DESCRIPTION OF CAPITAL STOCK
The following descriptions are summaries of the material terms of our certificate of incorporation and bylaws. These descriptions may not
contain all of the information that is important to you. To understand them fully, you should read our certificate of incorporation and bylaws, copies of which are filed with the Commission as exhibits to the registration statement of which this
prospectus is a part.
Please note that, with respect to any of our shares held in book-entry form through The Depository Trust Company or
any other share depository, the depository or its nominee will be the sole registered and legal owner of those shares, and references in this prospectus to any stockholder or holder of those shares means only the depository
or its nominee. Persons who hold beneficial interests in our shares through a depository will not be registered or legal owners of those shares and will not be recognized as such for any purpose. For example, only the depository or its nominee will
be entitled to vote the shares held through it, and any dividends or other distributions to be paid, and any notices to be given, in respect of those shares will be paid or given only to the depository or its nominee. Owners of beneficial interests
in those shares will have to look solely to the depository with respect to any benefits of share ownership, and any rights they may have with respect to those shares will be governed by the rules of the depository, which are subject to change from
time to time. We have no responsibility for those rules or their application to any interests held through the depository.
Authorized Capital Stock
Our authorized capital stock consists of:
|
|
|
2,000,000,000 shares of common stock, par value $0.01 per share; and
|
|
|
|
100,000,000 shares of preferred stock, par value $0.01 per share.
|
As of June 15, 2018,
82,148,869 shares of our common stock were issued and outstanding. All the outstanding shares of our common stock are fully paid and
non-assessable.
No shares of our preferred stock are outstanding.
Common Stock
Each holder of common stock
is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Except as provided with respect to any other class or series of stock, the holders of our common stock will possess the exclusive right
to vote for the election of directors and for all other purposes. Our certificate of incorporation and bylaws do not provide for cumulative voting in the election of directors, which means that the holders of a majority of the outstanding shares of
common stock can elect all of the directors standing for election, and the holders of the remaining shares will not be able to elect any directors.
Subject to any preference rights of holders of any preferred stock that we may issue in the future, holders of our common stock are entitled
to receive dividends, if any, declared from time to time by our board of directors out of legally available funds. In the event of our liquidation, dissolution or winding up, the holders of our common stock are entitled to share ratably in all
assets remaining after the payment of liabilities, subject to any rights of holders of our preferred stock prior to distribution.
Holders
of our common stock have no preemptive, subscription, redemption or conversion rights. Any shares of common stock issued pursuant to this prospectus will be validly issued, fully paid and nonassessable.
Preferred Stock
Our board of directors
has the authority, without action by our stockholders, to issue preferred stock and to fix voting powers for each class or series of preferred stock, and to provide that any class or series may be subject to redemption, entitled to receive
dividends, entitled to rights upon dissolution, or convertible or exchangeable
7
for shares of any other class or classes of capital stock. The rights with respect to a series or class of preferred stock may be greater than the rights attached to our common stock. It is not
possible to state the actual effect of the issuance of any shares of our preferred stock on the rights of holders of our common stock until our board of directors determines the specific rights attached to that preferred stock. The effect of issuing
preferred stock could include, among other things, one or more of the following:
|
|
|
restricting dividends in respect of our common stock;
|
|
|
|
diluting the voting power of our common stock or providing that holders of preferred stock have the right to vote on matters as a class;
|
|
|
|
impairing the liquidation rights of our common stock; or
|
|
|
|
delaying or preventing a change of control of us.
|
Restrictions on Ownership and Transfer of Capital Stock
In order to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the Code), for each taxable year
beginning after December 31, 2014, our shares of capital stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. Also, for
our taxable years beginning after December 31, 2014, no more than 50% of the value of our outstanding shares of capital stock may be owned, directly or constructively, by five or fewer individuals (as defined in the Code to include certain
entities) during the second half of any calendar year.
Our certificate of incorporation, subject to certain exceptions, contains
restrictions on the number of shares of our capital stock that a person may own and may prohibit certain entities from owning our shares. Our certificate of incorporation provides that (subject to certain exceptions described below) no person may
beneficially or constructively own, or be deemed to own by virtue of the attribution provisions of the Code, more than 9.8% in value or in number of shares, whichever is more restrictive, of our outstanding shares of common or capital stock.
Pursuant to our certificate of incorporation, our board of directors has the power to increase or decrease the percentage of common or capital stock that a person may beneficially or constructively own. However, any decreased stock ownership limit
will not apply to any person whose percentage ownership of our common or capital stock, as the case may be, is in excess of such decreased stock ownership limit until that persons percentage ownership of our common or capital stock, as the
case may be, equals or falls below the decreased stock ownership limit. Until such a persons percentage ownership of our common or capital stock, as the case may be, falls below such decreased stock ownership limit, any further acquisition of
common stock will be in violation of the decreased stock ownership limit.
Our certificate of incorporation also prohibits any person from
beneficially or constructively owning shares of our capital stock that would result in our being closely held under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT (including through ownership that
results in our owning (actually or constructively) an interest in a tenant as described in Section 856(d)(2)(B) of the Code) and from transferring shares of our capital stock if the transfer would result in our capital stock being beneficially
owned by fewer than 100 persons. Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our capital stock that will or may violate any of the foregoing restrictions on transferability and
ownership, or who is the intended transferee of shares of our capital stock that are transferred to the trust (as described below), is required to give written notice immediately to us and provide us with such other information as we may request in
order to determine the effect of such transfer on our qualification as a REIT. The foregoing restrictions on transferability and ownership will not apply if our board of directors determines that it is no longer in our best interests to attempt to
qualify, or to continue to qualify, as a REIT.
Our board of directors, in its sole discretion, may exempt a person from the foregoing
restrictions. The person seeking an exemption must provide to our board of directors such conditions, representations and undertakings as our board of directors may deem reasonably necessary to conclude that granting the exemption
8
will not cause us to lose our qualification as a REIT. Our board of directors may also require a ruling from the Internal Revenue Service (IRS) or an opinion of counsel in order to
determine or ensure our qualification as a REIT in the context of granting such exemptions.
Any attempted transfer of our capital stock
which, if effective, would result in a violation of the foregoing restrictions will cause 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, and 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 (as defined in our certificate of
incorporation) prior to the date of the transfer. If, for any reason, the transfer to the trust does not occur or would not prevent a violation of the restrictions on ownership contained in our certificate of incorporation, our certificate of
incorporation provides that the purported transfer will be void ab initio. Shares of our capital stock held in the trust will be issued and outstanding shares. The proposed transferee will not benefit economically from ownership of any shares of our
capital stock held in the trust, will have no rights to dividends and no rights to vote or other rights attributable to the shares of capital stock 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 of capital stock have
been transferred to the trust will be paid by the recipient to the trustee upon demand. Any dividend or other distribution authorized but unpaid will be paid when due to the trustee. Any dividend or distribution paid to the trustee will be held in
trust for the charitable beneficiary. Subject to Delaware law, the trustee will have the authority 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 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 our capital stock 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 limitations. Upon such 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 (1) the price paid by the proposed transferee for the shares or, if the proposed
transferee did not give value for the shares in connection with the event causing the shares to be held in the trust (e.g., a gift, devise or other similar transaction), the market price (as defined in our certificate of incorporation) of the shares
on the day of the event causing the shares to be held in the trust and (2) the price received by the trustee from the sale or other disposition of the shares. The trust may reduce the amount payable to the proposed transferee by the amount of
dividends and distributions paid to the proposed transferee and owed by the proposed transferee to the trust.
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 shares of our capital stock have been transferred to the trust, the shares are sold by the proposed
transferee, then (1) the shares shall be deemed to have been sold on behalf of the trust and (2) to the extent that the proposed transferee received an amount for the shares that exceeds the amount the proposed transferee was entitled to
receive, the excess shall be paid to the trustee upon demand.
In addition, shares of our capital stock 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 the price per share in the transaction that resulted in the transfer to the trust (or, in the case of a devise or gift, the market price at the time of
the devise or gift) and the market price on the date we, or our designee, accept the offer. 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.
Every owner of 5% or more
(or such lower percentage as required by the Code or the regulations promulgated thereunder) in number or in value of all classes or series of our capital stock, including shares of our
9
common stock, within 30 days after the end of each taxable year, will be required to give written notice to us stating the name and address of such owner, the number of shares of each class and
series of shares of our capital stock that the owner beneficially owns and a description of the manner in which the shares are held. Each owner shall provide to us such additional information as we may request to determine the effect, if any, of the
beneficial ownership on our qualification as a REIT and to ensure compliance with the ownership limitations. In addition, each such owner shall, upon demand, be required to provide to us such information as we may request, in good faith, to
determine our qualification as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance and to ensure compliance with the 9.8% ownership limitations in our certificate of
incorporation.
These ownership limitations could delay, defer or prevent a transaction or a change in control that might involve a
premium price for our common stock or might otherwise be in the best interests of our stockholders.
Anti-Takeover Effects of Delaware Law, Our
Certificate of Incorporation and Bylaws
The following is a summary of certain provisions of our certificate of incorporation and
bylaws that may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interest, including those attempts that might result in a premium over
the market price for the shares held by stockholders.
Authorized but Unissued Shares
The authorized but unissued shares of our common stock and our preferred stock will be available for future issuance without obtaining
stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions, and employee benefit plans. The existence of authorized but
unissued shares of our common stock and preferred stock could render more difficult or discourage an attempt to obtain control over us by means of a proxy contest, tender offer, merger or otherwise.
Delaware Business Combination Statute
We are organized under Delaware law. Some provisions of Delaware law may delay or prevent a transaction that would cause a change in our
control. Our certificate of incorporation provides that Section 203 of the Delaware General Corporation Law (the DGCL), as amended, an anti-takeover law, will not apply to us. In general, this statute prohibits a publicly held
Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction by which that person became an interested stockholder, unless the business combination is
approved in a prescribed manner. For purposes of Section 203, a business combination includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and an interested stockholder is a person
who, together with affiliates and associates, owns, or within three years prior, did own, 15% or more of voting stock.
Other Provisions of Our
Certificate of Incorporation and Bylaws
Our certificate of incorporation provides for a staggered board of directors consisting of
three classes of directors. Directors of each class are chosen for three-year terms upon the expiration of their current terms and each year one class of our directors will be elected by our stockholders. The term of the first class expires in 2018
and the terms of the second and third classes will expire in 2019 and 2020, respectively. We believe that classification of our board of directors helps to assure the continuity and stability of our business strategies and policies as determined by
our board of directors. Additionally, there is no cumulative voting in the election of directors. This classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult. At least two
annual meetings of stockholders, instead of one, will generally be required to effect a change in a majority of our board of directors.
10
Thus, the classified board provision could increase the likelihood that incumbent directors will
retain their positions. The staggered terms of directors may delay, defer or prevent a tender offer or an attempt to change control of us, even though a tender offer or change in control might be believed by our stockholders to be in their best
interest. In addition, our certificate of incorporation and bylaws provide that directors may be removed only for cause and only with the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to
vote in the election of directors.
Pursuant to our certificate of incorporation, shares of our preferred stock may be issued from time to
time, and the board of directors is authorized to determine and alter all rights, preferences, privileges, qualifications, limitations and restrictions without limitation. See Description of Capital StockPreferred Stock. Our bylaws
do not provide our stockholders with the ability to call a special meeting of the stockholders.
Ability of Our Stockholders to Act
Our certificate of incorporation and bylaws do not permit our stockholders to call special stockholders meetings (provided, however, that
Newcastle and certain other affiliates of Fortress and permitted transferees (collectively, the Fortress Stockholders) may call special meetings of our stockholders). Written notice of any special meeting so called shall be given to each
stockholder of record entitled to vote at such meeting not less than 10 or more than 60 days before the date of such meeting, unless otherwise required by law.
Our certificate of incorporation and bylaws provide that our stockholders may consent in writing to take any action in lieu of taking such
action at a duly called annual or special meeting of our stockholders.
Our bylaws provide that nominations of persons for election to our
board of directors may be made at any annual meeting of our stockholders, or at any special meeting of our stockholders called for the purpose of electing directors, (a) by or at the direction of our board of directors or (b) by any of our
stockholders. In addition to any other applicable requirements, for a nomination to be properly brought by a stockholder, such stockholder must have given timely notice thereof in proper written form to our secretary. To be timely, a
stockholders notice must be delivered to or mailed and received at our principal executive offices (a) in the case of an annual meeting of stockholders, not less than 90 days nor more than 120 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by a stockholder in order to be timely
must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first
occurs; and (b) in the case of a special meeting of our stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was
mailed or public disclosure of the date of the special meeting was made, whichever first occurs.
Our bylaws provide that no business may
be transacted at any annual meeting of our stockholders, other than business that is either (a) specified in the notice of meeting given by or at the direction of our board, (b) otherwise properly brought before the annual meeting by or at
the direction of our board, or (c) otherwise properly brought by any of our stockholders. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must
have given timely notice thereof in proper written form to our secretary. To be timely, a stockholders notice must be delivered to or mailed and received at our principal executive offices not less than 90 days nor more than 120 days prior to
the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by a
stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual
meeting was made, whichever first occurs.
11
Forum Selection Clause
Our bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action
or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the
DGCL or our certificate of incorporation or bylaws or (iv) any action asserting a claim against us governed by the internal affairs doctrine.
Limitations on Liability and Indemnification of Directors and Officers
Our certificate of incorporation and bylaws provide that our directors will not be personally liable to us or our stockholders for monetary
damages for breach of a fiduciary duty as a director, except to the extent such limitation of liability is not permitted under the DGCL, as hereafter amended. The DGCL currently prohibits limitations on liability for:
|
|
|
any breach of the directors duty of loyalty to us or our stockholders,
|
|
|
|
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
|
|
|
|
liability under Delaware corporate law for an unlawful payment of dividends or an unlawful stock purchase or redemption of stock; or
|
|
|
|
any transaction from which the director derives an improper personal benefit.
|
Our certificate
of incorporation and bylaws provide that we must indemnify our directors and officers to the fullest extent permitted by Delaware law. We are also expressly authorized to advance certain expenses (including attorneys fees and disbursements and
court costs) to our directors and officers and carry directors and officers insurance providing indemnification for our directors and officers for some liabilities. We believe that these indemnification provisions and insurance are
useful to attract and retain qualified directors and executive officers.
We have entered into separate indemnification agreements with
each of our directors and executive officers. Each indemnification agreement provides, among other things, for indemnification to the fullest extent permitted by law and our certificate of incorporation against (i) any and all expenses and
liabilities, including judgments, fines, penalties and amounts paid in settlement of any claim and counsel fees and disbursements, (ii) any liability pursuant to a loan guarantee, or otherwise, for any of our indebtedness and (iii) any
liabilities incurred as a result of acting on our behalf (as a fiduciary or otherwise) in connection with an employee benefit plan. The indemnification agreements provide for the advancement or payment of all expenses to the indemnitee and for
reimbursement to us if it is found that such indemnitee is not entitled to such indemnification under applicable law and our certificate of incorporation. These provisions and agreements may have the practical effect in some cases of eliminating our
stockholders ability to collect monetary damages from our directors and executive officers.
Insofar as indemnification for
liabilities arising under the Securities Act of 1933, as amended (the Securities Act) may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, we have been informed that, in the
opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Corporate
Opportunity
Under our certificate of incorporation, to the extent permitted by law:
|
|
|
the Fortress Stockholders and their affiliates have the right to, and have no duty to abstain from, exercising
such right to, engage or invest in the same or similar business as us, do business with any of
|
12
|
our clients, customers or vendors or employ or otherwise engage any of our officers, directors or employees;
|
|
|
|
if the Fortress Stockholders or their affiliates, or any of their officers, directors or employees, acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty to offer such
corporate opportunity to us, our stockholders or affiliates;
|
|
|
|
we renounced any interest or expectancy in, or in being offered an opportunity to participate in, such corporate opportunities; and
|
|
|
|
in the event that any of our directors and officers who is also a director, officer or employee of any of the Fortress Stockholders or their affiliates acquires knowledge of a corporate opportunity or is offered a
corporate opportunity, provided that this knowledge was not acquired solely in such persons capacity as our director or officer and such person acted in good faith, then such person is deemed to have fully satisfied such persons
fiduciary duty and is not liable to us if any of the Fortress Stockholders or their affiliates pursues or acquires such corporate opportunity or if such person did not present the corporate opportunity to us.
|