amendments to its organizational documents after the date of this
opinion that would affect its qualification as a real estate investment trust (a “REIT”) for any taxable year; and
Pebblebrook Hotel Trust
February 21, 2024
Page 3
4. no
action will be taken by the Company, Portland Hotel Trust, or Glass Houses after the date hereof that would have the effect of altering
the facts upon which the opinions set forth below are based.
In connection with the opinions
rendered below, we also have relied upon the correctness of the factual representations contained in the REIT Officer’s Certificates
and in a certificate, dated February 21, 2020 and executed by a duly appointed officer of the Company on behalf of DC Hotel Trust
(collectively with the REIT Officer’s Certificates, the “Officer’s Certificates”). No facts have come to
our attention that would cause us to question the accuracy and completeness of such factual representations. Furthermore, where such factual
representations involve terms defined in the Internal Revenue Code of 1986, as amended (the “Code”), the Treasury regulations
thereunder (the “Regulations”), published rulings of the Internal Revenue Service (the “Service”),
or other relevant authority, we have reviewed with the individuals making such representations the relevant provisions of the Code, the
applicable Regulations and published administrative interpretations thereof.
Based solely on the documents
and assumptions set forth above, the representations set forth in the Officer’s Certificates, and the discussion in the Prospectus
under the caption “Material Federal Income Tax Considerations” (which is incorporated herein by reference), we are of the
opinion that:
(a) the
Company qualified to be taxed as a REIT pursuant to sections 856 through 860 of the Code for its taxable years ended December 31,
2020 through December 31, 2023, and the Company’s organization and current and proposed method of operation will enable it
to continue to qualify for taxation as a REIT under the Code for its taxable year ending December 31, 2024 and thereafter; and
(b) the
description of the law and the legal conclusions in the Prospectus under the caption “Material Federal Income Tax Considerations”
are correct in all material respects.
We will not review on a continuing
basis the Company’s, Portland Hotel Trust’s, or Glass Houses’ compliance with the documents or assumptions set forth
above, or the representations set forth in the Officer’s Certificates. Accordingly, no assurance can be given that the actual results
of the Company’s, DC Hotel Trust’s, Portland Hotel Trust’s, or Glass Houses’ operations for any given taxable
year will satisfy the requirements for qualification and taxation as a REIT. Although we have made such inquiries and performed such investigations
as we have deemed necessary to fulfill our professional responsibilities as counsel, we have not undertaken an independent investigation
of all of the facts referred to in this letter or the Officer’s Certificates.
Pebblebrook Hotel Trust
February 21, 2024
Page 4
The foregoing opinions are
based on current provisions of the Code, the Regulations, published administrative interpretations thereof, and published court decisions.
The Service has not issued Regulations or administrative interpretations with respect to various provisions of the Code relating to REIT
qualification. No assurance can be given that the law will not change in a way that will prevent the Company from qualifying as a REIT.
The foregoing opinions are
limited to the U.S. federal income tax matters addressed herein, and no other opinions are rendered with respect to other U.S. federal
tax matters or to any issues arising under the tax laws of any other country, or any state or locality. We undertake no obligation to
update the opinions expressed herein after the date of this letter. This opinion letter speaks only as of the date hereof. Except as described
in the next paragraph, this opinion letter may not be distributed, quoted in whole or in part or otherwise reproduced in any document,
or filed with any governmental agency without our express written consent.
We hereby consent to the filing
of this opinion as an exhibit to the Registration Statement. We also consent to the references to Hunton Andrews Kurth LLP under the captions
“Material Federal Income Tax Considerations” and “Legal Matters” in the Prospectus. In giving this consent, we
do not admit that we are in the category of persons whose consent is required by Section 7 of the Securities Act of 1933, as amended,
or the rules and regulations promulgated thereunder by the SEC.
| |
Very truly yours, |
| |
|
| |
/s/ Hunton Andrews Kurth LLP |
Exhibit 23.1
KPMG LLP
Suite 900
8350 Broad Street
McLean, VA 22102
Consent of Independent Registered Public Accounting
Firm
We consent to the use of our reports
dated February 21, 2024, with respect to the consolidated financial statements of Pebblebrook Hotel Trust, and the effectiveness
of internal control over financial reporting, incorporated herein by reference, and to the reference to our firm under the heading "Experts"
in the prospectus.
Our report on the consolidated financial
statements refers to a change in the method of accounting for convertible debt.
McLean, Virginia
February 21, 2024
KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee.
Exhibit 25.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) x
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
(Exact name of trustee as specified in its charter)
(Jurisdiction of
incorporation
if not a U.S. national bank) |
95-3571558
(I.R.S. employer
identification no.) |
| |
|
333 South Hope Street
Suite 2525
Los Angeles, CA 90071
(Address of principal executive offices) |
90071
(Zip code) |
PEBBLEBROOK HOTEL TRUST
(Exact name of obligor as specified in its charter)
Maryland
(State or other jurisdiction of
incorporation or organization) |
27-1055421
(I.R.S. employer
identification no.) |
| |
|
|
4747 Bethesda Avenue
Suite 1100
Bethesda, Maryland
(Address of principal executive offices) |
20814
(Zip code) |
Debt Securities
(Title of the indenture securities)
| 1. | General information. Furnish the following information as to the Trustee: |
| (a) | Name and address of each examining or supervising authority to which it is subject. |
| Name |
Address |
| |
|
| Comptroller of the Currency United States Department of the Treasury |
400 7th Street SW
Washington, DC 20219 |
| |
|
| Federal Reserve Bank |
101 Market Street
San Francisco, CA 94105 |
| |
|
| Federal Deposit Insurance Corporation |
550 17th Street, N.W.
Washington, DC 20429 |
| (b) | Whether it is authorized to exercise corporate trust powers. |
Yes.
| 2. | Affiliations with Obligor. |
If the obligor is an affiliate of
the trustee, describe each such affiliation.
None.
Exhibits identified in parentheses
below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust
Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d).
| 1. | A copy of the articles of association of The Bank of New York Mellon Trust Company, N.A., formerly known as The Bank of New York Trust
Company, N.A. (Exhibit 1 to Form T-1 filed with Registration Statement No. 333-121948 and Exhibit 1 to Form T-1
filed with Registration Statement No. 333-152875). |
| 2. | A copy of certificate of authority of the trustee to commence business (Exhibit 2 to Form T-1 filed with Registration Statement
No. 333-121948). |
| 3. | A copy of the authorization of the trustee to exercise corporate trust powers (Exhibit 3 to Form T-1 filed with Registration
Statement No. 333-152875) |
| 4. | A copy of the existing by-laws of the trustee (Exhibit 4 to Form T-1 filed with Registration
Statement No. 333-229762) |
| 6. | The consent of the Trustee required by Section 321(b) of the Act (Exhibit 6 to Form T-1
filed with Registration Statement No. 333-152875) |
| 7. | A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements
of its supervising or examining authority. |
SIGNATURE
Pursuant to the requirements
of the Trust Indenture Act of 1939, the Trustee, The Bank of New York Mellon Trust Company, N.A., a banking association organized and
existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Jacksonville, and State of Florida, on the 20th day of February,
2024.
| |
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A. |
| |
By: |
/s/ Michael C. Jenkins |
| |
|
Name: |
Michael C. Jenkins |
| |
|
Title: |
Vice President |
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
of 333 South Hope Street, Suite 2525, Los Angeles,
CA 90071
At the close of business December 31, 2023,
published in accordance with Federal regulatory authority instructions.
| |
Dollar amounts |
| |
in thousands |
ASSETS
| Cash and balances due from depository institutions: | |
| | |
| Noninterest-bearing balances and currency and coin | |
| 2,559 | |
| Interest-bearing balances | |
| 331,039 | |
| Securities: | |
| | |
| Held-to-maturity securities | |
| 0 | |
| Available-for-sale debt securities | |
| 524 | |
| Equity securities with readily determinable fair values not held for trading | |
| 0 | |
| Federal funds sold and securities purchased under agreements to resell: | |
| | |
| Federal funds sold in domestic offices | |
| 0 | |
| Securities purchased under agreements to resell | |
| 0 | |
| Loans and lease financing receivables: | |
| | |
| Loans and leases held for sale | |
| 0 | |
| Loans and leases, held for investment | |
| 0 | |
| LESS: Allowance for loan and lease losses | |
| 0 | |
| Loans and leases held for investment, net of allowance | |
| 0 | |
| Trading assets | |
| 0 | |
| Premises and fixed assets (including capitalized leases) | |
| 13,138 | |
| Other real estate owned | |
| 0 | |
| Investments in unconsolidated subsidiaries and associated companies | |
| 0 | |
| Direct and indirect investments in real estate ventures | |
| 0 | |
| Intangible assets | |
| 856,313 | |
| Other assets | |
| 114,683 | |
| Total assets | |
$ | 1,318,256 | |
LIABILITIES
| Deposits: | |
| |
| In
domestic offices | |
| 1,264 | |
| Noninterest-bearing | |
| 1,264 | |
| Interest-bearing | |
| 0 | |
| | |
| | |
| Federal funds purchased and
securities sold under agreements to repurchase: | |
| | |
| Federal
funds purchased in domestic offices | |
| 0 | |
| Securities
sold under agreements to repurchase | |
| 0 | |
| Trading liabilities | |
| 0 | |
| Other borrowed money: (includes
mortgage indebtedness and obligations under capitalized leases) | |
| 0 | |
| Not applicable | |
| | |
| Not applicable | |
| | |
| Subordinated notes and debentures | |
| 0 | |
| Other liabilities | |
| 263,286 | |
| Total liabilities | |
| 264,550 | |
| Not applicable | |
| | |
EQUITY CAPITAL
| Perpetual preferred
stock and related surplus | |
| 0 |
|
| Common stock | |
| 1,000 |
|
| Surplus (exclude all surplus
related to preferred stock) | |
| 106,539 |
|
| Not available | |
| |
|
| Retained
earnings | |
| 946,167 |
|
| Accumulated
other comprehensive income | |
| 0 |
|
| Other equity capital components | |
| 0 |
|
| Not available | |
| |
|
| Total
bank equity capital | |
| 1,053,706 |
|
| Noncontrolling
(minority) interests in consolidated subsidiaries | |
| 0 |
|
| Total equity
capital | |
| 1,053,706 |
|
| Total
liabilities and equity capital | |
| 1,318,256 |
|
I, Matthew J. McNulty, CFO of the above-named bank
do hereby declare that the Reports of Condition and Income (including the supporting schedules) for this report date have been prepared
in conformance with the instructions issued by the appropriate Federal regulatory authority and are true to the best of my knowledge and
belief.
We, the undersigned directors (trustees), attest
to the correctness of the Report of Condition (including the supporting schedules) for this report date and declare that it has been examined
by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
| Antonio I. Portuondo, President | ) |
| |
| Loretta A. Lundberg,
Managing Director | ) |
Directors
(Trustees) | |
| Jon M. Pocchia,
Managing Director | ) |
| |
Exhibit 107
Calculation of Filing Fee Table
Form S-3
(Form Type)
PEBBLEBROOK HOTEL TRUST
(Exact Name of Registrant as Specified in its Charter)
Table 1: Newly Registered and Carry Forward
Securities
| |
|
Security
Type |
|
Security
Class Title |
|
Fee
Calculation
or Carry
Forward Rule |
|
Amount
Registered |
|
|
Proposed
Maximum
Offering
Price Per
Unit |
|
|
Maximum
Aggregate
Offering
Price |
|
|
Fee
Rate |
|
|
Amount
of
Registration Fee |
|
|
Carry
Forward
Form Type |
|
Carry
Forward File
Number |
|
Carry
Forward
Initial
effective
date |
|
Filing
Fee
Previously
Paid In
Connection
with
Unsold
Securities to
be Carried
Forward |
| Newly
Registered Securities |
| Fees to Be Paid |
|
Equity |
|
Common Shares |
|
Rules 456(b) and 457(r)(3) |
|
|
|
(1)(2) |
|
|
|
(1)(2) |
|
|
|
(1)(2) |
|
|
|
(3) |
|
|
|
(3) |
|
|
|
|
|
|
|
|
| |
|
Equity |
|
Preferred Shares |
|
Rules 456(b) and 457(r)(3) |
|
|
|
(1)(2) |
|
|
|
(1)(2) |
|
|
|
(1)(2) |
|
|
|
(3) |
|
|
|
(3) |
|
|
|
|
|
|
|
|
| |
|
Debt |
|
Debt Securities |
|
Rules 456(b) and 457(r)(3) |
|
|
|
(1)(2) |
|
|
|
(1)(2) |
|
|
|
(1)(2) |
|
|
|
(3) |
|
|
|
(3) |
|
|
|
|
|
|
|
|
| |
|
Other |
|
Warrants(4) |
|
Rules 456(b) and 457(r)(3) |
|
|
|
(1)(2) |
|
|
|
(1)(2) |
|
|
|
(1)(2) |
|
|
|
(3) |
|
|
|
(3) |
|
|
|
|
|
|
|
|
| |
|
Other |
|
Units(5) |
|
Rules 456(b) and 457(r)(3) |
|
|
|
(1)(2) |
|
|
|
(1)(2) |
|
|
|
(1)(2) |
|
|
|
(3) |
|
|
|
(3) |
|
|
|
|
|
|
|
|
| Fees Previously Paid |
|
N/A |
|
N/A |
|
N/A |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
Carry Forward Securities |
| |
|
Total Offering Amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
| |
|
Total Fees Previously Paid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
| |
|
Total Fee Offsets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$21,820 |
|
|
|
|
|
|
|
|
| |
|
Net Fee Due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(1) |
Omitted pursuant to Form S-3 General Instruction II.E. |
| |
(2) |
Pebblebrook Hotel Trust (the “registrant”) is registering an unspecified number of securities or aggregate principal amount, as applicable, as may from time to time be offered at unspecified prices and, in addition, an unspecified number of additional common shares of beneficial interest, $0.01 par value per share, of the registrant (the “Common Shares”), as may be issued from time to time upon conversion of any debt securities that are convertible into Common Shares or pursuant to any anti-dilution adjustments with respect to any such convertible debt securities. . Pursuant to Rule 457(i) of the Securities Act, this includes such indeterminate number of Common Shares as may be issued upon conversion of or exchange for any of the registrant’s preferred shares of beneficial interest, $0.01 par value per share (“Preferred Shares”), that provide for conversion or exchange into other securities or upon exercise of warrants for such securities. Separate consideration may or may not be received for securities that are issuable on exercise, conversion or exchange of other securities.. Pursuant to Rule 416(a) under the Securities Act, there is also being registered such indeterminate number of Common Shares as may be issued from time to time with respect to shares being registered hereunder as a result of share splits, share dividends or similar transactions. |
| |
(3) |
In accordance with Rules 456(b) and 457(r) under the Securities Act of 1933, as amended, the registrant is deferring payment of the entire registration fee. |
| |
(4) |
The warrants covered by this Registration Statement may be preferred share warrants or common share warrants. |
| |
(5) |
Each unit will be issued under a unit agreement and will represent an interest in one or more Common Shares, Preferred Shares, debt securities or warrants, in any combination. |
Table 2: Fee Offset Claims and Sources
| |
|
Registrant
or
Filer Name |
|
Form
or
Filing
Type |
|
File
Number |
|
Initial
Filing
Date |
|
Filing
Date |
|
Fee
Offset
Claimed |
|
|
Security
Type
Associated
with Fee
Offset
Claimed |
|
|
Security
Title
Associated
with Fee
Offset
Claimed |
|
|
Unsold
Securities
Associated
with Fee
Offset Claimed |
|
|
Unsold
Aggregate
Offering Amount
Associated with
Fee Offset
Claimed |
|
|
Fee
Paid with Fee
Offset Source |
| Fee Offset Claims |
|
Pebblebrook Hotel Trust |
|
S-3 |
|
333-236577 |
|
April 29, 2021 |
|
— |
|
$21,820 |
(1) |
|
Equity |
|
|
Common shares of beneficial interest, $0.01
par value per share |
|
|
— |
|
|
$200,000,000 |
|
|
|
— |
| Fee Offset Sources |
|
Pebblebrook Hotel Trust |
|
S-3 |
|
333-236577 |
|
— |
|
April 29, 2021 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
$ |
21,820 |
| |
(1) |
The registrant previously filed a prospectus supplement, dated April 29, 2021, to a prospectus, dated February 21, 2020, constituting part of its Registration Statement on Form S-3 (File No. 333-236577) (the “Prior Registration Statement”) and paid a registration fee relating to the offer and sale of Common Shares with a proposed maximum aggregate offering price of up to $200,000,000 under its then current “at-the-market” program (the “2021 ATM Program”). As of the date of this registration statement, Common Shares having an aggregate offering price of up to $200,000,000 were not sold under the Prior Registration Statement. Pursuant to Rule 457(p) under the Securities Act, so the registration fee of $21,820 that has already been paid and remains unused with respect to securities that were previously registered pursuant to the Prior Registration Statement and were not sold thereunder may be applied to the filing fees payable pursuant to this registration statement. The Prior Registration Statement expired on February 21, 2023. |
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