UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): November 20, 2018
BRAEMAR HOTELS & RESORTS INC.
(Exact name of registrant as specified in its charter)
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Maryland |
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001-35972 |
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46-2488594 |
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(State or other jurisdiction of
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(Commission File Number) |
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(I.R.S. Employer
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14185 Dallas Parkway, Suite 1100
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75254 |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (972) 490-9600
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 1.01 Entry into a Material Definitive Agreement.
On November 20, 2018, Braemar OP General Partner LLC, a Delaware limited liability company and wholly-owned subsidiary of Braemar Hotels & Resorts Inc., a Maryland corporation (the “ Company ”), executed Amendment No. 2 to the Third Amended and Restated Agreement of Limited Partnership (the “ Partnership Agreement Amendment ”) of Braemar Hospitality Limited Partnership, a Delaware limited partnership (“ Braemar OP ”), for the purpose of creating additional preferred units of Braemar OP having substantially the same designations, preferences and other rights as the economic rights of the Company’s 8.25% Series D Cumulative Preferred Stock, par value $0.01 per share (the “ Series D Preferred Stock ”), described in Item 3.03 to the Company’s Current Report on Form 8-K filed on November 19, 2018, which description is incorporated herein by reference.
The summary of the Partnership Agreement Amendment contained in this Item 1.01 does not purport to be complete and is qualified in its entirety by reference to the full text of the Partnership Agreement Amendment, which is filed as Exhibit 10.1 hereto and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 20, 2018
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BRAEMAR HOTELS & RESORTS INC. |
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By: |
/s/ Robert G. Haiman |
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Name: |
Robert G. Haiman |
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Title: |
Executive Vice President, |
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General Counsel and Secretary |
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Hogan Lovells US LLP |
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Harbor East |
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100 International Drive |
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Suite 2000 |
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Baltimore, MD 21202 |
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T +1 410 659 2700 |
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F +1 410 659 2701 |
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www.hoganlovells.com |
November 20, 2018
Board of Directors
Braemar Hotels & Resorts Inc.
14185 Dallas Parkway
Suite 1100
Dallas, TX 75254
1,840,000 Shares of 8.25% Series D Cumulative
Preferred Stock
Ladies and Gentlemen:
We are acting as counsel to Braemar Hotels & Resorts, Inc., (f/k/a Ashford Hospitality Prime, Inc.), a Maryland corporation (the “ Company ”), in connection with its filing of a registration statement on Form S-3 (the “ Registration Statement ”), filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “ Act ”), relating to the proposed offering of up to 1,840,000 shares of 8.25% Series D Cumulative Preferred Stock, par value $0.01 per share of the Company (the “ Preferred Shares ”) and (ii) an undetermined number of shares of common stock issuable upon conversion of the Preferred Shares (the “ Conversion Common Shares ”). The Preferred Shares were issued pursuant to the Underwriting Agreement dated as of November 13, 2018 among (i) the Company, Braemar Hospitality Limited Partnership (f/k/a Ashford Hospitality Prime Limited Partnership), a Delaware limited partnership and the Company’s operating partnership and Ashford Hospitality Advisors LLC, a Delaware limited liability company, and (ii) Morgan Stanley & Co. LLC, UBS Securities LLC and Citigroup Global Markets Inc., as representatives of the several underwriters named therein (the “ Underwriting Agreement ”). This opinion letter is furnished to you at your request to enable you to fulfill the requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. § 229.601(b)(5), in connection with the Registration Statement.
For purposes of this opinion letter, we have examined copies of such agreements, instruments and documents as we have deemed an appropriate basis on which to render the opinions hereinafter expressed. In our examination of the aforesaid documents, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the accuracy and completeness of all documents submitted to us, the authenticity of all original documents, and the conformity to authentic original documents of all documents submitted to us as copies (including telecopies). We also have assumed that the Preferred Shares and the Conversion Common Shares will not be issued in violation of the ownership limit contained in the Company’s charter and that, at the time the Preferred Shares are to be converted into
Conversion Common Shares, the number of Conversion Common Shares shall not exceed the total number of authorized but unissued shares of Common Stock of the Company. As to all matters of fact, we have relied on the representations and statements of fact made in the documents so reviewed, and we have not independently established the facts so relied on. This opinion letter is given, and all statements herein are made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on the Maryland General Corporation Law, as amended and as currently in effect. We express no opinion herein as to any other laws, statutes, ordinances, rules, or regulations.
Based upon, subject to and limited by the foregoing, we are of the opinion that:
(1) Following (i) execution and delivery by the Company of the Underwriting Agreement, (ii) effectiveness of the Registration Statement, (iii) issuance of the Preferred Shares pursuant to the terms of the Underwriting Agreement, and (iv) receipt by the Company of the consideration for the Preferred Shares specified in the resolutions of the Board of Directors and the Pricing Committee of the Board of Directors, the Preferred Shares will be validly issued, fully paid, and nonassessable.
(2) The Conversion Common Shares, if and when issued upon exercise of the conversion right in accordance with the terms of the Preferred Shares, will be validly issued, fully paid and nonassessable.
This opinion letter has been prepared for use in connection with the Registration Statement. We assume no obligation to advise you of any changes in the foregoing subsequent to the effective date of the Registration Statement
We hereby consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement. In giving this consent, we do not thereby admit that we are an “expert” within the meaning of the Securities Act of 1933, as amended.
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Very truly yours, |
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HOGAN LOVELLS US LLP |
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Locke Lord LLP |
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2200 Ross Avenue, Suite 2800 |
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Dallas, TX 75201 |
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Telephone: 214-740-8000 |
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Fax: 214-740-8800 |
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www.lockelord.com |
November 20, 2018
Braemar Hotels & Resorts Inc.
14185 Dallas Parkway, Suite 1100
Dallas, TX 75254
Ladies and Gentlemen:
We have acted as special United States federal income tax counsel to Braemar Hotels & Resorts Inc. (formerly Ashford Hospitality Prime, Inc.), a Maryland corporation (the “Company”), in connection with a registration statement number 333-223799 (the “Registration Statement”) on Form S-3 filed by the Company with the Securities and Exchange Commission, as amended, and a preliminary prospectus supplement dated November 13, 2018 (the “Preliminary Prospectus Supplement”), a final prospectus supplement dated November 13, 2018 (the “Final Prospectus Supplement”), and the base prospectus dated May 17, 2018 (the “Base Prospectus”, and together with the Preliminary Prospectus Supplement and the Final Prospectus Supplement, the “Prospectus”) providing for the issuance and sale of up to 1,840,000 shares of 8.25% Series D Cumulative Preferred Stock (the “Series D Preferred Stock”). You have requested our opinion as to certain United States federal income tax matters in connection with the offering of Series D Preferred Stock pursuant to the Preliminary Prospectus Supplement and the Final Prospectus Supplement.
In connection with our opinion, we have examined and relied upon the following:
1. the Company’s Articles of Amendment and Restatement, in the form filed with the State Department of Assessments and Taxation of Maryland on November 8, 2013, as amended by the Company’s Articles of Amendment, in the form filed with the State Department of Assessments and Taxation of Maryland on May 18, 2015, and as amended by Amendment No. 1 to the Articles of Amendment and Restatement filed with the State Department of Assessments and Taxation of Maryland on December 8, 2017, and as amended by Amendment No. 2 to the Articles of Amendment and Restatement filed with the State Department of Assessments and Taxation of Maryland on April 23, 2018;
2. the Company’s Articles Supplementary (Series A Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on May 18, 2015;
3. the Company’s Articles Supplementary (Series B Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on June 10, 2015, as corrected in a Certificate of Correction filed June 11, 2015;
4. the Company’s Articles Supplementary (Series C Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on December 4, 2015;
5. the Company’s Articles Supplementary, in the form filed with the State Department of Assessments and Taxation of Maryland on February 1, 2016;
6. the Company’s Articles Supplementary, in the form filed with the State Department of Assessments and Taxation of Maryland on April 27, 2016; the Company’s Articles Supplementary Establishing Additional Shares of Series B Cumulative Convertible Preferred Stock, in the form filed with the State Department of Assessments and Taxation of Maryland on March 3, 2017;
7. the Company’s Articles Supplementary (Series D Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on November 20, 2018;
8. the Company’s Amended and Restated Bylaws, dated November 5, 2013, the Company’s Second Amended and Restated Bylaws, dated August 3, 2016, the Company’s Third Amended and Restated Bylaws, dated April 23, 2018, and the Company’s Fourth Amended and Restated Bylaws, dated August 14, 2018;
9. the Certificate of Limited Partnership of the Operating Partnership, effective April 5, 2013, as certified by the Secretary of State of the State of Delaware, as corrected in a Certificate of Correction filed February 14, 2014;
10. the Third Amended and Restated Agreement of Limited Partnership of the Operating Partnership between Braemar OP General Partner LLC (formerly Ashford Prime OP General Partner LLC), as the general partner, and Braemar OP Limited Partner LLC (formerly Ashford Prime OP Limited Partner LLC), and certain officers, directors and others as the limited partners (the “Operating Partnership Agreement”), dated November 19, 2013, as amended through the relevant dates;
11. the Registration Statement;
12. the Prospectus;
13. the Officer’s Certificate to Counsel for Braemar Hotels & Resorts, Inc. Regarding Certain Income Tax Matters dated the date hereof and executed by a duly appointed officer of the Company (the “Braemar Officer’s Certificate”);
14. the form of leases entered into between any taxable REIT subsidiary of the Company and each partnership, limited liability company or trust in which the Company directly or indirectly owns an interest, the form of which is attached to the Braemar Officer’s Certificate; and
15. such other documents, records and matters of law as we have deemed necessary or appropriate for rendering this opinion.
In addition, the Company’s ability to qualify to be taxed as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”) for the 2013 taxable year and certain future taxable years has depended on or will depend upon qualification of Ashford Hospitality Trust, Inc., a Maryland corporation (“AHT”), to be taxed as a REIT for its taxable years ended December 31, 2009 through December 31, 2013. As a consequence in connection with our opinion, we have also examined and relied upon the following:
1. AHT’s Articles of Amendment and Restatement filed July 28, 2003, the Certificate of Correction to Correct an Error, in the form filed with the State Department of Assessments and Taxation of Maryland on August 7, 2003, and as amended by Amendment No. 1 filed with the State Department of Assessments and Taxation of Maryland on May 13, 2015;
2. AHT’s Articles Supplementary (Series A Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on September 21, 2004;
3. AHT’s Articles Supplementary (Series B-1 Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on December 29, 2004;
4. AHT’s Articles Supplementary (Series B-2 Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on December 29, 2004;
5. AHT’s Articles Supplementary (Series C Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on April 10, 2007;
6. AHT’s Articles Supplementary (Series D Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on July 17, 2007; AHT’s Articles Supplementary Establishing Additional Shares of Series D Preferred Stock, in the form filed with the State Department of Assessments and Taxation of Maryland on September 21, 2010; AHT’s Articles Supplementary Establishing Additional Shares of Series D Preferred Stock, in the form filed with the State Department of Assessments and Taxation of Maryland on September 30, 2011;
7. AHT’s Articles Supplementary (Series E Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on April 15, 2011; AHT’s Articles Supplementary Establishing Additional Shares of Series E Preferred Stock, in the form filed with the State Department of Assessments and Taxation of Maryland on October 14, 2011;
8. AHT’s Amended and Restated Bylaws, as amended by Amendment No. 1, Amendment No. 2 and Amendment No. 3, and AHT’s Second Amended and Restated Bylaws, as certified by the Secretary of AHT;
9. the Certificate of Amendment to the Certificate of Limited Partnership of Ashford Hospitality Limited Partnership, a Delaware limited partnership (the “AHT Partnership”), effective July 25, 2003, as certified by the Secretary of State of the State of Delaware;
10. the Amended and Restated Agreement of Limited Partnership of the AHT Partnership between Ashford OP General Partner LLC, as the general partner, and Ashford OP Limited Partner LLC, and certain officers, directors and others as the limited partners (the “AHT Partnership Agreement”), as amended through the relevant dates;
11. the Officer’s Certificate to Counsel for Ashford Hospitality Trust, Inc. Regarding Certain Income Tax Matters dated the date hereof and executed by a duly appointed officer of AHT (the “AHT Officer’s Certificate”);
12. the Officer’s Certificate to Counsel for Ashford, Inc. Regarding Certain Income Tax Matters dated the date hereof and executed by a duly appointed officer of Ashford, Inc. (the “Ashford Inc. Officer’s Certificate”);
13. the form of leases entered into between any taxable REIT subsidiary of AHT and each partnership, limited liability company or trust in which AHT directly or indirectly owns an interest, the form of which is attached to the AHT Officer’s Certificate; and
14. such other documents, records and matters of law as we have deemed necessary or appropriate for rendering this opinion.
In our examination, we have assumed, without independent investigation or verification, (i) the authenticity and completeness of all documents reviewed by us in original or copy form, (ii) the conformity to the original documents of all documents reviewed by us as copies, including electronic copies and conformed copies, (iii) the due authorization, capacity, execution and delivery on behalf of the respective parties thereto of all documents referred to herein and the legal, valid and binding effect thereof on such parties, (iv) the genuineness of all signatures on documents examined by us, (v) the truth, accuracy and completeness of the information, factual matters, representations and warranties contained in the records, documents, instruments and certificates we have reviewed and (vi) that each unexecuted document submitted to us for our review will be executed in a form materially identical to the form we reviewed. We have further assumed that each of the parties to each of the documents referred to herein fully complies with all of its obligations thereunder and that there are no arrangements, understandings or agreements among any of the parties relating to such documents other than those evidenced by such documents. In connection with the opinion rendered below, we have also relied upon the
correctness of the factual representations contained in the AHT Officer’s Certificate, the Braemar Officer’s Certificate and the Ashford Inc. Officer’s Certificate, and have assumed that all representations made “to the best knowledge of” any person will be true, correct and complete as if made without that qualification. We have also assumed that:
1. the Company has not made and will not make any amendments to its organization documents or allow amendments to the Operating Partnership Agreement or organization documents of its corporate subsidiaries or partnership, limited liability or trust agreements of its partnership, limited liability company or trust subsidiaries after the date of this opinion that would adversely affect the Company’s qualification as a REIT under the Code, for any taxable year;
2. no action has been or will be taken by the Company, the Operating Partnership, partnership, limited liability company and trust subsidiaries of the Company or corporate subsidiaries of the Company after the date hereof that would have the effect of altering the facts upon which the opinion set forth below is based;
3. for its taxable years ended December 31, 2003 through December 31, 2013, AHT operated in a manner that makes the representations contained in the AHT Officer’s Certificate true for such years;
4. AHT has not made and will not make any amendments to its organization documents or allow amendments to the AHT Partnership Agreement or organization documents of its corporate subsidiaries or partnership, limited liability or trust agreements of its partnership, limited liability company or trust subsidiaries after the date of this opinion that would adversely affect its qualification as a REIT under the Code, for its 2009 through 2013 taxable years; and
5. no action has been or will be taken by AHT, the AHT Partnership, partnership, limited liability company and trust subsidiaries of AHT or corporate subsidiaries of the Company after the date hereof that would have the effect of altering the facts upon which the opinion set forth below is based.
We have assumed that all facts, information, representations, covenants, agreements and other statements set forth in the documents referred to above were initially and are currently, and will continue to be, true, correct and complete without regard to any qualification as to knowledge or belief. We have assumed that none of the documents referred to above has been or will be amended, modified, supplemented or otherwise altered in any respect.
Based on the documents and assumptions set forth above and the representations set forth in the Braemar Officer’s Certificate, the AHT Officer’s Certificate and the Ashford Inc. Officer’s Certificate and the discussion in the Base Prospectus under the caption “Material Federal Income Tax Considerations” as well as the discussion in the Preliminary Prospectus Supplement and the Final Prospectus Supplement under the caption “Additional Federal Income Tax Considerations” (which is incorporated herein by reference), we are of the opinion that:
(a) commencing with the Company’s taxable year ended December 31, 2013 through its taxable year ended December 31, 2017, the Company has been organized and operated in conformity with the requirements for qualification as a REIT under the Code, and the Company’s organization and current and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code for its taxable year ending December 31, 2018 and thereafter;
(b) the Operating Partnership is classified as a partnership for United States federal income tax purposes and not as an association taxable as a corporation or a “publicly traded partnership” taxable as a corporation under the Code; and
(c) the descriptions of the law and the legal conclusions contained in the Base Prospectus under the caption “Material Federal Income Tax Considerations” and in the Preliminary Prospectus Supplement and the Final Prospectus Supplement under the caption “Additional Federal Income Tax Considerations” are correct in all material respects, and the discussion thereunder expresses the opinion of Locke Lord LLP insofar as it relates to matters of United States federal income tax law and legal conclusions with respect to those matters.
It is not possible to predict whether the statements, representations, warranties or assumptions on which we have relied to issue this opinion will continue to be accurate in the future. The Company’s qualification and taxation as a REIT under the Code has depended and will depend on the ability of the Company to meet on a prior and an ongoing basis (through actual quarterly and annual operating results, distribution levels, diversity of stock ownership and otherwise) the various qualification tests imposed under the Code, and upon the Company’s utilizing any and all appropriate “savings provisions” (including the provisions of Sections 856(c)(6), 856(c)(7), and 856(g) of the Code and the provisions included in Section 856(c)(4) of the Code (flush language) allowing for the disposal of assets within 30 days after the close of a calendar quarter, and all available deficiency dividend procedures) available to the Company under the Code to correct violations of specified REIT qualification requirements of Sections 856 and 857 of the Code. Our opinion set forth above does not foreclose the possibility that the Company may have to utilize one or more of these “savings provisions,” which could require the Company to pay an excise tax or penalty tax (which could be significant in amount) in order to maintain its REIT qualification for a taxable year. We will not review on a continuing basis the Company’s compliance with the documents or assumptions set forth above, or the representations set forth in the Braemar Officer’s Certificate, the AHT Officer’s Certificate and the Ashford Inc. Officer’s Certificate. Accordingly, no assurance can be given that the Company’s operations for any given taxable year will satisfy the requirements for qualification and taxation as a REIT.
The foregoing opinion is limited to the United States federal income tax matters addressed herein, and no other opinion is rendered with respect to other United States federal tax matters or to any issues arising under the tax laws of any other country, or any state or locality. The foregoing opinion is based on current provisions of the Code and the Treasury regulations thereunder (the “Regulations”), published administrative interpretations thereof, and published court decisions, all of which are subject to change and new interpretation, both prospectively and
retroactively. The Internal Revenue 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. Although the conclusions set forth herein represent our best judgment as to the probable outcome on the merits of such matters, the Internal Revenue Service and the courts are not bound by, and may disagree with, the conclusions set forth herein. This opinion is rendered only as of the date hereof, and we assume no obligation to update our opinion to address other facts or any changes in law or interpretation thereof that may hereafter occur or hereafter come to our attention. If any one of the statements, representations, warranties or assumptions that we have relied upon to issue this opinion is incorrect in a material respect, our opinion might be adversely affected and may not be relied upon.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, the Preliminary Prospectus Supplement and the Final Prospectus Supplement. We also consent to the references to Locke Lord LLP under the caption “Additional Federal Income Tax Considerations” and elsewhere in the Preliminary Prospectus Supplement and the Final Prospectus Supplement. 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.
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Very truly yours, |
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/s/ Locke Lord LLP |
AMENDMENT NO. 2
TO THE THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
BRAEMAR HOSPITALITY LIMITED PARTNERSHIP
November 20, 2018
This Amendment No. 2 to the Third Amended and Restated Agreement of Limited Partnership of Braemar Hospitality Limited Partnership (this “ Amendment ”) is made as of November 20, 2018, by Braemar OP General Partner LLC, a Delaware limited liability company, as general partner (the “ General Partner ”) of Braemar Hospitality Limited Partnership, a Delaware limited partnership (the “ Partnership ”), pursuant to the authority granted to the General Partner in Section 11.1(b) of the Third Amended and Restated Agreement of Limited Partnership of Braemar Hospitality Limited Partnership, dated March 7, 2017, as amended by Amendment No. 1 thereto dated as of April 23, 2018 (the “ Partnership Agreement ”), for the purpose of issuing additional Partnership Units in the form of Preferred Partnership Units. Capitalized terms used and not defined herein shall have the meanings set forth in the Partnership Agreement.
WHEREAS, the Board of Directors (the “ Board ”) of Braemar Hotels & Resorts Inc. (the “ Company ”) and a duly authorized committee thereof adopted resolutions on November 11, 2018 and November 13, 2018 classifying and designating 1,840,000 shares of Preferred Stock (as defined in the Articles of Amendment and Restatement of the Company (the “ Charter ”)) as Series D Preferred Stock;
WHEREAS, the Board filed Articles Supplementary to the Charter with the State Department of Assessments and Taxation of Maryland on November 19, 2018, establishing the Series D Preferred Stock, with such preferences, rights, powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption as described in the Series D Articles Supplementary;
WHEREAS, Section 11.1(b) of the Partnership Agreement permits the General Partner to amend the Partnership Agreement without the approval of any other Partner if such amendment is to create, issue or reflect the creation or issuance of additional Partnership Interests;
WHEREAS, the General Partner has determined that, in connection with the issuance of the Series D Preferred Stock, it is necessary and desirable to amend the Partnership Agreement to create additional Partnership Units in the form of Preferred Partnership Units having designations, preferences and other rights which are substantially the same as the economic rights of the Series D Preferred Stock; and
WHEREAS, the General Partner desires to so amend the Partnership Agreement as of the date first set forth above.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the General Partner hereby amends the Partnership Agreement as follows:
1. Article I is amended to add the following defined terms in their respective alphabetical order within Article I:
“ Series D Articles Supplementary ” shall mean the Articles Supplementary Establishing and Fixing the Rights and Preferences of a Series of Preferred Stock, designating the rights and preferences of the 8.25% Series D Cumulative Preferred Stock, filed as part of the Company’s charter with the State Department of Assessments and Taxation of Maryland, on November 16, 2018.
“ Series D Preferred Partnership Interests ” shall mean a partnership interest in the Partnership evidenced by the Series D Preferred Partnership Units, having a preference in payment of distributions or on liquidation as set forth in Exhibit H to this Agreement.
“ Series D Preferred Partnership Units ” shall mean the series of Preferred Partnership Units established pursuant to this Agreement, representing a fractional, undivided share of the Series D Preferred Partnership Interests of all Partners issued under this Agreement.
“ Series D Preferred Stock ” shall mean the Series D Cumulative Preferred Stock of the Company, with such preferences, rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption as described in the Series D Articles Supplementary.
2. In accordance with Section 4.3 of the Partnership Agreement, set forth in Exhibit H hereto are the terms and conditions of the Series D Preferred Partnership Units which are hereby established and issued to Braemar OP Limited Partner, LLC in consideration of its contribution to the Partnership of the proceeds from the issuance and sale of the Series D Preferred Stock by the Company. The Partnership Agreement is hereby amended to incorporate such Exhibit H as Exhibit H thereto and to replace Exhibit A thereto with a revised Exhibit A to reflect the issuance of the Series D Preferred Partnership Units.
3. Except as modified herein, all terms and conditions of the Partnership Agreement shall remain in full force and effect, which terms and conditions the General Partner hereby ratifies and confirms.
4. This Amendment shall be construed and enforced in accordance with and governed by the laws of the State of Delaware, without regard to conflicts of law.
5. If any provision of this Amendment is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.
[ The remainder of this page intentionally left blank. ]
IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date first set forth above.
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Braemar OP General Partner LLC, |
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a Delaware limited liability company, as General Partner of Braemar Hospitality Limited Partnership |
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By: |
/s/ Robert G. Haiman |
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Name: |
Robert G. Haiman |
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Title: |
Executive Vice President, General |
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Counsel and Secretary |
[ Amendment No. 2 to Third Amended and Restated LP Agreement of Braemar Hospitality Limited Partnership ]
EXHIBIT H
DESIGNATION OF TERMS AND CONDITIONS OF SERIES D PREFERRED PARTNERSHIP UNITS
(a) Designation and Number . A series of Preferred Partnership Units, designated as Series D Preferred Partnership Units, is hereby established. The number of authorized Series D Preferred Partnership Units shall be 1,840,000.
(b) Rank . The Series D Preferred Partnership Units, with respect to rights to distributions and payments to Partners, the distribution of assets upon the liquidation, dissolution or winding up of the Partnership, rank (a) prior or senior to the Common Partnership Units and all Partnership Units issued by the Partnership (“ Junior Units ”) the terms of which specifically provide that such Partnership Units rank junior to the Series D Preferred Partnership Units; (b) on a parity with the Series B Preferred Partnership Units and all other Partnership Units issued in the future by the Partnership (“ Parity Units ”) the terms of which specifically provide that such Partnership Units rank on a parity with the Series D Preferred Partnership Units; (c) junior to all Partnership Units issued by the Partnership the terms of which specifically provide that such Partnership Units rank senior to the Series D Preferred Partnership Units; and (d) junior to all of the Partnership’s existing and future indebtedness.
(c) Distributions .
(i) Pursuant to Section 8.1 of the Partnership Agreement but subject to the rights of holders of any Preferred Partnership Units ranking senior to the Series D Preferred Partnership Units as to the payment of distributions, Braemar OP Limited Partner LLC, in its capacity as the holder of the then outstanding Series D Preferred Partnership Units, shall be entitled to receive, when, as and if authorized by the General Partner, from the Cash Flow, cumulative quarterly preferential cash distributions in an amount per Series D Preferred Partnership Unit equal to 8.25% of the $25.00 liquidation preference per annum (equivalent to a fixed annual amount of $2.0625 per Series D Preferred Partnership Unit). Distributions of Preferred Return on the Series D Preferred Partnership Units shall be cumulative from (and including) the date of original issuance, whether or not in any distribution period or periods (i) such distributions shall be authorized by the General Partner, (ii) there shall be funds legally available for the payment of such distributions or (iii) any agreement prohibits the Partnership’s payment of such distributions, and such distributions shall be payable quarterly on the 15th day of January, April, July and October of each year (or, if not a Business Day, the next succeeding Business Day with the same force and effect as if paid on such distribution date, and no interest or additional distributions or other sums shall accrue on the amount so payable from such distribution date to such next succeeding Business Day). Any distribution of Preferred Return payable on the Series D Preferred Partnership Units for any distribution period (as defined below) will be computed on the basis of twelve 30-day months and a 360-day year. Distributions of Preferred Return will be payable in arrears to holders of record as they appear on the records of the Partnership at the close of business on the last day of each of March, June, September and December, as the case may be, immediately preceding the applicable
distribution payment date, which dates shall be the Partnership Record Dates for the Series D Preferred Partnership Units. Except for distributions in liquidation or redemption as provided in Sections D and E , respectively, holders of Series D Preferred Partnership Units will not be entitled to receive any distributions in excess of cumulative Preferred Returns accrued on the Series D Preferred Partnership Units at the rate specified in this paragraph. No interest will be paid in respect of any distribution payment or payments on the Series D Preferred Partnership Units that may be in arrears. As used herein, “ distribution period ” shall mean the respective periods commencing on, and including, the 1st day of January, April, July and October of each year and ending on, and including, the last day of each March, June, September and December, respectively (other than the initial distribution period with respect to units issued on November 20, 2018, which shall commence on (and include) November 20, 2018 and end on (and include) December 31, 2018, and other than the distribution period during which any Series D Preferred Partnership Units shall be redeemed pursuant to Section E , which shall end on, and include, the day preceding the redemption date with respect to the Series D Preferred Partnership Units being redeemed).
(ii) When distributions of Preferred Return are not paid in full upon the Series D Preferred Partnership Units or any other series of Parity Units, or a sum sufficient for such payment is not set apart, all distributions of Preferred Return authorized by the General Partner upon the Series D Preferred Partnership Units and any other series of Parity Units shall be authorized by the General Partner ratably in proportion to the respective amounts of such distributions accumulated, accrued and unpaid on the Series D Preferred Partnership Units and accumulated, accrued and unpaid on such Parity Units. Except as set forth in the preceding sentence, unless distributions on the Series D Preferred Partnership Units equal to the full amount of accumulated, accrued and unpaid distributions of Preferred Return have been or contemporaneously are authorized by the General Partner and paid, or authorized by the General Partner and a sum sufficient for the payment thereof set apart for such payment for all past distribution periods, no distributions (other than distributions paid in Junior Units or options, warrants or rights to subscribe for or purchase Junior Units) shall be authorized by the General Partner or paid or set aside for payment by the Partnership with respect to any class or series of Parity Units. Unless full cumulative distributions of Preferred Return on the Series D Preferred Partnership Units have been paid or authorized by the General Partner and set apart for payment for all past distribution periods, no distributions (other than distributions paid in Junior Units or options, warrants or rights to subscribe for or purchase Junior Units) shall be authorized by the General Partner or paid or set apart for payment by the Partnership with respect to any Junior Units, nor shall any Junior Units or Parity Units be redeemed, purchased or otherwise acquired for any consideration, or any monies be paid to or made available for a sinking fund for the redemption of any Junior Units or Parity Units (except by conversion or exchange for Junior Units, or options, warrants or rights to subscribe for or purchase Junior Units), nor shall any other cash or property be paid or distributed to or for the benefit of holders of Junior Units or Parity Units. Notwithstanding the foregoing, the General Partner shall not be prohibited from (i) authorizing or paying or setting apart for payment any Preferred Return or distribution on any Junior Units or Parity Units or (ii) redeeming, purchasing or otherwise acquiring any Junior Units or Parity Units, in each case, if such authorization, payment, redemption, purchase or other acquisition is necessary to maintain the Company’s qualification as a REIT.
(iii) No distribution of Preferred Return on the Series D Preferred Partnership Units shall be authorized by the General Partner or paid or set apart for payment at such time as the terms and provisions of any agreement of the Partnership, including any agreement of the Partnership relating to the Partnership’s indebtedness, prohibits such authorization, payment or setting apart for payment or provides that such authorization, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or if such authorization, payment or setting apart for payment shall be restricted or prohibited by law.
(iv) In determining whether a distribution (other than upon voluntary or involuntary liquidation, dissolution or winding up of the Partnership) of Preferred Return or in redemption or otherwise, is permitted, amounts that would be needed, if the Partnership were to be dissolved at the time of the distribution, to satisfy the liquidation preference of the Series D Preferred Partnership Units (as provided in Section D below) will not be added to the Partnership’s total liabilities.
(d) Liquidation Preference .
(i) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Partnership, before any payment or distribution shall be made to or set apart for the holders of any Junior Units, Braemar OP Limited Partner LLC, in its capacity as holder of the Series D Preferred Partnership Units, shall be entitled to receive a liquidation preference distribution of $25.00 per Series D Preferred Partnership Unit, plus an amount equal to all accumulated, accrued and unpaid Preferred Return to the date of final distribution, but Braemar OP Limited Partner LLC shall not be entitled to any further payment with respect thereto. If upon any liquidation, dissolution or winding up of the Partnership, its assets, or proceeds thereof, distributable among Braemar OP Limited Partner LLC, in its capacity as the holder of the Series D Preferred Partnership Units, shall be insufficient to pay in full the above described preferential distribution and liquidating distributions on any other series of Parity Units, then such assets, or the proceeds thereof, shall be distributed among Braemar OP Limited Partner LLC, in its capacity as the holder of the Series D Preferred Partnership Units, and the holders of any such other Parity Units ratably in the same proportion as the respective amounts that would be payable on such Series D Preferred Partnership Units and any such other Parity Units if all amounts payable thereon were paid in full.
(ii) Upon any liquidation, dissolution or winding up of the Partnership, after payment shall have been made in full to Breamar OP Limited Partner LLC, in its capacity as the holder of the Series D Preferred Partnership Units, holders of the Series D Preferred Partnership Units shall have no right or claim to any of the remaining assets of the Partnership.
(iii) None of a consolidation or merger of the Partnership with or into another entity, a merger of another entity with or into the Partnership, a statutory unit exchange by the Partnership or a sale, lease or conveyance of all or substantially all of the Partnership’s property or business shall be considered a liquidation, dissolution or winding up of the affairs of the Partnership.
(e) Redemption . In connection with the redemption by the Company of any shares of Series D Preferred Stock in accordance with the provisions of the Series D Articles Supplementary, the Partnership shall provide cash to Braemar OP Limited Partner LLC for such purpose which shall be equal to the redemption price (as set forth in the Series D Articles Supplementary), plus all distributions of Preferred Return accumulated and unpaid to, but not including, the Redemption Date (as defined in the Series D Articles Supplementary), and one Series D Preferred Partnership Unit shall be concurrently redeemed with respect to each share of Series D Preferred Stock so redeemed by the Company. From and after the applicable Redemption Date, the Series D Preferred Partnership Units so redeemed shall no longer be outstanding and all rights hereunder, to distributions or otherwise, with respect to such Series D Preferred Partnership Units shall cease.
(f) Voting Rights . Except as required by applicable law, the holder of the Series D Preferred Partnership Units, as such, shall have no voting rights.
(g) Conversion . In connection with the conversion by the Company of any shares of Series D Preferred Stock into shares of REIT Common Shares in accordance with the provisions of the Series D Articles Supplementary, the Partnership shall convert Series D Preferred Partnership Units into Common Partnership Units and issue such Common Partnership Units to Braemar OP Limited Partner LLC. The number of Common Partnership Units into which the Series D Preferred Partnership Units are convertible shall be equal to the number of REIT Common Shares into which the Series D Preferred Stock is then being converted, as set forth in the Series D Articles Supplementary. From and after the applicable Change of Control Conversion Date (as such term is defined in the Series D Articles Supplementary), the Series D Preferred Partnership Units so converted shall no longer be outstanding and all rights hereunder, to distributions or otherwise, with respect to such Series D Preferred Partnership Units shall cease.
(h) Restriction on Ownership . The Series D Preferred Partnership Units shall be owned and held solely by Braemar OP Limited Partner LLC.
(i) Allocations . Allocations of the Partnership’s items of income, gain, loss and deduction allocable with respect to Series D Preferred Partnership Units shall be allocated pro rata among holders of Series D Preferred Partnership Units in accordance with Article V of the Partnership Agreement.