Liens The Company and the Parent REIT will not and will not permit any Company Party to directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any Lien on or with respect to any property or asset of any Company Party, whether now owned or held or hereafter acquired, or any income or profits therefrom, or assign or otherwise convey any right to receive income or profits, except (the items described in clauses (a) through (h) below to be referred to as “Permitted Liens”):
(a) Liens, if any, that secure the Obligations;
(b) Liens that secure Indebtedness of the Company Parties on a pari passu basis with the Lien described in Section 10.5(a) subject to the terms of the Intercreditor Agreement;
(c) Liens existing on the Execution Date and listed in Schedule 5.15 and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased except by an amount equal to a reasonable premium or other reasonable amount paid and fees and expenses reasonably incurred in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder, and (iii) the direct or any contingent obligor with respect thereto is not changed;
(d) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;
(e) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;
(f) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;
(g) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(h) easements, rights-of-way, restrictions and other similar encumbrances affecting any Real Property owned by the Company or any Guarantor which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person and which, with respect to Unencumbered Borrowing Base Properties, have been reviewed and approved in accordance with the requirements of the Bank of America Credit Facility;
(i) Liens securing judgments for the payment of money not constituting an Event of Default under Section 11(i);
(j) (i) the interests of any ground lessor under an Eligible Ground Lease and the interests of any TRS under a lease of any Unencumbered Borrowing Base Property and (ii) Liens in connection with Permitted Intercompany Mortgages;
(k) Liens on any assets (other than any Unencumbered Borrowing Base Property and related assets) securing Indebtedness of any Note Party or Non-Guarantor Subsidiary incurred or assumed after the Execution Date; provided, such Lien to secure such Indebtedness can only be incurred if: (i) no Default shall exist immediately before or immediately after the incurrence or assumption such Indebtedness and (ii) there exists no violation of the financial covenants hereunder on a Pro Forma Basis after the incurrence or assumption of such Indebtedness, including Liens on such Real Property existing at the time such Real Property is acquired by the Company or applicable Guarantor or any Non-Guarantor Subsidiary;
(l) Liens on the Equity Interests of any Non-Guarantor Subsidiary; provided, no such Liens shall be permitted with respect to the Equity Interests of Pebblebrook Hotel Lessee, any entity which is the lessee with respect to an Unencumbered Borrowing Base Property or the direct or indirect parent thereof;
(m) other Liens on assets (other than Unencumbered Borrowing Base Properties) securing claims or other obligations of the Note Parties and their Subsidiaries (other than Indebtedness) in amounts not exceeding $5,000,000 in the aggregate; and
(n) any interest of title of a lessor under, and Liens arising from or evidenced by protective UCC financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to, operating leases permitted hereunder. Notwithstanding anything contained in this Section 10.5, the Company and the Parent REIT shall not, and shall not permit any of their Subsidiaries to, secure pursuant to this Section 10.5 any Indebtedness outstanding under or pursuant to any Primary Credit Facility unless and until the Notes (and any guaranty delivered in connection therewith) shall concurrently be secured equally and ratably with such Indebtedness pursuant to documentation reasonably acceptable to the Required Holders in substance and in form, including, without limitation, an intercreditor agreement and opinions of counsel to the Company and/or any such Subsidiary, as the case may be, from counsel that is reasonably acceptable to the Required Holders.
