MVP REIT II, Inc. (CVE:MVP) Files An 8-K Material Modification to Rights of Security Holders
Item 3.03. Material Modifications to Rights of Security Holders.
Articles Supplementary – Series 1 Convertible Redeemable
Preferred Stock
Preferred Stock
On March 29, 2017, MVP REIT II, Inc. (the “Company,” “us,”
“we,” or “our”) filed with the State Department of
Assessments and Taxation of Maryland Articles Supplementary (the
“Articles Supplementary”) to the charter of the Company (the
“Charter”) classifying and designating 97,000 shares of its
authorized capital stock as shares (the “Shares”) of Series 1
Convertible Redeemable Preferred Stock, par value $0.0001 per
share (the “Series 1 Convertible Redeemable Preferred Stock”).
“we,” or “our”) filed with the State Department of
Assessments and Taxation of Maryland Articles Supplementary (the
“Articles Supplementary”) to the charter of the Company (the
“Charter”) classifying and designating 97,000 shares of its
authorized capital stock as shares (the “Shares”) of Series 1
Convertible Redeemable Preferred Stock, par value $0.0001 per
share (the “Series 1 Convertible Redeemable Preferred Stock”).
The following is a summary of the terms of the Series 1
Convertible Redeemable Preferred Stock as set forth in the
Articles Supplementary. This summary is qualified in its entirety
by reference to the Articles Supplementary, which are filed as
Exhibit 3.1 to this Form 8-K and hereby incorporated by reference
into this Item 3.03.
Convertible Redeemable Preferred Stock as set forth in the
Articles Supplementary. This summary is qualified in its entirety
by reference to the Articles Supplementary, which are filed as
Exhibit 3.1 to this Form 8-K and hereby incorporated by reference
into this Item 3.03.
Ranking. The Shares rank senior to our common stock and
pari passu with our Series A Convertible Redeemable Preferred
Stock with respect to the payment of dividends and rights upon
liquidation, dissolution or winding up. Our board of directors
has the authority to issue additional classes or series of
preferred stock that could be junior, pari passu, or senior in
priority to the Series 1 Convertible Redeemable Preferred Stock.
pari passu with our Series A Convertible Redeemable Preferred
Stock with respect to the payment of dividends and rights upon
liquidation, dissolution or winding up. Our board of directors
has the authority to issue additional classes or series of
preferred stock that could be junior, pari passu, or senior in
priority to the Series 1 Convertible Redeemable Preferred Stock.
Stated Value. Each Share will have an initial “Stated
Value” of $1,000, subject to appropriate adjustment in relation
to certain events, such as recapitalizations, stock dividends,
stock splits, stock combinations, reclassifications or similar
events affecting the Shares, as set forth in the Articles
Supplementary.
Value” of $1,000, subject to appropriate adjustment in relation
to certain events, such as recapitalizations, stock dividends,
stock splits, stock combinations, reclassifications or similar
events affecting the Shares, as set forth in the Articles
Supplementary.
Listing Event: Under the Articles Supplementary, a
“Listing Event,” with respect to our common stock, means
either: (i) the listing of our common stock on a national
securities exchange or (ii) a merger, sale of all or
substantially all of our assets or another transaction, in each
case, approved by our board of directors in which our common
stockholders will receive common stock that is listed on a
national securities exchange, or options or warrants to acquire
common stock that is listed on a national securities exchange, in
exchange for their existing shares of common stock, options and
warrants of the Company, as applicable.
“Listing Event,” with respect to our common stock, means
either: (i) the listing of our common stock on a national
securities exchange or (ii) a merger, sale of all or
substantially all of our assets or another transaction, in each
case, approved by our board of directors in which our common
stockholders will receive common stock that is listed on a
national securities exchange, or options or warrants to acquire
common stock that is listed on a national securities exchange, in
exchange for their existing shares of common stock, options and
warrants of the Company, as applicable.
Dividends. Subject to the rights of holders of any class
or series of Senior Stock (as defined in the Articles
Supplementary) holders of the Shares are entitled to receive,
when and as authorized by our board of directors and declared by
us out of legally available funds, cumulative, cash dividends on
each Share at an annual rate of 5.50% of the Stated Value pari
passu with the dividend preference of the Series A Convertible
Redeemable Preferred Stock and in preference to any payment of
any dividend on our common stock; provided, however, that
Qualified Purchasers (as defined below) are entitled to receive,
when and as authorized by our board of directors and declared by
us out of legally available funds, cumulative, cash dividends on
each Share held by such Qualified Purchaser at an annual rate of
5.75% of the Stated Value (instead of the annual rate of 5.50%
for all other holders of the Shares) until April 7, 2018, at
which time, the annual dividend rate will be reduced to 5.50% of
Stated Value; provided further, however, that if a Listing Event
has not occurred by April 7, 2018, the annual dividend rate on
all Shares (without regard to Qualified Purchaser status) will be
increased to 7.00% of the Stated Value until the occurrence of a
Listing Event, at which time, the annual dividend rate will be
reduced to 5.50% of the Stated Value.
or series of Senior Stock (as defined in the Articles
Supplementary) holders of the Shares are entitled to receive,
when and as authorized by our board of directors and declared by
us out of legally available funds, cumulative, cash dividends on
each Share at an annual rate of 5.50% of the Stated Value pari
passu with the dividend preference of the Series A Convertible
Redeemable Preferred Stock and in preference to any payment of
any dividend on our common stock; provided, however, that
Qualified Purchasers (as defined below) are entitled to receive,
when and as authorized by our board of directors and declared by
us out of legally available funds, cumulative, cash dividends on
each Share held by such Qualified Purchaser at an annual rate of
5.75% of the Stated Value (instead of the annual rate of 5.50%
for all other holders of the Shares) until April 7, 2018, at
which time, the annual dividend rate will be reduced to 5.50% of
Stated Value; provided further, however, that if a Listing Event
has not occurred by April 7, 2018, the annual dividend rate on
all Shares (without regard to Qualified Purchaser status) will be
increased to 7.00% of the Stated Value until the occurrence of a
Listing Event, at which time, the annual dividend rate will be
reduced to 5.50% of the Stated Value.
“Qualified Purchaser” means any person purchasing $1,000,000 or
more in Shares in a single closing of the contemplated private
placement by the Company of the Shares. Purchases or other
acquisitions of Shares in separate closings will not be
aggregated to determine Qualified Purchaser status, and purchases
or other acquisitions of Shares outside of the contemplated
private placement will not be considered in determining Qualified
Purchaser status.
more in Shares in a single closing of the contemplated private
placement by the Company of the Shares. Purchases or other
acquisitions of Shares in separate closings will not be
aggregated to determine Qualified Purchaser status, and purchases
or other acquisitions of Shares outside of the contemplated
private placement will not be considered in determining Qualified
Purchaser status.
If and when issued, we expect to pay dividends on the Shares
monthly, unless our results of operations, our general financial
condition, general economic conditions, applicable provisions of
Maryland law or other factors make it imprudent to do so. We
expect that our board of directors will authorize, and we will
declare, dividends based on a record date on the close of
business on the 24th day of each month, and we expect to pay
dividends on the 12th day of the following month (or the next
business day if the 12th is not a business day), monthly in
arrears. The dividends on each Share shall be cumulative from the
first date on which such Shares is issued. Any dividend payable
on the Shares for any partial dividend period shall be computed
ratably on the basis of a 360-day year consisting of twelve
30-day months.
monthly, unless our results of operations, our general financial
condition, general economic conditions, applicable provisions of
Maryland law or other factors make it imprudent to do so. We
expect that our board of directors will authorize, and we will
declare, dividends based on a record date on the close of
business on the 24th day of each month, and we expect to pay
dividends on the 12th day of the following month (or the next
business day if the 12th is not a business day), monthly in
arrears. The dividends on each Share shall be cumulative from the
first date on which such Shares is issued. Any dividend payable
on the Shares for any partial dividend period shall be computed
ratably on the basis of a 360-day year consisting of twelve
30-day months.
Conversion. Subject to the Company’s redemption rights as
described below, each Share will be convertible into shares of
our common stock, at the election of the holder thereof by
written notice to the Company (each, a “Conversion Notice”)
containing the information required by the Articles
Supplementary, at any time beginning upon the earlier of (i) 45
days after the occurrence of a Listing Event or (ii) April 7,
2019 (whether or not a Listing Event has occurred). Each Share
will convert into a number of shares of our common stock
determined by dividing (i) the sum of (A) 100% of the Stated
Value, initially $1,000, plus (B) any accrued but unpaid
dividends to, but not including, the date of conversion, by (ii)
the conversion price for each
described below, each Share will be convertible into shares of
our common stock, at the election of the holder thereof by
written notice to the Company (each, a “Conversion Notice”)
containing the information required by the Articles
Supplementary, at any time beginning upon the earlier of (i) 45
days after the occurrence of a Listing Event or (ii) April 7,
2019 (whether or not a Listing Event has occurred). Each Share
will convert into a number of shares of our common stock
determined by dividing (i) the sum of (A) 100% of the Stated
Value, initially $1,000, plus (B) any accrued but unpaid
dividends to, but not including, the date of conversion, by (ii)
the conversion price for each
share of our common stock (the “Conversion Price”) determined
as follows:
as follows:
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Provided there has been a Listing Event, if a Conversion
Notice with respect to any Share is received prior to December 1, 2017, the Conversion Price for such Share will be equal to 110% of the volume weighted average price per share of the common stock of the Company (or its successor) for the 20 trading days prior to the delivery date of the Conversion Notice. |
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Provided there has been a Listing Event, if a Conversion
Notice with respect to any Share is received on or after December 1, 2017, the Conversion Price for such Share will be equal to the volume weighted average price per share of the common stock of the Company (or its successor) for the 20 trading days prior to the delivery date of the Conversion Notice. |
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If a Conversion Notice with respect to any Share is
received on or after April 7, 2019, and at the time of receipt of such Conversion Notice, a Listing Event has not occurred, the Conversion Price for such Share will be equal to 100% of our net asset value per share, or NAV per share, if then established, and until we establish a NAV per share, the Conversion Price will be equal to $25.00, or the initial offering price per share of our common stock in our initial public offering. |
Notwithstanding anything in the Articles Supplementary
designating the Shares to the contrary and except as otherwise
required by law, the persons who are the holders of record of
Shares at the close of business on a dividend record date will be
entitled to receive the dividend payable on the corresponding
dividend payment date notwithstanding the conversion of those
Shares after such dividend record date and on or prior to such
dividend payment date and, in such case, the full amount of such
dividend will be paid on such dividend payment date to the
persons who were the holders of record at the close of business
on such dividend record date.
designating the Shares to the contrary and except as otherwise
required by law, the persons who are the holders of record of
Shares at the close of business on a dividend record date will be
entitled to receive the dividend payable on the corresponding
dividend payment date notwithstanding the conversion of those
Shares after such dividend record date and on or prior to such
dividend payment date and, in such case, the full amount of such
dividend will be paid on such dividend payment date to the
persons who were the holders of record at the close of business
on such dividend record date.
The conversion of the Shares subject to a Conversion Notice into
shares of our common stock will occur at the end of the
20th trading day after the Company’s receipt of such
Conversion Notice (the “Conversion Date”). Holders must state
in the Conversion Notice (i) the number of Shares to be converted
and (ii) that the Shares are to be converted to the applicable
terms of the Shares.
shares of our common stock will occur at the end of the
20th trading day after the Company’s receipt of such
Conversion Notice (the “Conversion Date”). Holders must state
in the Conversion Notice (i) the number of Shares to be converted
and (ii) that the Shares are to be converted to the applicable
terms of the Shares.
Notwithstanding the foregoing, upon a holder providing a
Conversion Notice, the Company will have the right (but not the
obligation) to redeem, in whole or in part, the Shares subject to
such Conversion Notice at a redemption price, payable in cash,
determined as follows (the “Redemption Price”):
Conversion Notice, the Company will have the right (but not the
obligation) to redeem, in whole or in part, the Shares subject to
such Conversion Notice at a redemption price, payable in cash,
determined as follows (the “Redemption Price”):
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If a Conversion Notice with respect to any Share is
received prior to April 7, 2018, the Redemption Price for such Share will be equal to 90% of the Stated Value of the Shares, plus any accrued but unpaid dividends thereon to, but not including, the redemption date. |
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If a Conversion Notice with respect to any Share is
received on or after April 7, 2018, the Redemption Price for such Share will be equal to 100% of the Stated Value of the Shares, plus any accrued but unpaid dividends thereon to, but not including, the redemption date. |
The Company in its discretion may elect to redeem, in whole or in
part, such Shares by delivering written notice to the holder
thereof (each, a “Redemption Notice”) no later than the
10th trading day prior to the close of trading on the
Conversion Date. If a Redemption Notice is not delivered by the
Company prior to such time, the Shares subject to the Conversion
Notice shall thereafter convert into shares of our common stock,
effective as of the close of trading on the Conversion Date.
Holders of the Shares will not have any right to convert any such
Shares that the Company has elected to redeem. The Company shall
pay the Redemption Price, without interest, to holder of the
redeemed Shares promptly following the delivery of a Redemption
Notice.
part, such Shares by delivering written notice to the holder
thereof (each, a “Redemption Notice”) no later than the
10th trading day prior to the close of trading on the
Conversion Date. If a Redemption Notice is not delivered by the
Company prior to such time, the Shares subject to the Conversion
Notice shall thereafter convert into shares of our common stock,
effective as of the close of trading on the Conversion Date.
Holders of the Shares will not have any right to convert any such
Shares that the Company has elected to redeem. The Company shall
pay the Redemption Price, without interest, to holder of the
redeemed Shares promptly following the delivery of a Redemption
Notice.
Each Redemption Notice shall include (i) the redemption date
(which may not be after the Conversion Date for redemption made
in connection with a Conversion Notice), (ii) the applicable
Redemption Price, including a statement as to whether or not
accumulated, accrued and unpaid dividends shall be payable as
part of the redemption price, or payable on the next dividend
payment date to the record holder at the close of business on the
relevant dividend record date as described above; (iii) that the
Shares are being redeemed to the terms of such Shares; and (iv)
that dividends on the Shares to be redeemed will cease to accrue
on such redemption date.
(which may not be after the Conversion Date for redemption made
in connection with a Conversion Notice), (ii) the applicable
Redemption Price, including a statement as to whether or not
accumulated, accrued and unpaid dividends shall be payable as
part of the redemption price, or payable on the next dividend
payment date to the record holder at the close of business on the
relevant dividend record date as described above; (iii) that the
Shares are being redeemed to the terms of such Shares; and (iv)
that dividends on the Shares to be redeemed will cease to accrue
on such redemption date.
Optional Redemption by the Company. At any time, from time
to time, on and after the later of (i) the 20th trading day after
the date of a Listing Event, if any, or (ii) April 7, 2018, the
Company (or its successor) will have the right (but not the
obligation) to redeem, in whole or in part, the Shares at the
Redemption Price equal to 100% of the Stated Value, initially
$1,000 per share,
to time, on and after the later of (i) the 20th trading day after
the date of a Listing Event, if any, or (ii) April 7, 2018, the
Company (or its successor) will have the right (but not the
obligation) to redeem, in whole or in part, the Shares at the
Redemption Price equal to 100% of the Stated Value, initially
$1,000 per share,
plus any accrued but unpaid dividends if any, to and including
the date fixed for redemption. In case of any redemption of less
than all of the Shares by the Company, the Shares to be redeemed
will be selected either pro rata or in such other manner as the
board of directors may determine. If the Company (or its
successor) chooses to redeem any Shares, the Company (or its
successor) has the right, in its sole discretion, to pay the
Redemption Price in cash or in equal value of common stock of the
Company (or its successor), based on the volume weighted average
price per share of the common stock of the Company (or its
successor) for the 20 trading days prior to the redemption, in
exchange for the Shares.
the date fixed for redemption. In case of any redemption of less
than all of the Shares by the Company, the Shares to be redeemed
will be selected either pro rata or in such other manner as the
board of directors may determine. If the Company (or its
successor) chooses to redeem any Shares, the Company (or its
successor) has the right, in its sole discretion, to pay the
Redemption Price in cash or in equal value of common stock of the
Company (or its successor), based on the volume weighted average
price per share of the common stock of the Company (or its
successor) for the 20 trading days prior to the redemption, in
exchange for the Shares.
As disclosed in the section entitled “Conversion” above, the
Company (or its successor) also will have the right (but not the
obligation) to redeem all or any portion of the Shares subject to
a Conversion Notice for a cash payment to the holder thereof
equal to the applicable Redemption Price set forth in the section
entitled “Conversion” above, by delivering a Redemption Notice
to the holder of such Shares on or prior to the 10th
trading day prior to the close of trading on the Conversion Date
for such Shares..
Company (or its successor) also will have the right (but not the
obligation) to redeem all or any portion of the Shares subject to
a Conversion Notice for a cash payment to the holder thereof
equal to the applicable Redemption Price set forth in the section
entitled “Conversion” above, by delivering a Redemption Notice
to the holder of such Shares on or prior to the 10th
trading day prior to the close of trading on the Conversion Date
for such Shares..
Each Redemption Notice shall include (i) the redemption date
(which may not be after the Conversion Date for redemption made
in connection with a Conversion Notice), (ii) the applicable
Redemption Price, including a statement as to whether or not
accumulated, accrued and unpaid dividends shall be payable as
part of the redemption price, or payable on the next dividend
payment date to the record holder at the close of business on the
relevant dividend record date as described above; (iii) that the
Shares are being redeemed to the terms of such Shares; and (iv)
that dividends on the Shares to be redeemed will cease to accrue
on such redemption date.
(which may not be after the Conversion Date for redemption made
in connection with a Conversion Notice), (ii) the applicable
Redemption Price, including a statement as to whether or not
accumulated, accrued and unpaid dividends shall be payable as
part of the redemption price, or payable on the next dividend
payment date to the record holder at the close of business on the
relevant dividend record date as described above; (iii) that the
Shares are being redeemed to the terms of such Shares; and (iv)
that dividends on the Shares to be redeemed will cease to accrue
on such redemption date.
Notwithstanding anything in the Articles Supplementary
designating the Shares to the contrary and except as otherwise
required by law, the persons who are the holders of record of
Shares at the close of business on a dividend record date will be
entitled to receive the dividend payable on the corresponding
dividend payment date notwithstanding the redemption of those
Shares after such dividend record date and on or prior to such
dividend payment date and, in such case, the full amount of such
dividend will be paid on such dividend payment date to the
persons who were the holders of record at the close of business
on such dividend record date.
designating the Shares to the contrary and except as otherwise
required by law, the persons who are the holders of record of
Shares at the close of business on a dividend record date will be
entitled to receive the dividend payable on the corresponding
dividend payment date notwithstanding the redemption of those
Shares after such dividend record date and on or prior to such
dividend payment date and, in such case, the full amount of such
dividend will be paid on such dividend payment date to the
persons who were the holders of record at the close of business
on such dividend record date.
Our obligation to redeem any of the Shares, under any
circumstances, is limited to the extent that we do not have
sufficient funds available to fund any such redemption or we are
restricted by applicable law from making such redemption.
circumstances, is limited to the extent that we do not have
sufficient funds available to fund any such redemption or we are
restricted by applicable law from making such redemption.
Liquidation Preference. In the event of any voluntary or
involuntary liquidation or winding up of the Company, the holders
of Shares will be entitled to receive, in pari passu with the
liquidation preferences of the holders of our Series A
Convertible Redeemable Preferred Stock and in preference to the
holders of shares of our common stock, the amount per share equal
to 100% of the Stated Value, initially $1,000.00 per share, plus
any accumulated, accrued and unpaid dividends (whether or not
declared), if any, to and including the date of payment. In the
event of any shortfall, each series of our existing preferred
stock shall receive a pro rata portion of its respective
liquidation preference. After the full liquidation preferences on
all outstanding shares of Series 1 Convertible Redeemable
Preferred Stock and Series A Convertible Redeemable Preferred
Stock have been paid, any remaining funds and assets of the
Company legally available for distribution to shareholders will
be distributed pro rata among the holders of our common stock. A
merger, acquisition or sale of all or substantially all of the
assets of the Company or statutory share exchange will not be
deemed to be a liquidation for purposes of the liquidation
preference. A Listing Event will not be deemed a liquidation for
purposes of the liquidation preference.
involuntary liquidation or winding up of the Company, the holders
of Shares will be entitled to receive, in pari passu with the
liquidation preferences of the holders of our Series A
Convertible Redeemable Preferred Stock and in preference to the
holders of shares of our common stock, the amount per share equal
to 100% of the Stated Value, initially $1,000.00 per share, plus
any accumulated, accrued and unpaid dividends (whether or not
declared), if any, to and including the date of payment. In the
event of any shortfall, each series of our existing preferred
stock shall receive a pro rata portion of its respective
liquidation preference. After the full liquidation preferences on
all outstanding shares of Series 1 Convertible Redeemable
Preferred Stock and Series A Convertible Redeemable Preferred
Stock have been paid, any remaining funds and assets of the
Company legally available for distribution to shareholders will
be distributed pro rata among the holders of our common stock. A
merger, acquisition or sale of all or substantially all of the
assets of the Company or statutory share exchange will not be
deemed to be a liquidation for purposes of the liquidation
preference. A Listing Event will not be deemed a liquidation for
purposes of the liquidation preference.
No Voting Rights. Holders of the Shares will not have any
voting rights.
voting rights.
Transfer Restriction. None of the Shares may be sold or
otherwise transferred unless the holder thereof delivers
evidence, to the satisfaction of the Company, that such sale or
other transfer of the Shares is made to an accredited investor
solely in compliance with all federal and state securities
laws. Any sale or transfer of the Shares made in violation of
any federal or state securities laws shall be void ab initio.
otherwise transferred unless the holder thereof delivers
evidence, to the satisfaction of the Company, that such sale or
other transfer of the Shares is made to an accredited investor
solely in compliance with all federal and state securities
laws. Any sale or transfer of the Shares made in violation of
any federal or state securities laws shall be void ab initio.
In addition, in order to ensure that we remain qualified as a
REIT for U.S. federal income tax purposes, among other
purposes, Article VI of the Charter provides that unless an
exemption is granted prospectively or retroactively by our
board of directors, no person (as defined to include entities)
may own more than 9.8% in value of the aggregate of our
outstanding shares of capital stock or more than 9.8%, in value
or in number of shares, whichever is more restrictive, of the
aggregate of our outstanding shares of common stock. The Shares
will also be subject to all of the other restrictions on
ownership and transfer contained in Article VI of the Charter.
These provisions may restrict the ability of a holder of Shares
to convert such stock into our common stock. Our board of
directors may, in its sole discretion, prospectively or
retroactively exempt a person from the 9.8% ownership limits
under certain circumstances.
REIT for U.S. federal income tax purposes, among other
purposes, Article VI of the Charter provides that unless an
exemption is granted prospectively or retroactively by our
board of directors, no person (as defined to include entities)
may own more than 9.8% in value of the aggregate of our
outstanding shares of capital stock or more than 9.8%, in value
or in number of shares, whichever is more restrictive, of the
aggregate of our outstanding shares of common stock. The Shares
will also be subject to all of the other restrictions on
ownership and transfer contained in Article VI of the Charter.
These provisions may restrict the ability of a holder of Shares
to convert such stock into our common stock. Our board of
directors may, in its sole discretion, prospectively or
retroactively exempt a person from the 9.8% ownership limits
under certain circumstances.
This Form 8-K is neither an offer to sell nor a solicitation of
an offer to buy any of the Shares. Any offer of the Shares will
be made only by means of a confidential private placement
memorandum solely to accredited investors to an exemption from
registration under the Securities Act of 1933, as amended.
an offer to buy any of the Shares. Any offer of the Shares will
be made only by means of a confidential private placement
memorandum solely to accredited investors to an exemption from
registration under the Securities Act of 1933, as amended.
Item 5.03. Amendments to Articles of Incorporation or Bylaws;
Change in Fiscal Year.
Change in Fiscal Year.
The information about the Articles Supplementary set forth
under Item 3.03 of this Current Report on Form 8-K is hereby
incorporated by reference into this Item 5.03.
under Item 3.03 of this Current Report on Form 8-K is hereby
incorporated by reference into this Item 5.03.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
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No.
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Exhibit
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3.1
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Articles Supplementary designating the Series 1 Convertible
Redeemable Preferred Stock of MVP REIT II, Inc. |
MVP REIT II, Inc. (CVE:MVP) Recent Trading Information
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