Item 3.03. Material Modifications to Rights of Security Holders.
On June 25, 2021, Chatham Lodging Trust (the “Company”) filed, with the State Department of Assessments and Taxation of the State of Maryland, Articles Supplementary (the “Articles Supplementary”) to the Company’s Declaration of Trust, as amended and supplemented, classifying and designating 4,800,000 of the Company’s authorized preferred shares of beneficial interest, $0.01 par value per share, as 6.625% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share (the “Series A Preferred Shares”). A summary of the material terms of the Series A Preferred Shares is set forth under the caption “Description of the Series A Preferred Shares” in the Company’s prospectus supplement, dated June 23, 2021 and filed with the Securities and Exchange Commission (the “SEC”) on June 24, 2021 (the “Prospectus Supplement”). The summary of the Series A Preferred Shares in the Prospectus Supplement and the following description of the Series A Preferred Shares are qualified in their entirety by reference to the Articles Supplementary, which are hereby incorporated by reference into this Item 3.03 and which were filed as Exhibit 3.3 to the Company’s Registration Statement on Form 8-A, filed with the SEC on June 25, 2021.
The Company filed the Articles Supplementary in connection with its previously announced Preferred Shares Offering (as defined below), as further described below.
The Series A Preferred Shares rank senior to the Company’s common shares of beneficial interest, $0.01 par value per share (“Common Shares”), with respect to distribution rights and rights upon the voluntary or involuntary liquidation, dissolution or winding up of the Company.
In addition to other preferential rights, each holder of Series A Preferred Shares is entitled to receive a liquidation preference, which is equal to $25.00 per Series A Preferred Share, plus any accrued and unpaid distributions to, but not including, the date of the payment, before the holders of Common Shares, in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company. Furthermore, the Company is restricted from declaring or paying any distributions, or setting aside any funds for the payment of distributions, on the Common Shares or, subject to certain exceptions, redeeming or otherwise acquiring Common Shares unless full cumulative distributions on the Series A Preferred Shares have been declared and either paid or set aside for payment in full for all past distribution periods.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The information about the Articles Supplementary set forth under Item 3.03 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 5.03.
The Company, as the general partner of Chatham Lodging, L.P. (the “Operating Partnership”), has amended the Agreement of Limited Partnership of the Operating Partnership, as amended (the “Partnership Agreement”) to provide for the issuance of up to 4,800,000 6.625% Series A Preferred Partnership Units (liquidation preference $25.00 per unit) (the “Series A Preferred Units”). Such amendment is filed as Exhibit 3.2 to this Current Report on Form 8-K and incorporated by reference herein. The Company expects to contribute the net proceeds from the sale of the Series A Preferred Shares in the Preferred Shares Offering (as defined below) to the Operating Partnership in exchange for the same number of Series A Preferred Units. The Series A Preferred Units have economic terms that mirror the terms of the Series A Preferred Shares. The issuance of the Series A Preferred Units will be exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933.
