Franklin BSP Realty Trust, Inc 8-K, filed Mar 19, 2021
Franklin BSP Realty Trust, Inc. (FBRT)
About this 8-K
Franklin BSP Realty Trust, Inc filed this 8-K on March 19, 2021, reporting on events of March 15, 2021.
Items reported
- Item 1.01: Entered into a material agreement
- Item 3.02: Unregistered sale of equity
- Item 3.03: Change to shareholders' rights
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 9.01: Financial statements and exhibits
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): March 15, 2021
Benefit Street Partners Realty Trust, Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Maryland | 000-55188 | 46-1406086 |
| (State or other jurisdiction | (Commission File Number) | (I.R.S. Employer |
| of incorporation) | Identification No.) |
9 West 57th Street, Suite 4920
New York, New York 10019
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (212) 588-6770
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| None |
Indicated 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 ¨
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. ¨
| Item 1.01. | Entry into a Material Definitive Agreement |
Preferred Stock Purchase and Exchange Agreement
On March 15, 2021, Benefit Street Partners Realty Trust, Inc. (the “Company”) and Security Benefit Life Insurance Company (“SBL”) entered into a Purchase and Exchange Agreement (the “Purchase and Exchange Agreement”), pursuant to which SBL agreed to (i) exchange all 14,949 shares of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”) owned by SBL into an equal amount of newly issued shares (the “Exchange Shares”) of the Company’s new series of Series D Convertible Preferred Stock (“Series D Preferred Stock”) and (ii) purchase from the Company an additional 3,000 newly issued shares of Series D Preferred Stock (the “Purchased Shares,” and together with the the Exchange Shares, the “Shares”). The settlement of the exchange and purchase of the Shares contemplated by the Purchase and Exchange Agreement was completed on March 18, 2021.
The Purchase and Exchange Agreement provided that the aggregate purchase price for the Purchased Shares was $13,961,330.19, representing the $15,000,000 aggregate liquidation preference per share of the Purchased Shares as set forth in the articles supplementary for the Series D Preferred Stock (the “Articles Supplementary”), less the accrued and unpaid dividends on SBL’s surrendered shares of Series A Preferred Stock through March 17, 2021.
The Purchase and Exchange Agreement provides that the Company will enter into a liquidity event, such as a listing of the Company’s common stock, $0.01 par value per share (the “Common Stock”), within one year after the date of the Purchase and Exchange Agreement, subject to certain restrictions. In addition, the Company has agreed that if such liquidity event has not occurred by June 1, 2021 and the delay is not the result of market conditions, then, subject to certain conditions, the Company will appoint a director designated by SBL upon its request. The Purchase and Exchange Agreement contains customary representations, warranties and covenants and indemnification provisions.
SBL has agreed with the Company’s external manager, Benefit Street Partners L.L.C. (the “Advisor”) not to sell or otherwise transfer without the consent of the Advisor (i) any of the Shares and/or (ii) any Common Stock received upon an optional conversion pursuant to Section 7(c) of the Articles Supplementary prior to 30 days after such optional conversion, in each case subject to certain exceptions.
The Board granted SBL certain exemptions from the ownership limitations in the Company’s Articles of Amendment and Restatement (the “Charter”).
This offering is not registered under the Securities Act of 1933, as amended (the “Securities Act”) and is being made pursuant to the exemption provided by Section 4(a)(2) of the Securities Act and certain rules and regulations promulgated thereunder. The Shares may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company has provided SBL customary shelf registration rights pursuant to the Purchase and Exchange Agreement.
The Company intends to use the net proceeds from the sale of the Purchased Shares to originate and acquire additional commercial real estate debt investments for the Company and for working capital and other general corporate purposes of the Company.
The foregoing description of the Purchase and Exchange Agreement is a summary and is qualified in its entirety by the terms of the Purchase and Exchange Agreement which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Terms of the Series D Convertible Preferred Stock
As set forth in the Articles Supplementary, the shares of Series D Preferred Stock have terms substantially similar to the shares of Series A Preferred Stock, except as described below.
On the one-year anniversary of a Liquidity Event (as defined in the Articles Supplementary), each outstanding share of Series D Preferred Stock shall convert (the “Mandatory Conversion”) into 299.2 shares of Common Stock, subject to anti-dilution adjustments (the “Conversion Rate”). From and after a Liquidity Event, each holder of Series D Preferred Stock has the right to accelerate the Mandatory Conversion to a date no earlier than five months after the Liquidity Event, subject to required notice. If there has not been a Liquidity Event by June 25, 2024, each holder of Series D Preferred Stock shall have the right to convert all, but not less than all, of the Series D Preferred Stock held by such holder into Common Stock at the Conversion Rate. Each holder also has the option to convert its shares of Series D Preferred Stock into Common Stock upon a Change in Control (as defined in the Articles Supplementary) of the Company. In addition, neither the Company nor a holder of shares of Series D Preferred Stock may redeem shares of the Series D Preferred Stock until June 25, 2024, except in cases of a Change in Control (as defined in the Articles Supplementary).
The Articles Supplementary were filed with the Maryland State Department of Assessments and Taxation on March 17, 2021. The Articles Supplementary became effective on filing. The Articles Supplementary classified and designated 20,000 shares of Series D Preferred Stock, of which approximately 17,949 shares were outstanding as of March 19, 2021.
The foregoing description of the Articles Supplementary is a summary and is qualified in its entirety by the terms of the Articles Supplementary which is attached hereto as Exhibit 3.1 and is incorporated herein by reference.
| Item 3.02. | Unregistered Sales of Equity Securities. |
The information set forth above under Item 1.01 is hereby incorporated by reference into this Item 3.02.
| Item 3.03. | Material Modification to Rights of Security Holders |
The information set forth above under Item 1.01 is hereby incorporated by reference into this Item 3.03.
| Item 5.03. | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
The information set forth above under Item 1.01 related to the Articles Supplementary is hereby incorporated by reference into this Item 5.03.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BENEFIT STREET PARTNERS REALTY TRUST, INC. | ||
| By: | /s/ Jerome S. Baglien | |
| Name: | Jerome S. Baglien | |
| Title: | Chief Financial Officer and Treasurer | |
Date: March 19, 2021
Exhibit 3.1
EXECUTION VERSION
BENEFIT STREET PARTNERS REALTY TRUST, INC.
ARTICLES SUPPLEMENTARY
SERIES D CONVERTIBLE PREFERRED STOCK
BENEFIT STREET PARTNERS REALTY TRUST, INC., a Maryland corporation (the “Company”), hereby certifies to the State Department of Assessments and Taxation of Maryland (the “SDAT”) that:
FIRST: The Articles of Amendment and Restatement of the Company (the “Charter”) authorize the issuance of 50,000,000 shares of preferred stock, $0.01 par value per share (the “Preferred Shares”), issuable from time to time in one or more series, and authorize the Company’s board of directors (the “Board”) to classify or reclassify any unissued shares from time to time by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption of such unissued shares.
SECOND: Under the authority contained in the Charter, the Board, in resolutions adopted at a meeting on December 17, 2020, has classified and designated Preferred Shares of the Company as Series D Convertible Preferred Stock, with the following preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption, which upon any restatement of the Charter, shall be deemed to be part of Article V of the Charter, with any necessary or appropriate changes to the enumeration of sections or subsections hereof. Capitalized terms used and not otherwise defined herein have the meanings set forth in the Charter.
Series D Convertible Preferred Stock
(1) Designation and Number. A series of Preferred Shares, designated as the “Series D Convertible Preferred Stock” (the “Series D Preferred Shares”), is hereby established. The par value of the Series D Preferred Shares is $0.01 per share. The number of Series D Preferred Shares shall be 20,000.
(2) Maturity. The Series D Preferred Shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption.
(3) Ranking. The Series D Preferred Shares will, with respect to rights to receive dividends and to participate in distributions or payments upon any voluntary or involuntary liquidation, dissolution or winding up of the Company (a “Liquidation Event”), rank (a) senior to shares of the Company’s common stock, $0.01 par value per share (the “Common Shares”) and any other class or series of equity securities (the “Equity Securities”), now or hereafter issued and outstanding, the terms of which provide that such Equity Securities rank, as to dividend payments and the distribution of assets upon a Liquidation Event, junior to such Series D Preferred Shares (“Junior Equity Securities”), (b) on parity with the Company’s Series A Convertible Preferred Stock, $0.01 par value per share, the Company’s Series B Convertible Preferred Stock, $0.01 par value per share, the Company’s Series C Convertible Preferred Stock, $0.01 par value per share, and any other preferred or convertible preferred securities of the Company, now or hereafter issued and outstanding other than the securities referred to in clauses (a) and (c) with respect to rights of dividend payments and the distribution of assets upon a Liquidation Event (“Parity Equity Securities”); and (c) junior to all other Equity Securities issued by the Company with terms specifically providing that such Equity Securities rank senior to the Series D Preferred Shares with respect to rights of dividend payments and the distribution of assets upon a Liquidation Event (“Senior Equity Securities”). For the avoidance of doubt, the term “Equity Securities” does not include convertible debt securities, which debt securities would rank senior to the Series D Preferred Shares.
(4) Dividends.
(a) Dividends on each outstanding Series D Preferred Share shall be cumulative from and including March 18, 2021 (the “Original Issue Date”) and shall be payable, when and as authorized by the Board of Directors out of funds legally available therefore, for each quarterly distribution period (“Distribution Period”), which quarterly Distribution Periods shall be in four equal amounts and shall commence on January 1, April 1, July 1 and October 1 in each year (each, a “Distribution Period Commencement Date”), and shall end on and include the day next preceding the next Distribution Period Commencement Date, by the fifth Business Day following the end of the Distribution Period (each such day being hereinafter called a “Series D Dividend Payment Date”) at the then applicable Dividend Rate (as defined below). Each dividend is payable to holders of record as they appear on the share records of the Company at 5:00 p.m., New York time, on the record date, which shall be the last Business Day of each Distribution Period (each such date, a “Record Date”). Dividends for each quarter shall accrue and be cumulative from and including the applicable Distribution Period Commencement Date (or the Original Issue Date in the case of the initial dividend) to, and including, the last day of the Distribution Period (or June 30, 2021 in the case of the initial dividend), whether or not in any such Distribution Period there shall be funds legally available for the payment of such dividends, whether or not the Company has earnings or whether or not such dividends are authorized. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment on the Series D Preferred Shares that may be in arrears. Holders of the Series D Preferred Shares shall not be entitled to any dividends, in excess of full cumulative dividends, as herein provided, on the Series D Preferred Shares. Dividends payable on the Series D Preferred Shares for any period greater or less than a full Distribution Period will be computed on the basis of the actual number of days in the applicable quarter. After full cumulative distributions on the Series D Preferred Shares have been paid or declared and funds therefor set aside for payment with respect to a Distribution Period, the holders of Series D Preferred Shares will not be entitled to any further distributions with respect to that Distribution Period.
(b) Dividends payable on each Series D Preferred Share for each full quarterly Distribution Period will be equal to the greater of (i) an amount equal to $49.998 per share and (ii) the quarterly dividend that would have been paid had such Series D Preferred Share been converted to a Common Share pursuant to Section 7 (the “Dividend Rate”) on the first day of such Distribution Period, subject to proration in the event that such Series D Preferred Share is not outstanding for the full quarter (the “Quarterly Dividend Amount”); provided that under certain circumstances the Quarterly Dividend Amount shall be increased in accordance with Section 5.7 of the Purchase Agreement dated March 15, 2021 between the Company and Security Benefit Life Insurance Company. Dividends shall be paid in cash in the case of dividends paid pursuant to clause (i) of the first sentence of this paragraph or in the form in which dividends were paid to holders of Common Shares in the case of dividends paid pursuant to clause (ii) of the first sentence of this paragraph; provided, however, that with respect to dividends payable in cash, a holder may elect to receive in lieu of cash an amount of additional Series D Preferred Shares equal to the aggregate Quarterly Dividend Amount with respect to all Series D Preferred Shares divided by the Liquidation Preference (defined below) plus cash in lieu of fractional shares.
(c) The Board shall not authorize and declare, and the Company shall not pay or set apart for payment, any dividends on the Series D Preferred Shares at such time as the terms and provisions of any agreement of the Company, including any agreement relating to the Company’s indebtedness, prohibits such declaration, payment or setting apart for payment, or provides that such declaration, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.
(d) If, for any taxable year, the Company elects to designate as a “capital gain dividend” (as defined in Section 857 of the Internal Revenue Code of 1986, as amended) any portion (the “Capital Gains Amount”) of the dividends (as determined for U.S. federal income tax purposes) paid or made available for the year to holders of all classes of the Company’s equity securities (the “Total Dividends”), then, except as otherwise required by applicable law, that portion of the Capital Gains Amount that shall be allocable to the holders of Series D Preferred Shares shall be in proportion to the amount that the total dividends (as determined for U.S. federal income tax purposes) paid or made available to the holders of the Series D Preferred Shares for the year bears to the Total Dividends. Except as otherwise required by applicable law, the Company will make a similar allocation with respect to any undistributed long-term capital gains of the Company which are to be included in its stockholders’ long-term capital gains, based on the allocation of the Capital Gains Amount which would have resulted if such undistributed long-term capital gains had been distributed as “capital gains dividends” by the Company to its stockholders.
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(e) So long as any Series D Preferred Shares are outstanding, the Board shall not authorize and declare, and the Company shall not pay or set apart for payment, except as described in the immediately following sentence, any dividends on any series or class or classes of Parity Equity Securities for any period unless full cumulative dividends have been declared and paid or are contemporaneously declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series D Preferred Shares for all prior Distribution Periods. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends authorized and declared upon the Series D Preferred Shares and all dividends authorized and declared upon any other series or class or classes of Parity Equity Securities shall be authorized and declared ratably in proportion to the respective amounts of dividends accrued and unpaid on the Series D Preferred Shares and such Parity Equity Securities.
(f) So long as any Series D Preferred Shares are outstanding, the Board shall not authorize and declare, and the Company shall not pay or set apart for payment, any dividends (other than dividends or distributions paid solely in Junior Equity Securities of, or in options, warrants or rights to subscribe for or purchase, Junior Equity Securities) or other distribution upon Junior Equity Securities, nor shall any Junior Equity Securities be redeemed, purchased or otherwise acquired (other than redemptions for the purpose of preserving the Company’s qualification as a real estate investment trust), for any consideration (or any monies to be paid to or made available for a sinking fund for the redemption of any such shares) by the Company, directly or indirectly (except by conversion into or exchange for Junior Equity Securities), unless in each case all cumulative dividends on all outstanding Series D Preferred Shares and any Parity Equity Securities at the time such dividends are payable shall have been paid or set apart for payment for all past Distribution Periods with respect to the Series D Preferred Shares and all past dividend periods with respect to such Parity Equity Securities.
(g) Any dividend payment made on the Series D Preferred Shares, including any Capital Gains Amounts, shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable.
(h) As used herein, the term “Business Day” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York, New York are authorized or required by law, regulation or executive order to close.
(5) Liquidation Preference.
(a) In the event of any Liquidation Event, before any payment or distribution of the assets of the Company shall be made to or set apart for the holders of Junior Equity Securities, the holders of the Series D Preferred Shares shall be entitled to receive the greater of: (i) (A) a liquidating distribution in the amount of $5,000 per share, plus (B) an amount per Series D Preferred Share equal to all dividends (whether or not authorized or declared) accrued and unpaid thereon, up to an including the date of final distribution to such holders (the “Liquidation Preference”), and (ii) the amount the holders of such Series D Preferred Shares would be entitled to upon conversion of such Series D Preferred Shares to Common Shares under Section 7 below.
(b) If, upon any Liquidation Event, the assets of the Company, or proceeds thereof, distributable among the holders of the Series D Preferred Shares shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other Parity Equity Securities, then such assets, or the proceeds thereof, shall be distributed among the holders of such Series D Preferred Shares and any such other Parity Equity Securities ratably in accordance with the respective amounts that would be payable on such Series D Preferred Shares and any such other Parity Equity Securities if all amounts payable thereon were paid in full. For the purposes of this paragraph 5(b), none of (i) a consolidation or merger of the Company with one or more other entities, (ii) a statutory share exchange or (iii) a voluntary sale, transfer or conveyance of all or substantially all of the Company’s assets, properties or business shall be deemed to be a Liquidation Event of the Company.
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(c) Subject to the rights of the holders of Parity Equity Securities, upon any Liquidation Event, after payment shall have been made in full to the holders of the Series D Preferred Shares, as provided in paragraph 5(b) above, any series or class or classes of Junior Equity Securities shall, subject to any respective terms and provisions applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series D Preferred Shares shall not be entitled to share therein.
(d) Notice of any Liquidation Event, stating the payment date or dates when, and the place or places where the amounts distributable in such circumstances shall be payable, shall be given not less than thirty (30) nor more than sixty (60) days prior to the payment date stated therein, to each record holder of the Series D Preferred Shares at the respective addresses of such holders as the same shall appear on the share transfer records of the Company. Notwithstanding anything to the contrary contained herein, the holders of the Series D Preferred Shares shall have the right prior to any such Liquidation Event to convert the Series D Preferred Shares into Common Shares in accordance with paragraph 7 below.
(6) Redemption. The Series D Preferred Shares are not redeemable except as provided in this paragraph (6).
(a) Redemption at the Option of the Company or a Holder of Series D Preferred Shares. (i) Except as otherwise permitted by the Company or as provided in paragraph 5 in connection with a Liquidation Event or in this paragraph (6) or paragraph (7), neither the Company nor a holder of Series D Preferred Shares may redeem Series D Preferred Shares until after June 25, 2024. Any time, and from time to time, after June 25, 2024, (A) the Company, at its option, upon giving notice as provided below, and to the extent the Company shall have funds legally available therefor, may redeem or cause to be redeemed all, but not less than all, of the Series D Preferred Shares, at a redemption price paid in cash equal to the aggregate Liquidation Preference for all of the Series D Preferred Shares, or (B) a holder of Series D Preferred Shares, at its option, upon giving notice as provided below, and to the extent the Company shall have funds legally available therefor, may redeem or cause to be redeemed all, but not less than all, of the Series D Preferred Shares held by such holder at a redemption price paid in cash equal to the Liquidation Preference for such Series D Preferred Shares (in each case, the “Redemption Right”).
(ii) The following provisions set forth the procedures for redemption pursuant to the Redemption Right:
(A) In the event of a redemption at the option of the Company, a notice of redemption (which may be contingent upon the occurrence of a future event) shall be delivered by the Company not less than one hundred eighty (180) days prior to the designated redemption date, to the holder(s) of record of all (and not less than all of) the Series D Preferred Shares. A failure to give such notice shall not affect the validity of the proceedings for the redemption of any Series D Preferred Shares except as to the holder to whom notice was defective or not given. In addition to any information required by law, each notice shall state the redemption date and the redemption price. Notwithstanding anything to the contrary contained herein, the holders of the Series D Preferred Shares shall have the right prior to any such redemption to convert the Series D Preferred Shares into Common Shares in accordance with paragraph 7 below.
(B) In the event of a redemption at the option of a holder of Series D Preferred Shares, a notice of redemption (which may be contingent upon the occurrence of a future event) shall be delivered to the Company not less than one hundred eighty (180) days prior to the redemption date. In addition to any information required by law, each notice shall state the redemption date. Notwithstanding anything to the contrary contained herein, the holders of the Series D Preferred Shares shall have the right prior to any such redemption to convert the Series D Preferred Shares into Common Shares in accordance with paragraph 7 below.
(C) Upon any redemption of Series D Preferred Shares, the Company shall pay any accrued and unpaid dividends in arrears for any Distribution Period ending on or prior to the redemption date. If a redemption date falls after a Record Date for a Series D Preferred Shares dividend payment and prior to the corresponding Series D Dividend Payment Date, then each holder of the Series D Preferred Shares at the close of business on such Record Date shall be entitled to the dividend payable on such Series D Preferred Shares on the corresponding Series D Dividend Payment Date notwithstanding the redemption of such Series D Preferred Shares before such Series D Dividend Payment Date. Except as provided above, the Company shall make no payment or allowance for unpaid dividends, whether or not in arrears, on any Series D Preferred Shares called for redemption.
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(D) If full cumulative dividends on the Parity Equity Securities have not been paid or declared and set apart for payment, except as otherwise permitted under the Charter, the Company may not redeem any Series D Preferred Shares (other than in exchange for Junior Equity Securities) unless all Series D Preferred Shares and any other Parity Equity Securities eligible for redemption are redeemed for their full Liquidation Preference. Notwithstanding the foregoing, in the event that one or more holders of Series D Preferred Shares elects to have its Series D Preferred Shares redeemed and full cumulative dividends on the Parity Equity Securities have not been paid or declared and set apart for payment, then the Company shall first use all available funds to pay all cumulative dividends on the Parity Equity Securities that have not been paid or set apart for payment, and any remaining amounts shall be used to redeem on a pro rata basis all Series D Preferred Shares that have elected to be redeemed.
(E) On and after the date fixed for redemption (but only to the extent that such redemption occurs on such date), provided that the Company has made available at the office of the registrar and transfer agent a sufficient amount of cash to effect the redemption, dividends shall cease to accrue on the Series D Preferred Shares called for redemption (except that, in the case of a redemption date after a Record Date and prior to the related Series D Dividend Payment Date, holders of Series D Preferred Shares on the applicable Record Date will be entitled on such Series D Dividend Payment Date to receive the dividend payable on such shares on the corresponding Series D Dividend Payment Date), such shares shall no longer be deemed to be outstanding and all rights of the holders of such shares as holders of Series D Preferred Shares shall cease except the right to receive the cash payable upon such redemption, without interest from the date of such redemption.
(b) Redemption Upon a Change of Control. (i) Upon the occurrence of (A) an Advisor Change of Control (as defined herein), or (B) a Company Change of Control (as defined herein) that is not a Liquidity Event (as defined herein) and that is directly or indirectly related to either the removal of Benefit Street Partners, L.L.C. (“BSP”) as the advisor of the Company or an Advisor Change of Control, except as set forth below, the Company (in the case of clause (B)), at its option, or a holder of Series D Preferred Shares (in the case of clause (A) or (B)), at its option, and to the extent the Company shall have funds legally available therefor, may redeem all or any part of the Series D Preferred Shares at any time within sixty (60) days after the date on which the Change of Control has occurred (the “Change of Control Redemption Right”), for cash equal to the Liquidation Preference (which shall be paid in priority to payments to any Junior Equity Securities), up to, and including, the redemption date. Notwithstanding anything to the contrary contained herein, a holder of Series D Preferred Shares may exercise its Change of Control Conversion Right (as defined herein) in connection with a Change of Control, and in such event, the Company shall not be permitted to exercise its Change of Control Redemption Right and any notice previously provided by the Company exercising its Change of Control Redemption Right shall be deemed null and void.
A “Company Change of Control” shall be deemed to have occurred at such time after the Original Issue Date when the following has occurred and is continuing: the sale of all or substantially all of the business or assets of the Company (by sale, merger, consolidation or otherwise), or the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (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 securities of the Company entitling the acquiring person to exercise more than fifty percent (50%) of the total economic interests or total voting power of all securities of beneficial interest of the Company entitled to vote generally (except that such acquiring 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).
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An “Advisor Change of Control” means a change in the direct or indirect power to control or direct the management policies of BSP, whether through the ownership of beneficial equity interests, common directors or officers, by contract or otherwise.
A “Change of Control” means a Company Change of Control or an Advisor Change of Control.
A “Liquidity Event” is (i) the listing of the Common Shares on a national securities exchange or quotation on an electronic inter-dealer quotation system; (ii) a merger or business combination involving the Company pursuant to which outstanding Common Shares are exchanged for securities of another company which are listed on a national securities exchange or quoted on an electronic inter-dealer quotation system; or (iii) any other transaction or series of transaction that results in all Common Shares being transferred or exchange for cash or securities which are listed on a national securities exchange or quoted on an electronic inter-dealer quotation system.
(ii) The provisions in Section 6(a)(ii) setting forth the procedures for redemption pursuant to the Redemption Right shall apply as appropriate to the Change of Control Redemption Right.
(c) Status of Redeemed Series D Preferred Shares. Any Series D Preferred Shares that shall at any time have been redeemed shall, after such redemption, have the status of authorized but unissued Preferred Shares, without designation as to series until such shares are once more designated as part of a particular series by the Board.
(7) Conversion. The Series D Preferred Shares are not convertible into or exchangeable for any other property or securities of Company, except as provided in this paragraph (7).
(a) Mandatory Conversion upon Liquidity Event. Subject to the provisions of Section 7(b) below, on the one-year anniversary of a Liquidity Event, all of the outstanding Series D Preferred Shares (including, except as otherwise provided herein, Series D Preferred Shares for which a redemption notice has been submitted pursuant to Section 6 above if such Series D Preferred Shares remain outstanding as of the Mandatory Conversion Date) shall convert into Common Shares (the “Mandatory Conversion”). Each Series D Preferred Share shall convert into 299.2 Common Shares (the “Conversion Rate”), as such Conversion Rate may be adjusted below. The Company shall provide to holders of Series D Preferred Shares notice of a Mandatory Conversion at least 10 days prior to the expected date of such event (“Mandatory Conversion Notice”). A Mandatory Conversion Notice shall state the following: (A) the events constituting the Liquidity Event; (B) the expected date of the Liquidity Event and Mandatory Conversion (the “Mandatory Conversion Date”); and (C) the Conversion Rate. In the event that a Liquidation Event occurs at any time during the six-month period prior to the Mandatory Conversion Date, each holder of Series D Preferred Shares shall have the right to elect to maintain its Series D Preferred Shares instead of automatically converting to Common Shares on the Mandatory Conversion Date pursuant to this Section 7(a).
(c) Optional Conversion. Any time, and from time to time, after June 25, 2024 or on or after the five-month anniversary of a Liquidity Event each holder of Series D Preferred Shares shall have the right (“Optional Conversion Right”) to convert all, but not less than all, of such holder’s Series D Preferred Shares into a number of Common Shares per Series D Preferred Share equal to the Conversion Rate, following the delivery of written notice to the Company. The holder of Series D Preferred Shares may provide written notice to the Company prior to the five-month anniversary of a Liquidity Event electing to exercise such holder’s Optional Conversion Right and effect the conversion of such holder’s Series D Preferred Shares identified for conversion into Common Shares as of the six-month anniversary of the Liquidity Event or on the Business Day selected by the Company that is not more than seven days after the six-month anniversary of the Liquidity Event. If a holder of Series D Preferred Shares exercises its Optional Conversion Right following the six-month anniversary of the Liquidity Event, such Series D Preferred Shares identified for conversion shall be converted into Common Shares on a Business Day selected by the Company that is not more than seven days after the Company has received such notice.
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(d) Conversion Upon a Change of Control. Upon the occurrence of a Change of Control that is not a Liquidity Event, each holder of the Series D Preferred Shares shall have the right to convert all, but not less than all, of the Series D Preferred Shares held by such holder (the “Change of Control Conversion Right”) on the relevant Change of Control Conversion Date (as defined herein) into a number of Common Shares per Series D Preferred Share equal to the Conversion Rate, subject to the following:
(i) Within fifteen (15) days following the occurrence of a Change of Control, the Company shall provide to holders of Series D Preferred Shares a notice of occurrence of the Change of Control that describes the resulting Change of Control Conversion Right (the “Change of Control Notice”). A failure to give such Change of Control Notice or any defect in the notice or in its mailing shall not affect the validity of the proceedings for the conversion of any Series D Preferred Shares except as to the holder to whom the Change of Control Notice was defective or not given. Each Change of Control Notice shall state the following: (A) the events constituting the Change of Control; (B) the date of the Change of Control (the “Change of Control Conversion Date”); (C) the last date and time by which the holders of Series D Preferred Shares may exercise their Change of Control Conversion Right, which shall be 4:00 p.m., New York time on the Business day prior to the Change of Control Conversion Date; (D) the Conversion Rate; and (E) the procedures that the holders of Series D Preferred Shares must follow to exercise the Change of Control Conversion Right.
(ii) In order to exercise the Change of Control Conversion Right, a holder of Series D Preferred Shares shall be required to deliver, at or before 4:00 p.m., New York time on the Business day prior to the Change of Control Conversion Date, a completed conversion notice, to the Company. Such conversion notice shall state: (A) the relevant Change of Control Conversion Date; and (B) that the Series D Preferred Shares are to be converted pursuant to the applicable provisions of the Series D Preferred Shares.
(iii) Series D Preferred Shares as to which the Change of Control Conversion Right has been properly exercised and for which the conversion notice has not been properly withdrawn shall be converted into Common Shares in accordance with the Change of Control Conversion Right on the Change of Control Conversion Date (provided that the Change of Control actually occurs on such date).
(e) Mandatory Conversion on Excess Share Event. Immediately prior to an Excess Share Event (as defined below), the Excess Shares (as defined below) shall convert (the “Excess Share Conversion”) into an unsecured junior subordinated note (the “Note”) with a principal amount equal to the Liquidation Preference of the Excess Shares. The Note will be subordinated to all the Company’s other indebtedness, will mature 18 months from issuance, and will accrue interest monthly based on an annual rate of 4%, payable at maturity. “Excess Share Event” means any event which will result in a transfer of Series D Preferred Shares to a Trust for the benefit of a Charitable Beneficiary in accordance with Section 5.7 of the Charter; provided that any repurchase of Shares by the Company which would not cause a violation of Section 5.7(ii)(a)(I)(B) of the Charter shall not constitute a violation of Section 5.7 of the Charter for purposes of this Section 7(e). “Excess Shares” means the Series D Preferred Stock of a holder that would be transferred to a Trust for the benefit of a Charitable Beneficiary in connection with an Excess Share Event in accordance with Section 5.7 of the Charter but for application of this section. For the avoidance of doubt, this section shall not apply on or after the Restriction Termination Date. This section shall not apply to any holder that acquired Series D Preferred Shares from a person other than the Company. The Company shall promptly notify an applicable holder in the event of an Excess Share Conversion and shall promptly deliver the Note to such holder.
(f) Corporate Events. For the avoidance of doubt, in the event of a Change of Control that does not result in the exercise of a Change of Control Conversion Right or a redemption pursuant to Section 6, the Series D Preferred Shares will continue to be subject the terms of these Articles Supplementary.
(g) Miscellaneous.
(i) Any conversion pursuant to this Section 7 shall be subject to and done in compliance with all U.S. federal and state laws and applicable stock exchange rules. Notwithstanding anything to the contrary contained herein, no holder of Series D Preferred Shares shall be entitled to convert such Series D Preferred Shares for Common Shares to the extent that receipt of such Common Shares would cause such holder (or any other person) to Beneficially Own, within the meaning of the Charter, Common Shares of the Company in excess of the Share Ownership Limit, as such term is defined in the Charter.
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(ii) No fractional Common Shares shall be issued upon the conversion of the Series D Preferred Shares. In lieu of fractional shares, holders of the Series D Preferred Shares shall be entitled to receive the cash value of such fractional shares.
(iii) The Company will deliver all Common Shares, cash (including, without limitation, all accrued and unpaid dividends, and cash in lieu of fractional Common Shares) and any other property owing upon conversion no later than the Company’s (4th) Business Day following a conversion date. Notwithstanding the foregoing, the persons entitled to receive any Common Shares or other securities delivered upon conversion will be deemed to have become the holders of record thereof as of the conversion date.
(iv) Holders of Series D Preferred Shares may withdraw any notice of conversion or redemption by a notice of withdrawal delivered to the Company at least two (2) full Business Days prior to the conversion or redemption date.
(v) The Company will at all times reserve and keep available out of its authorized and unissued Common Shares, solely for issuance upon the conversion of shares of Series D Preferred Shares as provided herein, free from any preemptive or other similar rights, such number of Common Shares as shall from time to time be issuable upon the conversion of all the shares of Series D Preferred Shares then outstanding.
(h) Anti-Dilution.
(i) If the Company shall, at any time or from time to time after the Original Issue Date while any Series D Preferred Shares are outstanding, subdivide, combine reclassify, or split its outstanding Common Shares into a greater or lesser number of Common Shares, the Conversion Rate in effect immediately prior to the opening of business on the day following the day upon which such subdivision, combination, reclassification or split becomes effective shall be adjusted by multiplying such Conversion Rate by a fraction:
(A) the numerator of which shall be the number of Common Shares outstanding immediately prior to the opening of business on the day following the day such subdivision, combination, reclassification or split becomes effective; and
(B) the denominator of which shall be the number of Common Shares outstanding immediately prior to the opening of business on the day that such subdivision, combination, reclassification or split becomes effective.
An adjustment made pursuant to this Section 7(h)(i) shall become effective immediately prior to the opening of business on the day following the day upon which such subdivision, reclassification, split or combination becomes effective.
(ii) If the Company shall, at any time or from time to time after the Original Issue Date while any Series D Preferred Shares are outstanding, (a) issue rights or warrants for a period expiring within 60 days to all or substantially all holders of its outstanding Common Shares entitling them to subscribe for or purchase Common Shares (or securities convertible into or exchangeable or exercisable for Common Shares), at a price per Common Share (or having a conversion, exchange or exercise price per Common Share) less than the GAAP book value per share as of the most recently completed quarter disclosed in an Exchange Act periodic report (the “Last Book Value”), or (b) issue any Common Shares or securities convertible into or exchangeable or exercisable for Common Shares (except as noted in the last sentence of this Section 7(h)), at a price per Common Share (or having a conversion, exchange or exercise price per Common Share) less than the Last Book Value, then, unless such issuance is unanimously approved by the holders of outstanding Series D Preferred Shares, the Conversion Rate shall be adjusted by multiplying the Conversion Rate in effect at the opening of business on the date after the closing of such issuance by a fraction:
(A) the numerator of which shall be the sum of (x) the number of Common Shares (on an as converted fully diluted basis) outstanding at the close of business on the date immediately preceding such closing, and (y) the total number of additional Common Shares issued and issuable pursuant to such rights, warrants, options, other securities or convertible securities; and
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(B) the denominator of which shall be the sum of (x) the number of Common Shares (on an as converted fully diluted basis) outstanding on the close of business on the date immediately preceding such closing, and (y) the number of Common Shares equal to the aggregate purchase price, exercise price or conversion price payable to purchase, exercise or convert such Common Shares, rights, warrants, options, other securities or convertible securities divided by the Last Book Value.
For the avoidance of doubt, the Conversion Rate may only be adjusted upward pursuant to this Section 7(h)(ii).
An adjustment made pursuant to this Section 7(h)(ii)(a) shall become effective immediately prior to the opening of business on the day following the record date for such issuance. If the Common Shares are not delivered pursuant to such rights, warrants, options, other securities, or convertible securities upon the expiration or termination of such rights, warrants, options, other securities, or convertible securities, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect had the adjustments made upon the issuance of such rights, warrants, options, other securities, or convertible securities have been made on the basis of the delivery of only the number of Common Shares actually issued (or the number of Common Shares actually issued upon conversion, exchange, or exercise of such other securities). An adjustment made pursuant to this Section 7(h)(ii)(b) shall become effective immediately prior to the opening of business on the day following the closing of such issuance. In determining whether any rights, warrants options, other securities, or convertible securities entitle the holders to subscribe for or purchase Common Shares at less than the Last Book Value, and in determining the aggregate offering price of such Common Shares, there shall be taken into account any consideration received for such rights, warrants options, other securities, or convertible securities, the value of such consideration if other than cash, to be determined in good faith by the Board. There shall be no adjustments made pursuant to this Section 7(h) for Common Shares issued or subscribed for to the extent the proceeds of the new Common Share issuance are used to repurchase or redeem outstanding Common Shares for equal to or below the issue or subscription price for the new Common Shares so long as there are no additional Common Shares outstanding immediately after giving effect to such issuance and redemption or repurchase of Common Shares.
(iii) There shall be no adjustments pursuant to this Section 7(h) as a result of the implementation of a phased-in liquidity program in connection with a listing of the Common Shares, including any stock splits, reverse stock splits or stock dividends, to the extent the economic purpose and effect of such transactions together are to restrict the ability of holders of Common Shares prior to the listing to transfer their Common Shares after the listing and such transactions would not have an adverse effect on the proportional equity of the holders of Series D Preferred Shares (including upon the conversion thereof).
(8) Voting Rights.
(a) So long as Series D Preferred Shares are outstanding, except as otherwise set forth herein or as required by applicable law, the affirmative vote of holders of Series D Preferred Shares entitled to cast two-thirds (2/3) of the votes entitled to be cast by holders of outstanding Series D Preferred Shares, voting separately as a class, shall be necessary to approve the following: (i) the issuance of Senior Equity Securities; (ii) any amendment, alteration or repeal of any provisions of the Company’s Charter, bylaws or other organizational document of the Company, whether by merger, consolidation or otherwise, so as to materially and adversely affect or cause to be terminated any right, preference, privilege, voting power, conversion right, qualification and terms and conditions of redemption of the Series D Preferred Shares, provided, however, that the issuance of any shares of any class or series of Parity Equity Securities shall not be deemed to adversely affect or terminate the rights, preferences, conversion and other rights, voting powers, restrictions, qualifications and terms and conditions of redemption of the Series D Preferred Shares, and the holders of Series D Preferred Shares shall have no right to vote thereon. In any matter in which the holders of Series D Preferred Shares are entitled to vote, each such holder shall have the right to one vote for each Series D Preferred Share held by such holder.
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(b) So long as Series D Preferred Shares are outstanding, except as otherwise set forth herein or as required by applicable law, the affirmative vote of holders entitled to cast two-thirds (2/3) of the votes entitled to be cast by holders of outstanding Series D Preferred Shares and any other series of Preferred Shares (other than Series A Convertible Preferred Stock), voting as a single class, shall be necessary to approve the payment of any dividends on any series or class or classes of Parity Equity Securities or Junior Equity Securities (other than dividends or distributions paid solely in Junior Equity Securities of, or in options, warrants or rights to subscribe for or purchase, Junior Equity Securities) for any period unless dividends have been declared and paid or are contemporaneously declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series D Preferred Shares for all prior Distribution Periods in accordance with paragraph (4) herein.
(b) Except as prohibited by applicable law or the Charter, each Series D Preferred Share shall entitle the holder thereof on the applicable record date to the number of votes set forth below on each matter submitted to a vote of the stockholders of the Company, whether at a meeting of stockholders or by written consent, upon which holders of the Common Shares are entitled to vote, and the holders of Series D Preferred Shares shall vote together with the holders of Common Shares as a single class on all matters submitted to a vote of the stockholders of the Company upon which holders of Common Shares are entitled to vote, whether at a meeting of stockholders or by written consent. The number of votes applicable to a Series D Preferred Share will be equal to the number of Common Shares a Series D Preferred share could have been converted into as of the record date set for purposes of such stockholder vote (rounded down to the nearest whole number of Common Shares). The holders of Series D Preferred Shares shall be entitled to receive notice of all annual or special meetings of the stockholders of the Company in the same manner in which the holders of Common Shares are entitled to such notice.
(c) Effect of Conversion or Redemption Upon Voting Rights. The foregoing voting provisions shall not apply to a Series D Preferred Share if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, such Series D Preferred Share shall have been converted or redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.
(9) Information Rights. During any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act, and any Series D Preferred Shares are outstanding, the Company will provide to all holders of Series D Preferred Shares that appear in the record books of the Company, copies of the quarterly and annual financial statements and accompanying Item 303 of Regulation S-K disclosure that would be required to be contained in annual reports on Form 10-K and quarterly reports on Form 10-Q that the Company would have been required to file with the U.S. Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Exchange Act if the Company were subject thereto. The Company will provide such information to the holders of Series D Preferred Shares within fifteen (15) days after the applicable Exchange Act due dates.
(10) Other Limitations; Ownership and Transfer. The Series D Preferred Shares constitute Preferred Shares of the Company and are governed by and issued subject to all the limitations, terms and conditions of the Charter applicable to Preferred Shares generally, including but not limited to the terms and conditions (including exceptions and exemptions) of Article V of the Charter applicable to Preferred Shares. The foregoing sentence shall not be construed to limit the applicability to the Series D Preferred Shares of any other term or provision of the Charter.
(11) Record Holders. The Company and the transfer agent for the Series D Preferred Shares may deem and treat the record holder of any Series D Preferred Shares as the true and lawful owner thereof for all purposes, and neither the Company nor the transfer agent shall be affected by any notice to the contrary.
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(12) Miscellaneous.
(a) Tax Withholding. The Company may withhold from or pay on behalf of or with respect to each holder of Series D Preferred Shares any amount of U.S. federal, state, local, or foreign taxes that the Company reasonably determines that it was or is required to withhold or pay with respect to any cash or property distributable, allocable or otherwise transferred to such holder pursuant to these Articles Supplementary, including, without limitation, any taxes required to be withheld or paid by the Company pursuant to Section 1441, 1442, or 1445 of the Internal Revenue Code of 1986, as amended.
(b) Office or Agency. The Company will at all times maintain an office or agency in one of the 48 contiguous states of the United States of America where Series D Preferred Shares may be surrendered for payment (including upon redemption), registration of transfer or exchange.
(c) Severability. If any preference, conversion or other right, voting power, restriction, limitation as to dividends or other distributions, qualification, term or condition of redemption or other term of the Series D Preferred Shares is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, then, to the extent permitted by law, all other preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, terms or conditions of redemption and other terms of the Series D Preferred Shares which can be given effect without the invalid, unlawful or unenforceable preference, conversion or other right, voting power, restriction, limitation as to dividends or other distributions, qualification, term or condition of redemption or other term of the Series D Preferred Shares shall remain in full force and effect and shall not be deemed dependent upon any other such preference, conversion or other right, voting power, restriction, limitation as to dividends or other distributions, qualification, term or condition of redemption or other term of the Series D Preferred Shares unless so expressed herein.
(d) Terms of the Series D Preferred Shares. All references to the “terms” of the Series D Preferred Shares (and all similar references) shall include all of the preferences, conversion and other rights, voting powers, restrictions and limitations as to dividends and other distributions, qualifications, terms and conditions of redemption and other terms and provisions set forth in paragraphs (1) through (12), inclusive, hereof.
(e) Notices. All notices required to be provided by the Company shall be given by email or by first class mail, postage pre-paid. Any notices required to be provided by any shareholder may be given by email or by first class mail, postage prepaid.
THIRD: The Series D Preferred Shares have been classified and designated by the Board pursuant to the powers of the Board as contained in the Charter. These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.
FOURTH: These Articles Supplementary shall become effective upon acceptance by the SDAT.
FIFTH: The undersigned Chief Financial Officer and Treasurer of the Company acknowledges these Articles Supplementary to be the act of the Company and, as to all matters or facts required to be verified under oath, the undersigned Chief Financial Officer and Treasurer of the Company acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
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IN WITNESS WHEREOF, the Company has caused these Articles Supplementary to be signed in its name and on its behalf by its Chief Financial Officer and Treasurer and attested to by its Secretary on this 17th day of March, 2021.
| BENEFIT STREET PARTNERS REALTY TRUST, INC. | |||
| By: | /s/ Jerome S. Baglien | ||
| Name: | Jerome S. Baglien | ||
| Title: | Chief Financial Officer and Treasurer | ||
| ATTEST: | |||
| By: | /s/ Micah Goodman | ||
| Name: | Micah Goodman | ||
| Title: | Secretary | ||
Exhibit 10.1
EXECUTION VERSION
PURCHASE AND EXCHANGE AGREEMENT
This PURCHASE AND EXCHANGE AGREEMENT, dated as of March 15, 2021 (this “Agreement”), is by and among BENEFIT STREET PARTNERS REALTY TRUST, INC., a Maryland corporation (the “Company”), and Security Benefit Life Insurance Company (the “Purchaser”).
WHEREAS, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, shares of Series D convertible preferred stock of the Company, $0.01 par value (the “Series D Preferred Stock”) in accordance with the provisions of this Agreement; and
WHEREAS, the Purchaser also desires to exchange its existing shares of Series A convertible preferred stock of the Company, $0.01 par value (the “Series A Preferred Stock”) for new shares of Series D Preferred Stock in accordance with the provisions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:
“1940 Act” has the meaning specified in Section 3.15.
“Additional Dividend Amount” has the meaning specified in Section 5.7.
“Affiliate” has the meaning specified in the Securities Act.
“Agreement” has the meaning specified in the preamble to this Agreement.
“Agreements and Instruments” has the meaning specified in Section 3.12.
“Ancillary Agreements” means any agreement, document, instrument, certificate or contract entered into in connection with this Agreement, including, without limitation, the Articles Supplementary and all letter agreements entered into between the Company and the Purchaser.
“Articles Supplementary” means the articles supplementary for the Series D Preferred Stock, as will be filed with the Maryland State Department of Assessments and Taxation, in substantially the same form as Annex A.
“Business Day” means any day other than a Saturday, Sunday, any federal holiday or any other day on which banking institutions in the State of New York are authorized or required to be closed by law or governmental action.
“Charter” means the Articles of Amendment and Restatement of Benefit Street Partners Realty Trust, Inc., effective as of August 16, 2017.
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“Close Associate of a Senior Foreign Political Figure” means a person who is widely and publicly known internationally to maintain an unusually close relationship with the Senior Foreign Political Figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the Senior Foreign Political Figure.
“Closing” has the meaning specified in Section 2.3.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means shares of common stock of the Company, $0.01 par value.
“Company” has the meaning specified in the preamble to this Agreement.
“Company Entities” has the meaning specified in Section 3.12.
“Company Related Parties” has the meaning specified in Section 6.2.
“Company SEC Documents” has the meaning specified in Section 3.1.
“Conversion” means the conversion of the Series D Preferred Stock into Common Stock in accordance with the provisions of the Articles Supplementary.
“Corporate Event” is any of the following: (i) the listing of the Common Stock on a national securities exchange or quotation on an electronic inter-dealer quotation system; (ii) a merger or business combination involving the Company pursuant to which outstanding shares of the Common Stock are exchanged for securities of another company which are listed on a national securities exchange or quoted on an electronic inter-dealer quotation system; (iii) the approval of a plan of liquidation of the Company which the Company intends to complete as promptly as practicable, or (iv) any other transaction or series of transaction that results in all Common Shares being transferred or exchanged for cash or securities which are listed on a national securities exchange or quoted on an electronic inter-dealer quotation system.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.
“Exchange Act Regulations” has the meaning specified in Section 3.14.
“Exchange Shares” has the meaning specified in Section 2.2.
“FATCA” means (a) Sections 1471 to 1474 of the Code and any associated legislation, regulations or guidance, or similar legislation, regulations or guidance enacted in any jurisdiction which seeks to implement similar tax reporting and/or withholding tax regimes; (b) the intergovernmental agreement entered into between the Cayman Islands Government and the Government of the United States on 29 November 2013 (“US IGA”), to give effect to the U.S. Foreign Account Tax Compliance Act and Rules promulgated thereunder, the intergovernmental agreement entered into between the Cayman Islands Government and the United Kingdom on 5 November 2013 (“UK IGA”) and, together with the US IGA, the “IGAs”) and any intergovernmental agreement, treaty, regulation, guidance or other agreement between the Cayman Islands Government (or any Cayman Islands government body) and the US, UK or any other participating jurisdiction (including any government bodies in such jurisdiction), entered into in order to comply with, facilitate, supplement, implement or give effect to: (i) the legislation, regulations or guidance described above; or (ii) any similar regime, including any automatic exchange of information regime arising from or in connection with the OECD Common Reporting Standard (“CRS”); and (c) any legislation, regulations or guidance in the Cayman Islands that gives effect to the matters outlined in the preceding paragraph (i) including without limitation the Tax Information Authority (International Tax Compliance) (United States of America) Regulations, 2014 (“US FATCA Regulations”), the Tax Information Authority (International Tax Compliance) (United Kingdom) Regulations, 2014 (“UK FATCA Regulations”), the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) Regulations, 2015 (“CRS Regulations”) and, together with the US FATCA Regulations and UK FATCA Regulations, the “Cayman Regulations”) and the Guidance Notes on the International Tax Compliance Requirements of the Intergovernmental Agreements Between the Cayman Islands and the United States of America and the United Kingdom, as amended from time to time, and any further guidance issued in relation to the CRS Regulations (“Cayman Guidance Notes”).
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“Foreign Shell Bank” means a Foreign Bank without a Physical Presence in any country, but does not include a Regulated Affiliate. A “Foreign Bank” means an organization that (i) is organized under the laws of a foreign country, (ii) engages in the business of banking, (iii) is recognized as a bank by the bank supervisory or monetary authority of the country of its organization or principal banking operations, (iv) receives deposits to a substantial extent in the regular course of its business, and (v) has the power to accept demand deposits, but does not include the U.S. branches or agencies of a foreign bank. “Physical Presence” means a place of business that is maintained by a Foreign Bank and is located at a fixed address, other than solely a post office box or an electronic address, in a country in which the Foreign Bank is authorized to conduct banking activities, at which location the Foreign Bank (i) employs one or more individuals on a full-time basis, (ii) maintains operating records related to its banking activities, and (iii) is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities. “Regulated Affiliate” means a Foreign Shell Bank that (i) is an affiliate of a depository institution, credit union or Foreign Bank that maintains a Physical Presence in the U.S. or a foreign country regulating such affiliated depository institution, credit union or Foreign Bank.
“Form 10-Q” means the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2020 filed with the SEC on November 6, 2020.
“GAAP” has the meaning specified in Section 3.3.
“Governmental Entity” has the meaning specified in Section 3.12.
“Indemnified Party” has the meaning specified in Section 6.3.
“Indemnifying Party” has the meaning specified in Section 6.3.
“Law” means any federal, state, local or foreign order, writ, injunction, judgment, settlement, award, decree, statute, law, rule or regulation.
“Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. For the purpose of this Agreement, a Person shall be deemed to be the owner of any Property that it has acquired or holds subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing.
“Liquidity Event” has the meaning set forth in the Articles Supplementary.
“Lock-Up Securities” has the meaning specified in Section 5.6.
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“Material Adverse Effect” means a material adverse effect on the management, condition (financial or otherwise), results of operations, business or properties of the Company and its Subsidiaries, taken as a whole; provided, however, that a Material Adverse Effect shall not include any material and adverse effect on the foregoing to the extent such material and adverse effect results from, arises out of, or relates to (x) a general deterioration in the economy or changes in the general state of the industries in which the Company operates, except to the extent that the Company, taken as a whole, is adversely affected in a disproportionate manner as compared to other industry participants, (y) the outbreak or escalation of hostilities involving the United States, the declaration by the United States of a national emergency or war or the occurrence of any other calamity or crisis, including acts of terrorism or (z) any change in accounting requirements or principles imposed upon the Company and its Subsidiaries or their respective businesses or any change in applicable Law, or the interpretation thereof.
“Non-Cooperative Jurisdiction” means any foreign country that has been designated as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Task Force on Money Laundering, of which the U.S. is a member and with which designation the U.S. representative to the group or organization continues to concur.
“Operating Subsidiary” means each of the entities listed on Schedule D hereto.
“Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other form of entity.
“Preferred Stock Exchange” has the meaning specified Section 2.2.
“Preferred Stock Price” means the liquidation preference per share of the Series D Preferred Stock as set forth in the Articles Supplementary.
“Prohibited Purchaser” means a person or entity whose name appears on (i) the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Office of Foreign Assets Control; (ii) other lists of prohibited persons and entities as may be mandated by applicable law or regulation; or (iii) such other lists of prohibited persons and entities as may be provided to the Company in connection therewith.
“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
“Purchase Price” means an amount equal to (i) the number of shares to be settled for the account of the Purchaser at the Closing multiplied by the Series D Preferred Stock Price, minus (ii) the amount of accrued and unpaid dividends on the Surrendered Shares as of the day prior to the Closing Date, as set forth on Schedule A.
“Purchased Shares” means the amount of shares of Series D Preferred Stock set forth on Schedule A.
“Purchaser” has the meaning specified in the preamble to this Agreement.
“Purchaser Related Parties” has the meaning specified in Section 6.1.
“Representatives” of any Person means the Affiliates, officers, directors, managers, employees, agents, counsel, accountants, investment bankers, investment advisers and other representatives of such Person.
“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.
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“Senior Foreign Political Figure” shall mean a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a Senior Foreign Political Figure includes any corporation, business or other entity that has been formed by, or for the benefit of, a Senior Foreign Political Figure.
“Series A Preferred Stock” has the meaning specified in the recitals to this Agreement.
“Series D Preferred Stock” has the meaning specified in the recitals to this Agreement.
“Share Purchase” has the meaning specified in Section 2.1.
“Surrendered Shares” has the meaning specified in Section 2.2.
ARTICLE II
AGREEMENT TO SELL AND PURCHASE
Section 2.1 Sale and Purchase. Subject to the terms and conditions hereof, the Purchaser hereby agrees to purchase (the “Share Purchase”) the amount of shares of Series D Preferred Stock set forth on Schedule A from the Company on the Closing Date (as defined in Section 2.3 of this Agreement), at the Purchase Price set forth on Schedule A. Subject to the terms and conditions hereof, the Company hereby agrees to issue and sell such Purchased Shares to the Purchaser on the Closing Date for the Purchase Price set forth on Schedule A.
Section 2.2 Exchange of Series A Preferred Stock. Subject to the terms and conditions hereof, on the Closing Date (as defined in Section 2.3 of this Agreement), the Purchaser hereby agrees to surrender to the Company for exchange all of its shares of Series A Preferred Stock of the Company (the “Surrendered Shares,” the amount of which is set forth on Schedule A), and the Company agrees to subsequently cause its transfer agent and registrar to issue to the Purchaser an equal amount of shares of Series D Preferred Stock (the “Preferred Stock Exchange,” and such new shares, the “Exchange Shares”). If required by DST Systems, Inc., the Company’s transfer agent, the Purchaser agrees to execute a customary letter of transmittal surrendering the Surrendered Shares. Following the Preferred Stock Exchange, the Surrendered Shares will be classified as treasury shares on the books and records of the Company and the Purchaser shall own 17,949 shares of Series D Preferred Stock.
Section 2.3 Closing. Pursuant to the terms of this Agreement, the settlement of the Preferred Stock Exchange and the Share Purchase (the “Closing”) will occur on March 18, 2021 or another date mutually agreed by the parties hereto (such date, the “Closing Date”), subject to the provisions of this Agreement. The parties agree that the Closing may occur via delivery of electronic mail transmissions, ..pdf transmissions, facsimiles or photocopies of this Agreement and the closing deliverables contemplated hereby. The Closing shall take place at the offices of Hogan Lovells US LLP, 555 Thirteenth Street, NW, Washington, District of Columbia 20004 at 10:00 a.m. (Eastern Time) on the applicable day, or at such other time as the Company and the Purchaser determine. Unless otherwise provided herein, all proceedings to be taken and all documents to be executed and delivered by all parties at the Closing will be deemed to have been taken and executed simultaneously, and no proceedings will be deemed to have been taken nor documents executed or delivered until all have been taken.
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Section 2.4 The Purchaser’s Conditions. The obligation of the Purchaser to consummate the Share Purchase and the Preferred Stock Exchange at the Closing shall be subject to the satisfaction on or prior to the Closing of each of the following conditions (any or all of which may be waived by the Purchaser at the Closing, in whole or in part, to the extent permitted by applicable Law):
(a) the Company shall have performed and complied with the covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by the Company on or prior to the Closing;
(b) (i) the representations and warranties of the Company contained in this Agreement that are qualified by materiality or a Material Adverse Effect shall be true and correct when made and as of the Closing and (ii) all other representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects when made and as of the Closing, in each case as though made at and as of the Closing (except that representations and warranties made as of a specific date shall be required to be true and correct as of such date only); and
(c) the Company shall have delivered, or caused to be delivered, to the Purchaser the Company’s closing deliverables described in Section 2.6.
Section 2.5 Company’s Conditions. The obligation of the Company to consummate the Share Purchase and the Preferred Stock Exchange at the Closing shall be subject to the satisfaction on or prior to the Closing of each of the following conditions with respect to the Purchaser (any or all of which may be waived by the Company in writing, in whole or in part, to the extent permitted by applicable Law):
(a) (i) the representations and warranties of the Purchaser contained in this Agreement that are qualified by materiality shall be true and correct when made and as of the Closing and (ii) all other representations and warranties of the Purchaser shall be true and correct in all material respects as of the Closing (except that representations of the Purchaser made as of a specific date shall be required to be true and correct as of such date only);
(b) the Purchaser shall have performed and complied with the covenants and agreements contained in this Agreement that are required to be performed and complied with by that Purchaser on or prior to the Closing; and
(c) the Purchaser shall have delivered, or caused to be delivered, to the Company at the Closing the Purchaser’s closing deliverables described in Section 2.7.
Section 2.6 Deliverables by the Company. Upon the terms and subject to the conditions of this Agreement, at the Closing the Company will deliver (or cause to be delivered) the following:
(a) evidence of the shares settled at the Closing credited to book-entry accounts maintained by the Company’s transfer agent, bearing the legend or restrictive notation set forth in Section 4.9, free and clear of any Liens, other than transfer restrictions under the Company’s Charter and applicable federal and state securities laws;
(b) a certificate of the Maryland State Department of Assessments and Taxation (“MSDAT”), dated as of a recent date, to the effect that the Company is in good standing;
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(c) a copy of the certified copy of the Articles Supplementary evidencing that it has been filed with the MSDAT;
(d) the executed Ancillary Agreements to which the Company is a party;
(e) a cross receipt executed by the Company and delivered to the Purchaser certifying that it has received the Purchase Price and the Surrendered Shares from the Purchaser with respect to the shares settled at the Closing (including the Exchange Shares);
(f) to the extent the shares settled at the Closing would otherwise result in the Purchaser violating the ownership restrictions in the Charter, including on an as-converted fully diluted basis, the Company will provide the Purchaser evidence reasonably acceptable to the Purchaser that the board of directors of the Company (the “Board”) has granted a waiver of the ownership restrictions such that the settlement will not result in Purchaser violating the ownership restrictions;
(g) a certificate executed by an officer of the Company certifying that the conditions in Sections 2.3(a) and (b) have been satisfied; and
(h) a certificate of the Secretary of the Company, certifying as to (1) the Charter and bylaws of the Company, (2) resolutions of the Board authorizing the execution and delivery of this Agreement, the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby, including without limitation the issuance of the Purchased Shares and the Exchange Shares and (3) the incumbency of the officers authorized to execute this Agreement and the Ancillary Agreements, setting forth the name and title and bearing the signatures of such officers.
Section 2.7 Purchaser Deliverables. Upon the terms and subject to the conditions of this Agreement, at the Closing, the Purchaser will deliver (or cause to be delivered) the following:
(a) the Purchase Price payable by the Purchaser, by wire transfer of immediately available funds to the account of the Company set forth on Schedule B;
(b) to the extent the Company is required to deliver evidence of a Board ownership waiver described in Section 2.6(f), the Purchaser will provide a representation letter reasonably required by the Board in connection with such waiver;
(c) the executed Ancillary Agreements to which the Purchaser is a party;
(d) a cross-receipt executed by the Purchaser and delivered to the Company certifying that the Purchaser has received the shares settled (including the Exchange Shares) at the Closing from the Company; and
(e) if required by the Company’s transfer agent, an executed letter of transmittal with respect to the Surrendered Shares.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
Section 3.1 Accurate Disclosure. All forms, registration statements, reports, schedules and statements required to be filed by the Company under the Exchange Act or the Securities Act (all such documents, including the exhibits thereto, prior to the date hereof, collectively, the “Company SEC Documents”) have been filed with the Commission. The Company SEC Documents, including, without limitation, any audited or unaudited financial statements and any notes thereto or schedules included therein, at the time filed (or, in the case of registration statements, solely on the dates of effectiveness) (except to the extent corrected by a subsequent Company SEC Document) (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (b) complied as to form in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as applicable.
Section 3.2 Independent Accountants. Ernst & Young LLP, the accountant who has reviewed and/or certified the financial statements included in the Company SEC Documents, is an independent public accountant as required by the Securities Act and Securities Act regulations and the Public Company Accounting Oversight Board.
Section 3.3 Financial Statements; Non-GAAP Financial Measures. The historical consolidated financial statements of the Company, included in the Company SEC Documents, together with the related schedules and notes thereto, present fairly in all material respects the financial position, results of operations and cash flows of the Company, at the dates indicated and for the periods specified; said financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved. Except as included therein, no historical financial statements or supporting schedules are required to be included or incorporated by reference in the Company SEC Documents under the Securities Act, Securities Act regulations, the Exchange Act, or the Exchange Act Regulations. All disclosures contained in the Company SEC Documents regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K promulgated by the Commission, to the extent applicable.
Section 3.4 No Material Adverse Change in Business. Since September 30, 2020, no event or circumstance has occurred that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect.
Section 3.5 Good Standing of the Company. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Maryland and has corporate power and authority to conduct its business as described in the Company SEC Documents and has presently proposed to be conducted and to enter into and perform its obligations under this Agreement; and the Company is duly qualified as a foreign corporation to transact business and is in good standing or equivalent status in each other jurisdiction in which such qualification is required, except where the failure so to qualify or to be in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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Section 3.6 Good Standing of Subsidiaries. Each Operating Subsidiary has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its incorporation or organization, has corporate or similar power and authority to conduct its business as described in the Company SEC Documents and as presently proposed to be conducted and is duly qualified to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify or to be in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The only subsidiaries of the Company are the Operating Subsidiaries. As of the date of this Agreement, the Company is not a party to any joint venture or similar arrangement and does not have any ownership interest in any other Person other than the Operating Subsidiaries.
Section 3.7 Authorization of the Series D Preferred Stock. The Series D Preferred Stock to be acquired from the Company in the Shares Purchase and issued by the Company in the Preferred Stock Exchange has been duly authorized for issuance and sale to the Purchaser pursuant to this Agreement and, when issued and delivered by the Company pursuant to this Agreement against payment of the consideration set forth herein, will be validly issued and fully paid and non-assessable. No holder of Series D Preferred Stock will be subject to personal liability by reason of being such a holder. The Series D Preferred Stock ranks pari passu with all other preferred stock of the Company and senior to all other outstanding securities of the Company with respect to rights to receive dividends and to participate in distributions or payments upon any voluntary or involuntary liquidation, dissolution or winding up of the Company. The Series D Preferred Stock is not subject to any transfer restrictions other than any restrictions set forth under the Articles Supplementary, pursuant to applicable Law, or as may be set forth in agreements entered into by the Purchaser.
Section 3.8 Capitalization; Debt. The authorized, issued and outstanding shares of capital stock of the Company and any outstanding debt are as set forth in the Company’s Form 10-Q (except for subsequent issuances, if any, pursuant to this Agreement or pursuant to the exercise of convertible securities referred to in the Form 10-Q). The outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable. None of the outstanding shares of capital stock of the Company were issued in violation of the preemptive or other similar rights of any securityholder of the Company.
Section 3.9 No Preemptive Rights. Except as have been provided to the Purchaser, contained in the Charter or described in the Company SEC Documents or the Articles Supplementary, there are no (A) preemptive rights or other rights to subscribe for or to purchase, nor any restriction or agreement relating to the voting or transfer of, any equity securities of the Company, or (B) outstanding options or warrants to purchase any securities of the Company.
Section 3.10 Authorization of Agreement; Enforceability. The Company has all requisite power and authority to execute and deliver this Agreement and perform its respective obligations hereunder. This Agreement has been duly authorized, executed and delivered by the Company and this Agreement constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer and similar laws affecting creditors’ rights generally or by general principles of equity, including principles of commercial reasonableness, fair dealing and good faith.
Section 3.11 Authorization of Transactions. As of the Closing, all corporate action required to be taken by the Company or any of its partners for the execution and delivery by the Company of this Agreement and the consummation of the transactions contemplated by the Agreement, shall have been validly taken.
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Section 3.12 Absence of Violations, Defaults and Conflicts. None of the Company and the Operating Subsidiaries (collectively, the “Company Entities”) is (A) in violation of its organizational documents, (B) in violation or breach of or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which any such Company Entity is a party or by which it may be bound or to which any of the properties or assets of any of the Company Entities is subject (collectively, “Agreements and Instruments”), except for such defaults that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (C) in violation of any law, statute, rule, regulation, judgment, order, writ or decree of any arbitrator, court, governmental body, regulatory body, administrative agency or other authority, body or agency having jurisdiction over any of the Company Entities or any of their respective properties, assets or operations (each, a “Governmental Entity”), except for such violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not, whether with or without the giving of notice or passage of time or, require consent under, or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any Lien upon any properties or assets of the Company pursuant to, the Agreements and Instruments (except for such conflicts, breaches, defaults or Repayment Events or Liens that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect), nor will such actions (i) result in any violation of the provisions of the organizational documents of any of the Company Entities, (ii) conflict with or constitute a breach of, or a default or a Repayment Event (as defined below) under, or result in the creation or imposition of any Lien upon any property or assets of any of the Company Entities pursuant to, or require the consent of any other party to, any Agreements and Instruments, except for such conflicts, breaches, defaults or Liens as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or (iii) result in any violation of any law, statute, rule, regulation, judgment, order, writ or decree of any Governmental Entity, except for such violations as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by any of the Company Entities.
Section 3.13 Absence of Proceedings. Except as disclosed in the Company SEC Documents, there is no action, suit, proceeding, inquiry, claim or investigation before or brought by any Governmental Entity or any other Person now pending or, to the knowledge of the Company, threatened, against or affecting the Company, which would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, or which might materially and adversely affect its assets or the consummation of the transactions contemplated in this Agreement or the performance by the Company of its obligations hereunder.
Section 3.14 Compliance with Law. Since the Company’s formation, it has complied in all material respects with applicable Law.
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Section 3.15 Accounting Controls. The Company Entities maintain internal control over financial reporting (as defined under Rule 13a-15 and 15d-15 under the rules and regulations of the Commission under the Exchange Act (the “Exchange Act Regulations”) and a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as described in the Company SEC Documents, since the Company’s inception, there has been (1) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (2) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. “Material Weakness” has the meaning set forth under Rule 1-02 of Regulation S-X promulgated by the Commission.
Section 3.16 Investment Company Act. None of the Company Entities are required, and upon the issuance and sale of the Series D Preferred Stock as herein contemplated and the application of the net proceeds therefrom, none of the Company Entities will be required, to register as an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”).
Section 3.17 No General Solicitation; No Advertising. The Company has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Purchased Shares or the Exchange Shares by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.
Section 3.18 No Registration Required. Assuming the accuracy of the representations and warranties of the Purchaser contained in Article IV, the issuance and sale of the Purchased Shares and the issuance of the Exchange Shares pursuant to this Agreement shall have been issued, to the knowledge of the Company, in compliance with all applicable Laws, and is exempt from the registration requirements of the Securities Act, and neither the Company nor, to the knowledge of the Company, any authorized Representative acting on its behalf has taken or will take any action hereafter that would cause the loss of such exemption.
Section 3.19 No Integration. Neither the Company nor any of its Affiliates have, directly or indirectly through any agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any “security” (as defined in the Securities Act) that is or is likely to be integrated with the sale of Purchased Shares or issuance of the Exchange Shares in a manner that would require registration under the Securities Act.
Section 3.20 Rating. Prior to the time of the Closing, the Series D Preferred Stock will have been rated “BB-” or better by a nationally recognized statistical ratings organization.
Section 3.21 Use of Proceeds. The Company will use the proceeds received at the Closing to originate and acquire commercial real estate investments for the Company and for other corporate purposes consistent with the Company’s historical use of cash.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company that:
Section 4.1 Existence. The Purchaser is duly organized and validly existing and in good standing under the Laws of its jurisdiction of organization, with all requisite power and authority to own its assets and to conduct its business as currently conducted, except as would not prevent the consummation of the transactions contemplated by this Agreement.
Section 4.2 Authorization, Enforceability. The Purchaser has all necessary corporate, limited liability company or partnership power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby, and the execution, delivery and performance by the Purchaser of this Agreement has been duly authorized by all necessary action on the part of the Purchaser, and this Agreement constitutes the legal, valid and binding obligations of the Purchaser, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer and similar laws affecting creditors’ rights generally or by general principles of equity, including principles of commercial reasonableness, fair dealing and good faith.
Section 4.3 No Breach. The execution, delivery and performance of this Agreement by the Purchaser and the consummation by the Purchaser of the transactions contemplated hereby and thereby will not (a) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any material agreement to which the Purchaser is a party or by which the Purchaser is bound or to which any of the property or assets of the Purchaser is subject, (b) conflict with or result in any violation of the provisions of the organizational documents of the Purchaser or (c) violate any statute, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Purchaser or the property or assets of the Purchaser, except in the cases of clauses (a) and (c), for such conflicts, breaches, violations or defaults as would not prevent the consummation of the transactions contemplated by this Agreement.
Section 4.4 Certain Fees. No fees or commissions are or will be payable by the Purchaser to brokers, finders or investment bankers with respect to the purchase of Purchased Shares, the issuance of the Exchange Shares or the consummation of the transaction contemplated by this Agreement. The Purchaser agrees that it will indemnify and hold harmless the Company from and against any and all claims, demands or liabilities for broker’s, finder’s, placement or similar fees or commissions incurred by the Purchaser in connection with the purchase of Purchased Shares or the consummation of the transactions contemplated by this Agreement.
Section 4.5 Investment. The Purchased Shares and the Exchange Shares are being acquired for the Purchaser’s own account, the account of its Affiliates, or the accounts of clients for whom the Purchaser exercises discretionary investment authority (all of whom the Purchaser hereby represents and warrants are institutional “accredited investors” within the meaning of Rule 501(a) of Regulation D promulgated by the Commission pursuant to the Securities Act), not as a nominee or agent, and with no present intention of distributing the Purchased Shares, the Exchange Shares or any part thereof, and the Purchaser has no present intention of selling or granting any participation in or otherwise distributing the same in any transaction in violation of the securities laws of the United States or any state, without prejudice, however, to the Purchaser’s right at all times to sell or otherwise dispose of all or any part of the Purchased Shares or the Exchange Shares under an exemption from applicable federal or state registration requirements (including, without limitation, if available, Rule 144 promulgated thereunder). If the Purchaser should in the future decide to dispose of any of the Purchased Shares or the Exchange Shares, the Purchaser understands and agrees (a) that it may do so only in compliance with the Securities Act and applicable state securities law, as then in effect, including a sale contemplated by any registration statement pursuant to which such securities are being offered, or pursuant to an exemption from the Securities Act, and (b) that stop-transfer instructions to that effect will be in effect with respect to such securities.
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Section 4.6 Nature of Purchaser.
(a) The Purchaser represents and warrants to the Company that, (a) it is (1) a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) or (2) an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated by the Commission pursuant to the Securities Act purchasing Series D Preferred Stock for its own account (or accounts managed by it) and (b) by reason of its business and financial experience it has such knowledge, sophistication and experience in making similar investments and in business and financial matters generally so as to be capable of evaluating the merits and risks of the prospective investment in the Purchased Shares and the Exchange Shares, is able to bear the economic risk of such investment and, at the present time, would be able to afford a complete loss of such investment.
(b) The Purchaser or its Representatives have been furnished with materials relating to the business, finances and operations of the Company and relating to the offer and sale of the Purchased Shares and the issuance of the Exchange Shares that have been requested by the Purchaser. The Purchaser or its Representatives has or have been afforded the full opportunity to ask questions of and receive answers from the Company or its Representatives and no statement or printed material which is contrary to the Company SEC Documents has been made or given to the purchaser by or on behalf of the Company. Neither such inquiries nor any other due diligence investigations conducted at any time by the Purchaser or its Representatives shall modify, amend or affect the Purchaser’s right (i) to rely on the Company’s representations and warranties contained in Article III above or (ii) to indemnification or any other remedy based on, or with respect to the accuracy or inaccuracy of, or compliance with, the representations, warranties, covenants and agreements in this Agreement. The Purchaser understands and acknowledges that its purchase of the Purchased Shares and exchange for the Exchange Shares involves a high degree of risk and uncertainty. The Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its investment in the Purchased Shares and the Exchange Shares.
Section 4.7 Restricted Securities. The Purchaser understands that the Purchased Shares and the Exchange Shares are characterized as “restricted securities” under the federal securities Laws in as much as they are being acquired from the Company in a transaction not involving a public offering and that under such Laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. The Purchaser represents that it is knowledgeable with respect to Rule 144 of the Commission promulgated under the Securities Act.
Section 4.8 Reliance Upon the Purchaser’s Representations and Warranties. The Purchaser understands and acknowledges that the Purchased Shares and the Exchange Shares are being offered and sold in reliance on a transactional exemption from the registration requirements of federal and state securities laws, and that the Company is relying in part upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth in this Agreement in (i) concluding that the issuance and sale of the Purchased Shares and issuance of the Exchange Shares are each a “private offering” and, as such, are exempt from the registration requirements of the Securities Act and (ii) determining the applicability of such exemptions and the suitability of the Purchaser to purchase the Purchased Shares and the Exchange Shares.
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Section 4.9 Legend; Restrictive Notation. The Purchaser understands that any certificates evidencing the Purchased Shares and the Exchange Shares and the book-entry account maintained by the transfer agent evidencing ownership of the Purchased Shares and the Exchange Shares will bear the legend or restrictive notation required by the Charter of the Company as well as the following legend or restrictive notation: “These securities have not been registered under the Securities Act. These securities may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under the Securities Act or pursuant to an exemption from registration thereunder, in each case in accordance with all applicable securities laws of the states or other jurisdictions, and, in the case of a transaction exempt from registration, such securities may only be transferred if the transfer agent for such securities has received documentation satisfactory to it that such transaction does not require registration under the Securities Act.”
Section 4.10 Section 4.10 Anti-Money Laundering. The Purchaser hereby acknowledges the Company’s intention to comply with all applicable laws concerning money laundering, terrorism and related activities, including, without limitation, the provisions of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended (“PATRIOT Act”). In furtherance of such efforts, the Purchaser hereby represents, warrants, and agrees that, to the best of the Purchaser’s knowledge based on reasonable diligence and investigation:
(a) none of the Purchaser’s past or future capital contributions to the Company (whether payable in cash or otherwise) have been or shall be derived from money laundering or similar activities deemed illegal under federal laws and regulations;
(b) none of the Purchaser’s past or future capital contributions to the Company will cause the Company or any of their personnel to be in violation of United States federal or other anti-money laundering laws, including without limitation the United States Bank Secrecy Act (31 U.S.C. § 5311, et seq.), the United States Money Laundering Control Act of 1986 or the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, and any regulations promulgated thereunder;
(c) to the best of its knowledge, none of (A) the Purchaser, (B) any person controlling or controlled by the Purchaser, (C) if the Purchaser is a privately held entity, any person having a beneficial interest in the Purchaser, or (D) any person for whom the Purchaser is acting as agent or nominee in connection with this investment, is, in the case of each of the foregoing, an individual, entity, country or territory named on an U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) list, is located in a country or territory named on an OFAC list or is a person or entity prohibited under the OFAC programs;
(d) when requested by the Company the Purchaser will provide any and all additional information that the Company deems necessary to ensure compliance with all applicable laws and regulations concerning money laundering and similar activities. The Company may request additional documentation and information to verify the identity of the Purchaser. The Purchaser acknowledges and agrees that the Purchaser will not be in compliance with this Agreement until such time as the Company has received and is satisfied with all the information and documentation requested to verify the Purchaser’s identity;
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(e) the Purchaser shall promptly notify the Company in the event that any of the foregoing representations cease to be true and accurate regarding the Purchaser; and
(f) the Purchaser will immediately notify the Company if Purchaser is or Purchaser knows, or has reason to suspect, that one of the Purchaser’s underlying beneficial owners is:
(i) a Prohibited Purchaser;
(ii) a Senior Foreign Political Figure, any member of a Senior Foreign Political Figure’s “immediate family,” which includes the figure’s parents, siblings, spouse, children and in-laws, or any Close Associate of a Senior Foreign Political Figure, or a person or entity resident in, or organized or chartered under, the laws of a Non-Cooperative Jurisdiction;
(iii) a person or entity resident in, or organized or chartered under, the laws of a jurisdiction that has been designated by the U.S. Secretary of the Treasury under Section 311 or 312 of the PATRIOT Act as warranting special measures due to money laundering concerns; or
(iv) a person or entity who gives the Purchaser a reason to believe that its funds originate from, or will be or have been routed through, an account maintained at a Foreign Shell Bank, an “offshore bank,” or a bank organized or chartered under the laws of a Non-Cooperative Jurisdiction.
The Purchaser understands and agrees that if at any time it is discovered that any of the foregoing representations are incorrect, or if otherwise required by applicable laws or regulations, the Company may, to the fullest extent permitted by law, undertake appropriate actions, and the Purchaser agrees to cooperate with such actions, to ensure continued compliance with applicable laws or regulations. The Purchaser further understands and agrees that the Company may release confidential information about the Purchaser (and, if applicable, any underlying beneficial owners of the Purchaser) to appropriate authorities if the Company determines that it is in the Company’s best interests to do so in light of applicable laws and regulations.
Section 4.11 FATCA. The Purchaser acknowledges and agrees that:
(a) the Company may take such actions as it determines necessary or appropriate to comply with FATCA;
(b) it will furnish the Company with such information, documentation and certifications as the Company may request to comply with the regulations governing FATCA and the obligations of withholding tax agents; any such forms or documentation requested by the Company pursuant to this paragraph (b), or any financial or account information with respect to the Purchaser’s investment in the Company, may be disclosed to the Cayman Islands Tax Information Authority (or any other Cayman Islands governmental body which collects information in accordance with FATCA) and to any withholding agent where the provision of that information is required by such agent to avoid the application of any withholding tax on any payments to the Company;
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(c) it waives, and/or shall cooperate with the Company to obtain a waiver of, the provisions of any law which:
(i) prohibit the disclosure by the Company, or by any of its agents, of the information or documentation requested from the Purchaser pursuant to paragraph (b) above;
(ii) prohibit the reporting of financial or account information by the Company or its agents required pursuant to FATCA; or
(iii) otherwise prevent compliance by the Company with its obligations under FATCA.
The Purchaser hereby indemnifies the Company for any loss or liability arising in whole or in part from the Purchaser’s failure to establish that payments and allocations to it are exempt from withholding under FATCA. This indemnification shall survive indefinitely. Notwithstanding any provision to the contrary contained in this Agreement, each of the Affiliates of the Company may enforce directly its rights pursuant to this Section 4.12 of this Agreement subject to and in accordance with the provisions of the Contracts (Rights of Third Parties) Law, 2014, as amended, modified, re-enacted or replaced, or any law having similar effect. Notwithstanding any other term of this Agreement, the consent of any person who is not a party to this Agreement (including any Affiliate of the Company) is not required for any variation of, amendment to, or release, rescission, or termination of, this Agreement.
Section 4.12 Share Repurchase Programs. The Purchaser acknowledges and agrees that until June 1, 2021 it shall not participate in the Company’s amended and restated share repurchase program, which became effective on February 28, 2016, or any subsequent program pursuant to which the Company repurchases Common Stock from Company stockholders.
Section 4.13 Valid Title. The Purchaser has and at the Closing Time will have, valid title to the Surrendered Shares, free and clear of all security interests, claims, liens, equities or other encumbrances (other than those set forth in the Purchaser’s organizational documents) and the legal right and power, and all authorization and approval required by law, to enter into this Agreement and to exchange the Surrendered Shares in accordance with this Agreement. Upon surrender in accordance with this Agreement, valid title (free and clear security interests, claims, liens, equities or other encumbrances) will pass to the Company. All of the Surrendered Shares were acquired by the Purchaser directly from the Company.
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ARTICLE V
COVENANTS
Section 5.1 Taking of Necessary Action. Each of the parties hereto shall use its commercially reasonable efforts to take or cause to be taken all action and to do or cause to be done all things necessary, proper or advisable under applicable Law and regulations to consummate and make effective the transactions between the Company and the Purchaser contemplated by this Agreement. Without limiting the foregoing, each of the Company and the Purchaser shall use its commercially reasonable efforts to make all filings and obtain all consents of Governmental Authorities that may be necessary or, in the reasonable opinion of the other parties, as the case may be, advisable for the consummation of the transactions contemplated by this Agreement. The Purchaser agrees that its trading activities, if any, with respect to Company’s securities will be in compliance with all applicable state and federal securities laws and rules. The Company shall promptly and accurately respond, and shall use its commercially reasonable efforts to cause its transfer agent to respond, to reasonable requests for information (which is otherwise not publicly available) made by the Purchaser or its auditors relating to the actual holdings of the Purchaser or its accounts; provided that, the Company shall not be obligated to provide any such information that could reasonably result in a violation of applicable law or conflict with the Company’s insider trading policy or a confidentiality obligation of the Company. The Company shall use its commercially reasonable efforts to cause its transfer agent to reasonably cooperate with the Purchaser to ensure that the Purchased Shares and the Exchange Shares are validly and effectively issued to the Purchaser and that the Purchaser’s ownership of the Purchased Shares and Exchange Shares following the Closing is accurately reflected on the appropriate books and records of the Company’s transfer agent.
Section 5.2 Registration Rights.
(a) The Company agrees that, to the extent the Purchaser is not able to freely resell without any limitations its Common Stock pursuant to an exemption from registration under the Securities Act, and upon the written request of the Purchaser, the Company will use its reasonable best efforts to file a registration statement (the “Shelf Registration Statement”) under the Securities Act within 60 days of a Liquidity Event that registers the resale of all the Common Stock held by the Purchaser (the “Registrable Securities”). Further, the Company shall use its reasonable best efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act no later than within 180 days of the Liquidity Event such that Purchaser may freely resell its Common Stock immediately following the 180 day anniversary of the Liquidity Event. If the Shelf Registration Statement is not automatically effective due to the Company’s status as a “well known seasoned issuer” as defined under Rule 405 of the Securities Act, at the time of filing of the Shelf Registration Statement, the Company shall use its reasonable commercial efforts, subject to receipt of necessary information from Purchaser (which information shall be provided by Purchaser to the Company promptly) to cause the SEC to declare the Shelf Registration Statement effective within 90 days after a Liquidity Event (or ten (10) business days after receipt of notice of no review by the SEC);
(b) the Company agrees to use its reasonable efforts to keep any Shelf Registration Statement filed under this Section 5.2 continuously effective for a period expiring on the earlier of (x) the date on which all of the Purchaser’s shares have been sold pursuant to the Shelf Registration Statement, and (y) when all such shares may be resold without any limitations, including any volume limitations pursuant to Rule 144 of the Securities Act (“Rule 144”) and further agrees during such period to supplement or amend the Shelf Registration Statement, if and as required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder for a shelf registration to the extent necessary to ensure that it is available for resales by the Purchaser of its shares;
(c) the Company agrees that if at any time after a Liquidity Event it files a Shelf Registration Statement that registers the resale of Common Stock of any other Person, the Company shall provide reasonable advance notice to Purchaser and shall include in such Shelf Registration Statement any shares of Common Stock that Purchaser requests to be included;
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(d) the Company shall bear all expenses in connection with the procedures in this Section and the registration of the Registrable Securities pursuant to any Shelf Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or underwriting discounts, brokerage fees and commissions incurred by the Purchaser, if any in connection with the offering of the shares pursuant to any Shelf Registration Statement; and
(e) in order to enable Purchaser to sell the Registrable Securities under Rule 144, the Company shall use its commercially reasonable efforts to comply with the requirements of Rule 144, including without limitation, with respect to public information about the Company and timely file all reports required to be filed by the Company under the Exchange Act.
Section 5.3 Corporate Event. The Company agrees to consummate a Corporate Event of 100% of the shares of Common Stock within one year of the date of this Agreement, unless a majority of the independent directors of the Company’s Board determine that at that time a Corporate Event would be detrimental to the Company’s shareholders, in which case the Company will consummate a Corporate Event as soon as the Board determines a Corporate Event would not be detrimental. The Board will provide Purchaser an explanation of the reasons for any determination that a Corporate Event would be detrimental. At least 75 days prior to a Corporate Event, the Company shall provide written notice to Purchaser that it intends to consummate a Corporate Event.
Section 5.4 Management Equity Investment. For so long as the Series D Preferred Stock remains outstanding, the Company will not, without the consent of a majority of the Preferred Shares outstanding, agree to amend or waive Section 22 of the Amended and Restated Advisory Agreement, dated as of January 19, 2018, by and among the Company and the Company’s external advisor (the “Advisor”), to reduce the obligation of the Advisor and its affiliates to acquire equity securities of the Company.
Section 5.5 Preemptive Rights. If the Company offers equity securities or securities convertible or exchangeable into equity securities and the Purchaser at that time holds Series D Preferred Stock, the Purchaser shall have the right, and the Company shall offer such holder the opportunity, to participate pro rata in such offering, as long as such participation could not reasonably result in a violation of applicable law or otherwise materially adversely impact the offering.
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Section 5.6 Underwriter Lock-Up. If the Purchaser owns more than 5% of the Common Stock outstanding as of the date of any underwritten public offering of securities of the Company, the Purchaser agrees to execute a customary lock-up agreement for the benefit of the underwriters upon the request of a managing underwriter, which will provide that the Purchaser will not directly or indirectly, offer, pledge, sell, including any sale pursuant to Rule 144 under the Securities Act, contact to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any securities of the same class as those to be distributed by the underwriters in such public offering that are owned by the Purchaser, and will not effect any sale or distribution of other securities convertible into or exchangeable or exercisable for securities of such class (in each case, other than as part of such underwritten public offering), whether now owned or hereafter acquired by the Purchaser or with respect to which the Purchaser has or hereafter acquires the power of disposition (collectively, the “Lock-Up Securities”), or exercise any right with respect to the registration of any Lock-Up Securities, or cause to be filed any registration statement in connection therewith, under the Securities Act, or enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap or transaction is to be settled by delivery of the securities, in cash or otherwise, during such period as the managing underwriter may require, not to exceed one hundred eighty (180) calendar days after the sale of such underwritten securities with respect to a public offering occurring within sixty (60) calendar days of the Liquidity Event or ninety (90) calendar days for underwritten public offerings thereafter (or such other period as may be requested by the managing underwriter to comply with regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in Rule 2711(f)(4) of the Financial Industry Regulatory Authority, or any successor provisions or amendments thereto); provided, however, that the foregoing restrictions shall not apply to any disposition or transfer to any affiliate of the Purchaser, provided that such affiliate agrees in writing to be bound by the terms of the lock-up agreement. Notwithstanding anything to the contrary contained herein, the restrictions contained herein shall only apply if all other stockholders who then own at least 5% of the capital stock of the Company, each director and executive officer of the Company, and any other person reasonably requested by the managing underwriter to execute a customary lock-up agreement, are also subject to the same restrictions contained herein.
Section 5.7 Ratings. For so long as the Series D Preferred Stock remains outstanding, the Company shall use commercially reasonable efforts to maintain a rating for the Series D Preferred Stock (or for the Series D Preferred Stock and one or more other classes of Company parity preferred stock that are rated as a single class) with a nationally recognized statistical ratings organization (“NRSRO”) and shall not intentionally take any action that at the time of such action would be reasonably likely to result in the Company not being able to maintain at least a “BB-” rating for such preferred stock with a NRSRO (the “Minimum Rating”), unless a majority of the independent directors of the Board determine that taking such action would be in the best interests of the Company, in which case the Company may take such action; provided that if the Company takes such action it shall increase any monthly dividend paid pursuant to Section 4(b) of the Articles Supplementary by $4.166 per Series D Preferred Share (the “Additional Dividend Amount”) for any full monthly dividend period during which the Minimum Rating is not maintained (and, in the event the Minimum Rating is not maintained with respect to a portion of a month, the pro rata amount of such Additional Dividend Amount).
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification by the Company. The Company agrees to indemnify the Purchaser and its Representatives (collectively, “Purchaser Related Parties”) from costs, losses, liabilities, damages or expenses of any kind or nature whatsoever, and hold each of them harmless against, any and all actions, suits, proceedings (including any investigations, litigation or inquiries), demands and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all reasonable costs, losses, liabilities, damages or expenses of any kind or nature whatsoever, including, without limitation, the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them as a result of, arising out of, or in any way related to the breach of any of the representations, warranties or covenants of the Company contained herein, provided that such claim for indemnification relating to a breach of a representation or warranty is made prior to the expiration of such representation or warranty; and provided further, that no Purchaser Related Party shall be entitled to recover special, consequential (including lost profits) or punitive damages under this Section 6.1. The maximum liability of the Company for any indemnification of the Purchaser and its respective Purchaser Related Parties pursuant to this Section 6.1 shall not exceed the aggregate Purchase Price paid by the Purchaser at the Closing.
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Section 6.2 Indemnification by the Purchaser. The Purchaser agrees to indemnify the Company and its respective Representatives (collectively, “Company Related Parties”) from, and hold each of them harmless against, any and all actions, suits, proceedings (including any investigations, litigation or inquiries), demands and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all reasonable costs, losses, liabilities, damages or expenses of any kind or nature whatsoever, including, without limitation, the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them as a result of, arising out of, or in any way related to the breach of any of the representations, warranties or covenants of the Purchaser contained herein, provided that such claim for indemnification relating to a breach of any representation or warranty is made prior to the expiration of such representation or warranty; and provided further, that no Company Related Party shall be entitled to recover special, consequential (including lost profits) or punitive damages. The maximum liability of the Purchaser for any indemnification of the Company and the Company Related Parties pursuant to this Section 6.2 shall not exceed the aggregate Purchase Price paid by the Purchaser at the Closing.
Section 6.3 Indemnification Procedure. Promptly after any Company Related Party or Purchaser Related Party (hereinafter, the “Indemnified Party”) has received notice of any indemnifiable claim hereunder, or the commencement of any action, suit or proceeding by a third person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement, the Indemnified Party shall give the indemnitor hereunder (the “Indemnifying Party”) written notice of such claim or the commencement of such action, suit or proceeding, but failure to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability it may have to such Indemnified Party hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure. Such notice shall state the nature and the basis of such claim to the extent then known. The Indemnifying Party shall have the right to defend and settle, at its own expense and by its own counsel who shall be reasonably acceptable to the Indemnified Party, any such matter as long as the Indemnifying Party pursues the same diligently and in good faith. If the Indemnifying Party undertakes to defend or settle, it shall promptly notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof and the settlement thereof. Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably requested by the Indemnifying Party and in the Indemnified Party’s possession or control. Such cooperation of the Indemnified Party shall be at the cost of the Indemnifying Party. After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the Indemnified Party in connection with any defense or settlement of such asserted liability; provided, however, that the Indemnified Party shall be entitled (i) at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof and (ii) if (A) the Indemnifying Party has failed to assume the defense or employ counsel reasonably acceptable to the Indemnified Party or (B) if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and counsel to the Indemnified Party shall have concluded that there may be reasonable defenses available to the Indemnified Party that are different from or in addition to those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying Party, then the Indemnified Party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party as incurred. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not settle any indemnified claim without the consent of the Indemnified Party (which consent shall not be unreasonably withheld, delayed or conditioned), unless the settlement thereof imposes no liability or obligation on, and includes a complete release from liability of, and does not include any admission of wrongdoing or malfeasance by, the Indemnified Party. The remedies provided for in this Article VI are cumulative and are not exclusive of any remedies that may be available to a party at law or in equity or otherwise.
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Interpretation and Severability. Article, Section, Schedule, and Exhibit references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts and agreements are references to such instruments, documents, contracts and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The word “including” shall mean “including but not limited to.” Whenever any party has an obligation under this Agreement, the expense of complying with that obligation shall be an expense of such party unless otherwise specified. Whenever any determination, consent or approval is to be made or given by the Purchaser, such action shall be in the Purchaser’s sole discretion unless otherwise specified in this Agreement. If any provision in this Agreement is held to be illegal, invalid, not binding or unenforceable, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid, not binding or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions shall remain in full force and effect. This Agreement has been reviewed and negotiated by sophisticated parties with access to legal counsel and shall not be construed against the drafter.
Section 7.2 Survival of Provisions. Subject to Section 7.1, and except as otherwise provided herein, the representations and warranties contained in this Agreement shall survive the execution and delivery of this Agreement and the Closing for a period of twelve (12) months. The respective covenants and agreements of the Company and Purchaser contained in this Agreement made by or on behalf of the Company or Purchaser pursuant to this Agreement shall survive the execution of this Agreement and shall remain in full force and effect, regardless of any termination of this Agreement. All indemnification obligations of the Company and the Purchaser pursuant to this Agreement and the provisions of Article VI shall remain operative and in full force and effect unless such obligations are expressly terminated in writing by the parties referencing the particular Article or Section, regardless of any purported general termination of this Agreement.
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Section 7.3 No Waiver; Modifications in Writing.
(a) Delay. No failure or delay on the part of any party in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a party at law or in equity or otherwise.
(b) Amendments and Waivers. Except as otherwise provided herein, including Section 7.13, no amendment, waiver, consent, modification or termination of any provision of this Agreement shall be effective unless signed by each of the parties hereto or thereto affected by such amendment, waiver, consent, modification or termination. Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Company from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances.
Section 7.4 Binding Effect; Assignment.
(a) Binding Effect. This Agreement shall be binding upon the Company, the Purchaser, and their respective successors and permitted assigns. Except as expressly provided in this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and permitted assigns.
(b) Assignment of Rights. No portion of the rights and obligations of the Purchaser under this Agreement may be transferred by the Purchaser without the written consent of the Company; provided, however, that the Purchaser may transfer the Series D Preferred Stock to any affiliate of Purchaser, and in connection therewith, may transfer its rights and obligations hereunder.
Section 7.5 Confidentiality. Notwithstanding anything herein to the contrary, to the extent that the Purchaser has executed or is otherwise bound by a confidentiality agreement in favor of the Company, the Purchaser shall continue to be bound by such confidentiality agreement.
Section 7.6 Communications. All notices and demands provided for hereunder shall be in writing and shall be given by registered or certified mail, return receipt requested, telecopy, air courier guaranteeing overnight delivery or personal delivery to the following addresses:
(a) If to the Purchaser:
To the respective address listed on Schedule C hereof
(b) If to Benefit Street Partners Realty Trust, Inc.:
9 West 57th Street, Suite 4920
New York, New York 10019
Attention: Secretary
Phone: (212) 588-6770
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With a copy to:
Hogan Lovells US LLP
555 Thirteenth Street, NW
Washington, DC 20004
Attention: Michael E. McTiernan
Facsimile: (202) 637-5684
Email: Michael.McTiernan@hoganlovells.com
or to such other address as the Company or the Purchaser may designate in writing. All notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when notice is sent to the sender that the recipient has read the message, if sent by electronic mail; upon actual receipt if sent by certified mail, return receipt requested, or regular mail, if mailed; when receipt acknowledged, if sent via facsimile; and upon actual receipt when delivered to an air courier guaranteeing overnight delivery.
Section 7.7 Removal of Legend. In connection with a sale of the Purchased Shares or the Exchange Shares (which for purposes of this section includes the underlying Common Stock) by the Purchaser in reliance on Rule 144, the applicable Purchaser or its broker shall deliver to the transfer agent and the Company a customary broker representation letter providing to the transfer agent and the Company any information the Company deems necessary to determine that the sale of the Purchased Shares or the Exchange Shares is made in compliance with Rule 144, including, as may be appropriate, a certification that the Purchaser is not an Affiliate of the Company and regarding the length of time the Purchased Shares or the Exchange Shares have been held. Upon receipt of such representation letter, the Company shall promptly direct its transfer agent to remove the notation of a restrictive legend in the Purchaser’s book-entry account maintained by the transfer agent, including the legend referred to in Section 4.9, and the Company shall bear all costs associated therewith. After the Purchaser or its permitted assigns have held the Purchased Shares or the Exchange Shares for six months, if the book-entry account of such Purchased Shares or Exchange Shares still bears the notation of the restrictive legend referred to in Section 4.9, the Company agrees, upon request of the Purchaser or permitted assignee, to take all steps necessary to promptly effect the removal of the legend described in Section 4.9 from the Purchased Shares or the Exchange Shares, and the Company shall bear all costs associated therewith, regardless of whether the request is made in connection with a sale or otherwise, so long as the Purchaser or its permitted assigns provide to the Company any information the Company deems reasonably necessary to determine that the legend is no longer required under the Securities Act or applicable state laws, including (if there is no such registration statement) a certification that the holder is not an Affiliate of the Company (and a covenant to inform the Company if it should thereafter become an Affiliate and to consent to the notation of an appropriate restriction) and regarding the length of time the Purchased Shares or the Exchange Shares have been held.
Section 7.8 Entire Agreement. This Agreement and the other agreements and documents referred to herein are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the rights granted by the Company or any of its Affiliates or the Purchaser or any of its Affiliates set forth herein or therein. This Agreement and the other agreements and documents referred to herein supersede all prior agreements and understandings between the parties with respect to such subject matter.
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Section 7.9 Governing Law. This Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement), will be construed in accordance with and governed by the laws of the State of New York without regard to principles of conflicts of laws. Any action against any party relating to the foregoing shall be brought in any federal or state court of competent jurisdiction located within the State of New York, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of New York over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection that they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute.
Section 7.10 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.
Section 7.11 Termination.
(a) Notwithstanding anything herein to the contrary, this Agreement shall automatically terminate at any time at or prior to the Closing if a statute, rule, order, decree or regulation shall have been enacted or promulgated, or if any action shall have been taken by any Governmental Entity of competent jurisdiction that permanently restrains, permanently precludes, permanently enjoins or otherwise permanently prohibits the consummation of the transactions contemplated by this Agreement or makes the transactions contemplated by this Agreement illegal.
(b) In the event of the termination of this Agreement as provided in this Section 7.11, (1) this Agreement shall forthwith become null and void and (2) there shall be no liability on the part of any party hereto, except as set forth in Article VI of this Agreement and except with respect to the requirement to comply with any confidentiality agreement in favor of the Company; provided that nothing herein shall relieve any party from any liability or obligation with respect to any willful breach of this Agreement.
Section 7.12 Recapitalization, Exchanges, Etc. Affecting the Series D Preferred Stock. The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all equity interests of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution of, the Series D Preferred Stock, and shall be appropriately adjusted for combinations, recapitalizations and the like occurring after the date of this Agreement and prior to the Closing.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.
BENEFIT STREET PARTNERS REALTY TRUST, INC. | |||
| By: | /s/ Jerome S. Baglien | ||
|
Name: |
Jerome S. Baglien | |
|
Title: |
Chief Financial Officer and Treasurer | |
| SECURITY BENEFIT LIFE INSURANCE COMPANY | ||
| By: | /s/ Cole Charnas | |
| Name: Cole Charnas | ||
| Title: Assistant Vice President | ||
Schedule A –
| Purchased Shares |
| 3,000 shares |
| Purchase Price |
| $13,961,330.19
(representing $15 million aggregate Liquidation Preference of Purchased Shares less $1,038,669.81 accrued and unpaid dividends on Surrendered Shares) |
| Surrendered Shares |
| 14,949 shares of Series A Preferred Stock |
| Exchange Shares |
| 14,949 shares of Series D Preferred Stock |