|
Item 3.03
|
Material Modifications to Rights of Security Holders.
|
Spirit Realty Capital, Inc.
On October 2, 2017, the Company filed with the State Department of Assessments and Taxation of Maryland articles supplementary to its
charter (the “Articles Supplementary”), classifying and designating 6,900,000 of its authorized capital stock as shares of Series A Preferred Stock. As set forth in the Articles Supplementary, the Series A Preferred Stock ranks, with
respect to dividend rights and rights upon the Company’s liquidation, dissolution or winding-up, senior to its common stock, par value $0.01 per share (the “Common Stock”), and on parity with any future class or series of its capital
stock expressly designated as ranking on parity with the Series A Preferred Stock.
Holders of Series A Preferred Stock, when and as
authorized by the Company’s board of directors and declared by it, are entitled to cumulative cash dividends at the rate of 6.000% per annum of the $25.00 liquidation preference per share, equivalent to an annual rate of $1.50 per share.
Dividends are payable quarterly in arrears on or about the last day of March, June, September and December of each year, beginning on December 31, 2017. Dividends will accrue and be cumulative from and including October 3, 2017, the first
date on which shares of the Series A Preferred Stock were issued.
If the Company is liquidated, dissolved or wound up, holders of shares
of the Series A Preferred Stock will be entitled to receive a liquidation preference of $25.00 per share, plus any accrued and unpaid dividends (whether or not authorized or declared) up to but excluding the date of payment, before any distribution
or payment is made to holders of Common Stock and any other class or series of capital stock ranking junior to the Series A Preferred Stock, none of which exist on the date hereof. The rights of holders of shares of the Series A Preferred Stock to
receive their liquidation preference will be subject to the proportionate rights of any other class or series of capital stock ranking on parity with the Series A Preferred Stock as to liquidation, and junior to the rights of any class or series of
capital stock expressly designated as ranking senior to the Series A Preferred Stock.
The Company may not redeem the Series A Preferred Stock prior to October 3, 2022, except in
limited circumstances to preserve its status as a real estate investment trust, and pursuant to the special optional redemption provision described below. On and after October 3, 2022, the Company may, at its option, redeem the Series A
Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends up to but excluding the redemption date. In addition, upon the occurrence of a
“Change of Control” (as defined below), the Company may, at its option, redeem the Series A Preferred Stock, in whole or in part within 120 days after the first date on which such Change of Control occurred, by paying $25.00 per share,
plus any accrued and unpaid dividends to, but not including, the date of redemption. If, prior to the Change of Control Conversion Date (as defined below), the Company exercises any of its redemption rights relating to the Series A Preferred Stock
(whether the optional redemption right or the special optional redemption right), the holders of the Series A Preferred Stock will not have the conversion rights described below with respect to the shares called for redemption.
Upon the occurrence of a “Change of Control”, each holder of the Series A Preferred Stock will have the right (unless, prior to the
Change of Control Conversion Date, the Company has provided or provides notice of its election to redeem the Series A Preferred Stock) to convert some or all of the Series A Preferred Stock held by such holder on the Change of Control Conversion
Date, referred to as the “Change of Control Conversion Right”, into a number of shares of Common Stock per share of Series A Preferred Stock to be converted equal to the lesser of:
|
|
●
|
|
the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any
accrued and unpaid dividends to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a record date for a Series A Preferred Stock dividend payment and prior to the corresponding Series A
Preferred Stock dividend payment date, in which case no additional amount for such accrued and unpaid dividends will be included in this sum) by (ii) the Common Stock Price; and
|
|
|
●
|
|
5.93120 (i.e., the Share Cap), subject to certain adjustments;
|
subject, in each case, to provisions for the receipt of alternative consideration, as described in the Articles Supplementary.
The Share Cap is subject to pro rata adjustments for any share splits (including those effected pursuant to a distribution of the Common
Stock), subdivisions or combinations (in each case, a “Share Split”) with respect to the Common Stock as described in the Articles Supplementary.
Upon such a conversion, the holders will be limited to a maximum number of shares of Common Stock equal to the Share Cap multiplied by the
number of shares of the Series A Preferred Stock converted. If the Common Stock Price is less than $4.215 (which is approximately 50% of the per-share closing sale price of the Common Stock reported on the NYSE on September 25, 2017), subject
to adjustment, the holders will receive a maximum of an aggregate of 40,925,280 shares of Common Stock, which may result in the holders receiving a value that is less than the liquidation preference of the Series A Preferred Stock.
If, prior to the Change of Control Conversion Date, the Company has provided a redemption notice, whether pursuant to its special optional
redemption right in connection with a Change of Control or its optional redemption right, holders of the Series A Preferred Stock will not have any right to convert the Series A Preferred Stock in connection with the Change of Control Conversion
Right and any shares of the Series A Preferred Stock selected for redemption that have been tendered for conversion will be redeemed on the related date of redemption instead of converted on the Change of Control Conversion Date.
A “Change of Control” is when, after the original issuance of the Series A Preferred Stock, the following have occurred and are
continuing:
|
|
●
|
|
the acquisition by any person, including any syndicate or group deemed to be a “person” under
Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of stock of the Company
entitling that person to exercise more than 50% of the total voting power of all stock of the Company entitled to vote generally in the election of the Company’s directors (except that such person will be deemed to have beneficial ownership of
all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and
|
|
|
●
|
|
following the closing of any transaction referred to in the bullet point above, neither the Company nor the
acquiring or surviving entity has a class of common securities (or ADRs representing such securities) listed on the NYSE, the NYSE American or NASDAQ or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE
American or NASDAQ.
|
The “Change of Control Conversion Date” is the date the Series A Preferred Stock is to
be converted, which will be a business day that is no fewer than 20 days nor more than 35 days after the date on which the Company provides the required notice of the occurrence of a Change of Control to the holders of the Series A Preferred Stock.
The “Common Stock Price” will be (i) if the consideration to be received in the Change of Control by the holders of Common
Stock is solely cash, the amount of cash consideration per share of Common Stock or (ii) if the consideration to be received in the Change of Control by holders of Common Stock is other than solely cash (x) the average of the closing sale
prices per share of Common Stock (or, if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) for the ten
consecutive trading days immediately preceding, but not including, the effective date of the Change of Control as reported on the principal U.S. securities exchange on which the Common Stock is then traded, or (y) the average of the last quoted
bid prices for the Common Stock in the over-the-counter market as reported by Pink Sheets LLC or similar organization for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Control, if the
Common Stock is not then listed for trading on a U.S. securities exchange.
The foregoing description of the Articles Supplementary is a
summary and, as such, does not purport to be complete and is qualified in its entirety by reference to the Articles Supplementary filed with the State Department of Assessments and Taxation of Maryland on October 2, 2017. A copy of the Articles
Supplementary is filed as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated herein by reference. A specimen certificate for the Series A Preferred Stock is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated
herein by reference.
Spirit Realty, L.P.
On October 3, 2017, the General Partner, as the sole general partner of the Operating Partnership, executed the Second Amended and
Restated Agreement of Limited Partnership creating the Series A Preferred Units that mirror the rights and preferences of the Series A Preferred Stock. At the closing of the Series A Preferred Stock Offering, the Company contributed the net proceeds
of the Series A Preferred Stock Offering to the Operating Partnership in exchange for 6,900,000 Series A Preferred Units. If shares of Series A Preferred Stock are converted into shares of the Common Stock, the Operating Partnership will convert an
equal number of Series A Preferred Units into units of common partnership interest, and if shares of Series A Preferred Stock are converted into consideration other than shares of the Common Stock, the Operating Partnership will retire an equal
number of Series A Preferred Units. The terms of conversion of the Series A Preferred Stock are described above under this Item 3.03. A complete description of the Series A Preferred Units is contained in the Second Amended and Restated
Agreement of Limited Partnership filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated herein by reference.