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Share Name | Share Symbol | Market | Type |
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Jernigan Capital Inc | NYSE:JCAP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 17.22 | 0 | 01:00:00 |
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Jernigan Capital, Inc. Common Shares, $0.01 par value per share (“Common Shares”)
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Jernigan Capital, Inc. 7.00% Series A preferred stock, $0.01 par value per share (“Series A Preferred Stock”)
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Jernigan Capital, Inc. 7.00% Series B cumulative redeemable perpetual preferred stock, $0.01 par value per share (“Series B Preferred Stock”)
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(2)
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Aggregate number of securities to which transaction applies:
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23,263,130 Common Shares (including 150,836 Common Shares that are unvested outstanding restricted share awards);
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62,486 Common Shares that may be issued in exchange of Company performance share awards (assuming maximum performance);
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123,603 Common Shares reserved and available for issuance under various equity plans of the Company;
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2,386,935 Operating Company Units (as defined below) held by persons other than the Company or any of its subsidiaries;
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139,875 shares of Series A Preferred Stock that will each be cancelled in exchange for the right to receive one share of common stock of the Parent; and
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1,571,734 shares of Series B Preferred Stock that will be cancelled in exchange for the right to receive a liquidation preference consisting of $25.00 per share plus accrued and unpaid dividends.
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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The proposed maximum aggregate value of the transaction for purposes of calculating the filing fee is $626,133,814.20.
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The proposed maximum aggregate value of the transaction was calculated by adding (i) the product resulting from multiplying (a) the sum of 25,836,154 Common Shares (including shares that are unvested outstanding restricted share awards, shares issuable upon the exchange of unvested Company performance share awards (assuming maximum performance), shares reserved and available for issuance under various equity plans and shares issuable upon conversion of Operating Company Units held by persons other than the Company or any of its subsidiaries), that are exchangeable for cash in the mergers, by (b) the merger consideration of $17.30 to be paid with respect to each Common Share outstanding immediately prior to the mergers; plus (ii) the product resulting from multiplying (a) 139,875 shares of Series A Preferred Stock that will be cancelled in exchange for the right to receive shares of Parent common stock and (b) the $1,000.00 per share liquidation preference with respect to the Series A Preferred Stock; plus (iii) the product resulting from multiplying (a) 1,571,734 shares of Series B Preferred Stock that will be cancelled in exchange for the right to receive a liquidation preference and (b) the Series B preferred merger consideration of $25.00 to be paid with respect to each share of Series B Preferred Stock outstanding immediately prior to the mergers.
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The filing fee equals the product of 0.0001298 multiplied by the proposed maximum aggregate value of the transaction.
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(4)
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Proposed maximum aggregate value of transaction: $626,133,814.20
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(5)
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Total fee paid: $81,272.17
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Sincerely,
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John A. Good
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Chairman and Chief Executive Officer
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1.
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To consider and vote on a proposal to approve the merger of NexPoint RE Merger, Inc. with and into Jernigan Capital, Inc., and the other transactions contemplated by the Agreement and Plan of Merger, dated as of August 3, 2020 and as it may be amended from time to time, among Jernigan Capital, Inc., Jernigan Capital Operating Company, LLC, NexPoint RE Merger, Inc. and NexPoint RE Merger OP, LLC;
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To consider and vote on a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger; and
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To consider and vote on a proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement.
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BY ORDER OF THE BOARD OF DIRECTORS
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Kelly P. Luttrell
Senior Vice President, Chief Financial Officer, Treasurer and Corporate Secretary
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Annexes
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approved the merger agreement;
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declared the merger agreement and the transactions contemplated by the merger agreement, including the merger, to be advisable and in the best interests of the Company and our stockholders; and
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recommended that you vote “FOR” the proposal to approve the merger and the other transactions contemplated by the merger agreement, “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger, and “FOR” the proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement.
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Parent obtains alternative equity or debt commitment letters that are, in each case, acceptable to us in our reasonable discretion, including with respect to the source of the financing and the conditionality in the relevant letter;
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Parent’s entry into one or more credit agreements (excluding a commitment letter) that have been executed and delivered pursuant to an approved debt commitment letter with a financing source reasonably acceptable to us, which agreements provide funding that is subject only to the occurrence of the closing of the mergers and other customary “SunGard” or “certain funds” conditionality provisions reasonably acceptable to us; or
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We obtain an amendment, amendment and restatement, waiver or consent under our existing revolving credit facility such that this facility remains in place and is available upon the closing of the mergers and related transactions.
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the merger and the other transactions contemplated by the merger agreement must be approved by the affirmative vote of the holders of our common shares entitled to cast not less than a majority of all the votes entitled to be cast on the matter;
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no governmental entity of competent jurisdiction has enacted, issued, promulgated, enforced or entered any law or order (whether temporary, preliminary or permanent) which is then in effect and has the effect of making the mergers illegal or otherwise restricting, preventing or prohibiting the consummation of the mergers;
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our and the Operating Company’s, and Parent’s and Parent OP’s respective representations and warranties in the merger agreement must be true and correct in the manner described under the section entitled “The Merger Agreement—Conditions to the Mergers”;
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we and the Operating Company, and Parent and Parent OP must have performed and complied, in all material respects, with our and their respective obligations, agreements and covenants
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Parent must have received the written tax opinion of our counsel, King & Spalding LLP, which we refer to as King & Spalding, or such other law firm as may be reasonably acceptable to Parent, dated as of the closing date, concluding for all taxable periods commencing with our taxable year ended December 31, 2015 we have been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code; and
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from the date of the merger agreement through the closing date, there must not have occurred a change, event, state of facts or development which has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on us.
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any governmental entity of competent authority has issued an order, decree or ruling or taken any other action in each case permanently restraining, enjoining or otherwise prohibiting the mergers substantially on the terms contemplated by the merger agreement and such order, decree, ruling or other action has become final and non-appealable, provided that the right to terminate the merger agreement pursuant to this bullet point is not available to a party if the issuance of such final, non-appealable order, decree or ruling or taking of such other action was primarily due to the failure of us or the Operating Company, in the case of termination by us, or Parent or Parent OP, in the case of termination by Parent, to perform any of its obligations under the merger agreement;
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the mergers have not been consummated by December 31, 2020, provided that the right to terminate the merger agreement under this bullet point is not available to us, if the Company or the Operating Company, or to Parent, if Parent or Parent OP, as applicable, has breached in any material respect its obligations under the merger agreement in any manner that has caused or resulted in the failure to consummate the mergers on or before December 31, 2020; or
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the requisite vote of our common stockholders to approve the merger and the other transactions contemplated by the merger agreement has not been obtained at the duly held special meeting or any adjournment or postponement thereof at which the merger is voted on.
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prior to obtaining the requisite vote of our common stockholders to approve the merger and the other transactions contemplated by the merger agreement, our board of directors effects an adverse recommendation change in accordance with the requirements described below under “The Merger Agreement—Obligation of the Board of Directors with Respect to Its Recommendation” in connection with a superior proposal and our board of directors has approved, and concurrently with the termination under the provision described in this bullet point, we enter into, a definitive agreement providing for the implementation of a superior proposal, but only if we are not then in material breach of our obligations described under “The Merger
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Parent or Parent OP has breached or failed to perform any of its representations, warranties, covenants or other agreements contained in the merger agreement such that a closing condition relating to its representations, warranties, covenants or agreements would be incapable of being satisfied by December 31, 2020 (subject to a 20-day cure period after written notice by the Company to Parent informing Parent of such breach or failure to perform and Company’s intention to terminate the merger agreement, except that no cure period is required for a breach or failure that by its nature cannot be cured prior to December 31, 2020), provided that neither we nor the Operating Company have breached or failed to perform any of our or its representations, warranties, covenants or other agreements contained in the merger agreement in any material respect; or
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all of the following requirements are satisfied:
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all of the mutual conditions to the parties’ obligations to effect the mergers and the additional conditions to the obligations of Parent and Parent OP to effect the mergers have been satisfied or waived by Parent (other than those conditions that by their nature are to be satisfied at the closing of the mergers, provided that such conditions to be satisfied at the closing of the mergers would be satisfied as of the date of the notice referenced in the immediately following bullet point if the closing of the mergers were to occur on the date of such notice);
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on or after the date the closing of the mergers should have occurred pursuant to the merger agreement, we have delivered irrevocable written notice to Parent to the effect that all of the mutual conditions to the parties’ obligations to effect the mergers and the additional conditions to the obligations of Parent and Parent OP to effect the mergers have been satisfied or waived by Parent (other than those conditions that by their nature are to be satisfied at the closing of the mergers, provided that such conditions to be satisfied at the closing of the mergers would be satisfied as of the date of such notice if the closing of the mergers were to occur on the date of such notice) and we and the Operating Company are ready, willing and able to consummate the closing of the mergers; and
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Parent and Parent OP fail to consummate the closing of the mergers on or before the third business day after delivery of the notice referenced in the immediately preceding bullet point, and we and the Operating Company stood ready, willing and able to consummate the closing of the mergers during such three business day period.
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we or the Operating Company have breached or failed to perform any of our or the Operating Company’s representations, warranties, covenants or other agreements contained in the merger agreement such that the closing conditions relating to our and the Operating Company’s representations, warranties, covenants or agreements would be incapable of being satisfied by December 31, 2020 (subject to a 20-day cure period after written notice by the Parent to the Company informing the Company of such breach or failure to perform and Parent’s intention to terminate the merger agreement, except that no cure period is required for a breach or failure that by its nature cannot be cured prior to December 31, 2020), provided that neither Parent nor Parent OP has breached or failed to perform any of its representations, warranties, covenants or other agreements contained in the merger agreement in any material respect; or
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our board of directors has effected, or resolved to effect, an adverse recommendation change or we enter into a letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, share purchase agreement, asset purchase
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Parent terminates the merger agreement pursuant to the provision described in the second bullet point under “The Merger Agreement—Termination of the Merger Agreement—Termination by Parent”;
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we terminate the merger agreement pursuant to the provision described in the first bullet point under “The Merger Agreement—Termination of the Merger Agreement—Termination by the Company”; or
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all of the following requirements are satisfied:
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we or Parent terminate the merger agreement pursuant to the provisions described in the second bullet point under “The Merger Agreement—Termination of the Merger Agreement—Termination by either the Company or Parent” or Parent terminates the merger agreement pursuant to the provision described in the first bullet point under “The Merger Agreement—Termination of the Merger Agreement—Termination by Parent”; and
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(1) a company acquisition proposal has been received by us or our representatives or any person has publicly proposed or publicly announced an intention (whether or not conditional) to make a company acquisition proposal and (2) within twelve months after a termination referred to in the immediately preceding sub-bullet point we enter into a definitive agreement relating to, or consummate, any company acquisition proposal (with, for purposes of this clause (2), the references to “15%” in the definition of “company acquisition proposal” being deemed to be references to “50%”).
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What is the proposed transaction?
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The proposed transaction is the acquisition of the Company and its subsidiaries, including the Operating Company, by affiliates of NexPoint Advisors pursuant to the merger agreement. After the merger and the other transactions contemplated by the merger agreement have been approved by our common stockholders and the other closing conditions under the merger agreement have been satisfied or waived, the Parent will be merged with and into the Company, with the Company continuing as the Surviving Company. Immediately following the company merger effective time, the Parent OP will merge with and into the Operating Company, with Operating Company continuing as the Surviving OP. The mergers will occur at the times provided in the merger agreement. For additional information about the mergers, please review the merger agreement attached to this proxy statement as Annex A and incorporated by reference into this proxy statement. We encourage you to read the merger agreement carefully and in its entirety, as it is the principal document governing the mergers.
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As a common stockholder, what will I receive in the merger?
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For each outstanding common share that you own immediately prior to the company merger effective time, you will receive $17.30 in cash, without interest and less any applicable withholding taxes.
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Will I receive any regular quarterly dividends with respect to the common shares that I own?
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Under the terms of the merger agreement, we may not authorize, declare or pay any other dividends to the holders of our common shares during the term of the merger agreement without the prior written consent of Parent. Pursuant to the terms of the merger agreement, we do not intend to authorize, declare or pay any dividends with respect to our common shares during the term of the merger agreement.
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What will happen to my restricted share awards and performance award units in the mergers?
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Restricted Share Awards. Pursuant to the merger agreement, immediately prior to the company merger effective time, all outstanding issuance and forfeiture conditions on each Company restricted share award that is outstanding immediately prior to the company merger effective time (we refer to each as a Company restricted share award) will be deemed satisfied in full, subject to and conditioned upon the occurrence of the company merger, and at the company merger effective time such Company common shares will automatically be converted into the right to receive an amount in cash equal to the merger consideration, less any applicable withholding taxes, subject to and conditioned upon the occurrence of the closing of the company merger.
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When do you expect the mergers to be completed?
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If our common stockholders vote to approve the merger and the other transactions contemplated by the merger agreement, and assuming that the other conditions to the mergers are satisfied or
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What happens if the mergers are not completed?
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If the merger and the other transactions contemplated by the merger agreement are not approved by our common stockholders, or if the mergers are not completed for any other reason, our common stockholders will not receive any payment for their common shares pursuant to the merger agreement. Instead, Jernigan Capital, Inc. will remain a public company and our common shares will continue to be registered under the Exchange Act and listed on the NYSE. Upon a termination of the merger agreement, under certain circumstances, we will be required to pay Parent the company termination fee. In certain other circumstances, Parent will be required to pay us the parent termination fee upon termination of the merger agreement.
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If the mergers are completed, how do I obtain the merger consideration for my common shares?
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Following the completion of the merger, your common shares will automatically be converted into the right to receive your portion of the merger consideration. Shortly after the merger is completed, you will receive a letter of transmittal describing how you may exchange your common shares for the merger consideration. If your common shares are held in “street name” by your broker, bank or other nominee, you may receive instructions from your broker, bank or other nominee as to what action, if any, you need to take to effect the surrender of your “street name” shares in exchange for the merger consideration.
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When and where is the special meeting?
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The special meeting will be held on [•], 2020 at [9:30] a.m., Central Daylight Time, at the offices of Jernigan Capital, Inc., 6410 Poplar Avenue, Suite 650, Memphis, Tennessee 38119. As part of our precautions regarding the COVID-19 pandemic, the special meeting may be held solely by means of remote communication rather than in person. If we take this step, we will announce the decision to do so in advance and provide details on how to participate in a press release issued by the Company and on our website, www.jernigancapital.com. We will also file the press release with the SEC as definitive additional soliciting material. We encourage you to vote by proxy-over the Internet, by telephone or by mail well in advance of the special meeting, to ensure your shares are represented whether or not you decide to attend.
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Who can vote and attend the special meeting?
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All holders of record of our common shares as of the record date, which was the close of business on [•], 2020, are entitled to receive notice of and attend and vote at the special meeting or any postponement or adjournment of the special meeting. Each common stockholder will be entitled to cast one vote on each matter presented at the special meeting for each common share that such holder owned as of the record date. The vote of the holders of our preferred shares is not required to approve any of the proposals at the special meeting and is not being solicited.
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What is a quorum?
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The presence at the special meeting, in person or, in the event that the special meeting is held by means of remote communication, virtually, or by proxy, of the holders of a majority of the shares of our common stock outstanding on the record date will constitute a quorum for all purposes. As of the close of business on [•], 2020, [•] shares of our common stock were outstanding. If you submit a
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What vote of common stockholders is required to approve the merger and the other transactions contemplated by the merger agreement?
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Approval of the merger and the other transactions contemplated by the merger agreement requires the affirmative vote of the holders of common shares entitled to cast not less than a majority of all the votes entitled to be cast on the matter at the special meeting. Because the required vote for this proposal is based on the number of votes our common stockholders are entitled to cast rather than on the number of votes cast, failure to vote your common shares (including failure to give voting instructions to your broker, bank or other nominee) and abstentions will have the same effect as voting “AGAINST” the proposal to approve the merger and the other transactions contemplated by the merger agreement.
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What vote of common stockholders is required to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger?
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Approval, on a non-binding, advisory basis, of the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger requires the affirmative vote of a majority of the votes cast on the proposal. For the purpose of this proposal, failure to vote your common shares (including failure to give voting instructions to your broker, bank or other nominee) and abstentions will have no effect on the proposal.
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What vote of common stockholders is required to approve adjournments of the special meeting?
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Approval of any adjournment of the special meeting to solicit additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement requires the affirmative vote of a majority of the votes cast on the proposal. For the purpose of this proposal, failure to vote your common shares (including failure to give voting instructions to your broker, bank or other nominee) and abstentions will have no effect on the proposal.
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Why is my vote important?
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If you do not authorize your proxy or voting instructions or vote in person at the special meeting, it will be more difficult for us to obtain the necessary quorum to hold the special meeting. In addition, because the proposal to approve the merger and the other transactions contemplated by the merger agreement must be approved by the affirmative vote of the holders of common shares entitled to cast not less than a majority of all the votes entitled to be cast on the matter, your failure to authorize your proxy or voting instructions or to vote in person at the special meeting will have the same effect as a vote “AGAINST” the approval of the merger and the other transactions contemplated by the merger agreement.
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How does the merger consideration compare to the market price of the Company’s common shares?
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The merger consideration of $17.30 per share represents a premium of approximately 23% over the closing price of our common shares of $14.01 per share on July 31, 2020, the last trading day prior to the public announcement of the merger agreement, and a premium of approximately 30% over the 90-day volume weighted average share price for the period ended July 31, 2020.
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Will I have to pay U.S. federal income taxes on the merger consideration I receive in the merger?
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A:
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The exchange of our common stock for cash in the merger will be a taxable transaction for U.S. federal income tax purposes. A U.S. holder (as defined in the discussion under the heading “The Mergers—Material U.S. Federal Income Tax Consequences”) of our common stock who receives cash in the merger is generally expected to recognize gain or loss in an amount equal to the difference, if any, between (1) the amount of cash received (plus applicable withholding taxes withheld from any such payment) and (2) such U.S. holder’s adjusted tax basis in our common stock exchanged therefor. Subject to the exceptions discussed under the heading “The Mergers—Consequences of the Merger to Non-U.S. Holders of our Common Shares,” non-U.S. holders are generally not expected to be subject to U.S. federal income tax on the gain or loss recognized on cash received with respect to their common stock pursuant to the merger.
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How does our board of directors recommend that I vote?
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Our board of directors unanimously recommends that you vote “FOR” the proposal to approve the merger and the other transactions contemplated by the merger agreement, “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger, and “FOR” the proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement.
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Why am I being asked to consider and cast a vote on the non-binding proposal to approve the merger-related compensation payable to our named executive officers?
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The SEC has adopted rules that require companies to seek a non-binding, advisory vote to approve certain compensation that may be paid or become payable to their named executive officers that is based on or otherwise relates to corporate transactions such as the merger.
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What will happen if stockholders do not approve the non-binding proposal to approve the merger-related compensation?
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The vote to approve the non-binding proposal to approve the merger-related compensation is a vote separate and apart from the vote to approve the merger and the other transactions contemplated by the merger agreement. Approval of this proposal is not a condition to completion of the mergers. The vote on this proposal is an advisory vote only, and it is not binding on us or our board of directors. Further, the underlying arrangements are contractual in nature and not, by their terms, subject to stockholder approval. Accordingly, regardless of the outcome of the advisory vote, if the merger is completed, our named executive officers will be eligible to receive the compensation that may be paid or become payable to them that is based on or otherwise relates to the merger, in accordance with the terms and conditions applicable to such compensation.
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Do any of the Company’s directors and executive officers have any interest in the mergers that is different than mine?
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Our directors and executive officers have certain interests in the mergers that are different from, or in addition to, the interests of our stockholders generally, including (1) the consideration that they would receive with respect to their Company restricted share awards and Company PSU awards, in connection with the mergers, (2) the consideration that certain executive officers would receive upon acceleration of Operating Company Units received as Earn-Out Consideration in the internalization in
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What do I need to do now?
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After carefully reading and considering the information contained in this proxy statement and the annexes attached to this proxy statement, please vote your common shares or authorize a proxy to vote your common shares in one of the ways described below as soon as possible. You will be entitled to one vote for each common share that you owned as of the record date.
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How do I cast my vote?
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A:
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If you are a common stockholder of record on the record date, you may vote in person at the special meeting or authorize a proxy to vote your common shares at the special meeting. You can authorize your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed, postage-paid envelope, or, if you prefer, by following the instructions on your proxy card for telephonic or Internet proxy authorization. If the telephone or Internet option is available to you, we strongly encourage you to use it because it is faster and less costly. Registered stockholders can transmit their voting instructions by telephone by calling [•] or on the Internet at [www.proxyvote.com]. Telephone and Internet voting are available 24 hours a day until 11:59 p.m., Eastern Time, the day immediately prior to the special meeting. Have your proxy card with you if you are going to authorize your proxy by telephone or through the Internet. To authorize your proxy by mail, please complete sign, date and mail your proxy card in the envelope provided. If you attend the special meeting in person, you may request a ballot when you arrive. If you are a holder of our restricted share awards, your shares will be voted as you specify on your proxy card and will not be voted if the proxy card is not returned or if you do not vote in person or authorize a proxy by telephone or through the Internet.
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Q:
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How do I cast my vote if my common shares are held of record in “street name”?
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A:
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If you own common shares through a broker, bank or other nominee (i.e., in “street name”), you must provide voting instructions in accordance with the instructions on the voting instruction card that your broker, bank or other nominee provides to you, since brokers, banks and other nominees do not have discretionary voting authority with respect to any of the proposals described in this proxy statement. If you have not received such voting instructions or require further information regarding such voting instructions, contact your broker, bank or other nominee who can give you directions on how to vote your common shares. If you hold your common shares through a broker, bank or other nominee and wish to vote in person at the special meeting, you must obtain a “legal proxy,” executed in your favor, from the broker, bank or other nominee (which may take several days).
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Q:
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What will happen if I abstain from voting or fail to vote?
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A:
|
With respect to the proposal to approve the merger and the other transactions contemplated by the merger agreement, if you abstain from voting, fail to cast your vote in person or by proxy or if you hold your common shares in “street name” and fail to give voting instructions to your broker, bank or other nominee, it will have the same effect as a vote “AGAINST” the merger and the other transactions contemplated by the merger agreement. With respect to the proposal regarding the non-binding, advisory vote on the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and the proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement, if you abstain from voting, fail to cast your vote in person or by proxy or if you hold your common shares in “street name” and fail to give voting instructions to your broker, bank or other nominee, it will not have any effect on the outcome of such proposals.
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Q:
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How will proxy holders vote my common shares?
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A:
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If you properly authorize a proxy prior to the special meeting, your common shares will be voted as you direct. If you authorize a proxy but no direction is otherwise made, your common shares will be voted “FOR” the proposal to approve the merger and the other transactions contemplated by the merger agreement, “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and “FOR” the proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement. Pursuant to our bylaws, only the matters set forth in the Notice of Special Meeting may be brought before the special meeting.
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Q:
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What happens if I sell my common shares before the special meeting?
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A:
|
If you held common shares on the record date but transfer them prior to the company merger effective time, you will retain your right to vote at the special meeting, but not the right to receive the merger consideration for those shares. The right to receive such consideration when the merger becomes effective will pass to the person who at that time owns the common shares you previously owned.
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Q:
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Can I change my vote after I have mailed my proxy card?
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A:
|
Yes. If you own common shares as a record holder on the record date, you may revoke a previously authorized proxy at any time before it is exercised by filing with our Secretary a notice of revocation or a duly authorized proxy bearing a later date or by attending the meeting and voting in person. Attendance at the meeting will not, in itself, constitute revocation of a previously authorized proxy. If you have instructed a broker to vote your common shares, the foregoing options for changing your vote do not apply and instead you must follow the instructions received from your broker to change your vote.
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Q:
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Is the merger expected to be taxable to me?
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A:
|
Yes. The receipt of cash in exchange for our common shares pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. You should consult your own tax advisors regarding the particular tax consequences to you of the exchange of our common shares for cash pursuant to the merger in light of your particular circumstances (including the application and effect of any state, local or foreign income and other tax laws). For further discussion, see “The Mergers—Material U.S. Federal Income Tax Consequences.”
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Q:
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What rights do I have if I oppose the merger?
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A:
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If you are a common stockholder of record on the record date, you can vote against the proposal to approve the merger and the other transactions contemplated by the merger agreement. You are not, however, entitled to exercise any appraisal rights, dissenters’ rights or the rights of an objecting stockholder to receive the fair value of the stockholder’s shares in connection with the merger because, as permitted by the MGCL, our articles of incorporation provide that stockholders are not entitled to exercise any such rights unless our board of directors, upon the affirmative vote of a majority of the entire board, determines that the rights apply. Our board of directors has made no such determination. See “No Dissenters’ Rights of Appraisal.”
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Q:
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Where can I find the voting results of the special meeting?
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A:
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We intend to announce preliminary voting results at the special meeting and publish final results in a Current Report on Form 8-K that will be filed with the SEC following the special meeting. All reports that we file with the SEC are publicly available on the SEC’s website at www.sec.gov when filed.
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Q:
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Can I participate if I am unable to attend the special meeting?
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A:
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If you are unable to attend the meeting in person, we encourage you to complete, sign, date and return your proxy card, or authorize your proxy or voting instructions by telephone or through the Internet. Unless otherwise announced by us in a press release and subsequent soliciting material filed with the SEC, the special meeting will not be broadcast telephonically or over the Internet.
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Q:
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Have any stockholders already agreed to approve the merger?
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A:
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No. There are no agreements between Parent, Parent OP or other affiliates of NexPoint Advisors and any of our common stockholders in which a stockholder has agreed to vote in favor of approval of the merger and the other transactions contemplated by the merger agreement.
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Q:
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Where can I find more information about the Company?
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A:
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We file certain information with the SEC. You may read and copy this information at the SEC’s public reference facilities. You may call the SEC at 1-800-SEC-0330 for information about these facilities. This information is also available on the SEC’s website at www.sec.gov and on our website at www.jernigancapital.com. The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with or furnish to the SEC. You can also request copies of these documents from us. See “Where You Can Find More Information.”
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Q:
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Who will solicit and pay the cost of soliciting proxies?
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A:
|
We will bear the cost of solicitation of proxies for the special meeting. Our board of directors is soliciting your proxy on our behalf. In addition to the use of mails, proxies may be solicited by personal interview, telephone, facsimile, e-mail or otherwise, by our directors, officers and other employees. We have engaged [•] to assist in the solicitation of proxies for a fee of $[•], plus reimbursement of out-of-pocket expenses. We also will request persons, firms and corporations holding common shares in their names, or in the names of their nominees, that are beneficially owned by others to send or cause to be sent proxy materials to, and obtain proxies from, such beneficial owners and will reimburse such holders for their reasonable expenses in so doing.
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Q:
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What is householding?
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A:
|
We have elected to send a single copy of this proxy statement to any household at which two or more stockholders reside unless one of the stockholders at such address provides notice that he or she desires to receive individual copies or has elected e-mail delivery of proxy materials. A separate proxy card is included in the proxy materials for each of these stockholders. This “householding” practice reduces our printing and postage costs. If you would like to request additional copies of this proxy statement, you can request householding by contacting [•] as described under “Who can help answer my other questions?” below.
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Q:
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Who can help answer my other questions?
|
A:
|
If after reading this proxy statement you have more questions about the special meeting or the mergers, you should contact us at:
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•
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risks associated with our ability to obtain the stockholder approval required to consummate the merger and the timing of the closing of the mergers, including the risks that a condition to closing would not be satisfied within the expected timeframe or at all or that the closing of the mergers will not occur;
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•
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unanticipated difficulties or expenditures relating to the mergers;
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•
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the occurrence of any change, effect, event, circumstance, occurrence or state of facts that could give rise to the termination of the merger agreement;
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•
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the outcome of any legal proceedings that have been, or may be, instituted against the parties and others related to the merger agreement;
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•
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unanticipated difficulties or expenditures relating to the transaction, the response of business partners and competitors to the announcement of the transaction and/or potential difficulties in employee retention as a result of the announcement and pendency of the transaction;
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•
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our exclusive remedy against the counterparties to the merger agreement with respect to any breach of the merger agreement being to seek payment by Parent of a termination fee in the amount of $32 million, payable either in cash or as an offset of certain other amounts due to Parent or its affiliates, which may not be adequate to cover our damages;
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•
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our restricted ability to pay dividends to the holders of our common shares pursuant to the merger agreement;
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•
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general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate);
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•
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adverse economic or real estate developments in our target markets, including the inability of our tenants to obtain funding to run their businesses;
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•
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availability of financing and capital;
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•
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national, international, regional and local economic climates;
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•
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changes affecting the self-storage industry and changes in financial markets, interest rates and foreign currency exchange rates;
|
•
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general volatility in the securities markets (which has significantly increased as a result of the COVID-19 pandemic) and the market price of our common stock;
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•
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defaults on or non-renewal of leases by tenants;
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•
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increased operating costs;
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•
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our ability to successfully source, structure, negotiate and close investments in and acquisitions of self-storage facilities;
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•
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changes in our business strategy and the market’s acceptance of our investment terms;
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•
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our ability to acquire our developers’ interests on favorable terms;
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•
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our ability to complete construction, obtain certificates of occupancy and complete leasing for self-storage development projects in which we invest;
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•
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our ability to increase rental rates;
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•
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potential liability for uninsured losses and environmental matters;
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•
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reductions in asset valuations and related impairment charges;
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•
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the loss of services of one or more of our executive officers;
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•
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our inability to retain key personnel and maintain relationships with business partners pending the consummation of the mergers;
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•
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maintenance of our REIT status under the Code;
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•
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government approvals, actions and initiatives, including the need for compliance with environmental requirements;
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•
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the effects of earthquakes and other natural disasters;
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•
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lack of or insufficient amounts of insurance;
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•
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risks associated with security breaches and other disruptions to our information technology networks and related systems;
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•
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the negative impact of the ongoing COVID-19 pandemic and the measures intended to prevent its spread, which, in addition to exacerbating the risks set forth below, may result in: a prolonged global economic downturn, recession or depression; reductions in move-ins at the properties that we own; slower increases in physical occupancy, or decreases in occupancy, due to declines in discretionary household income and rates of consumption; temporary holds on existing customer rental rate increases and the deferral of auctions of delinquent tenants initiated by our third-party managers, as well as slower rent collections and potential increases in uncollectible accounts; the delay in construction or development of certain of our investments and the cancellation of certain potential investments; adverse impacts on the value of our debt investments due to impairment of our developers’ ability to make timely payments and disruptions in the capital markets that have negatively impacted the values of debt instruments; adverse impacts on assumptions made in evaluating our investments accounted for using the fair value method; the interplay of the pandemic and over-development in the self-storage industry; and the adverse impacts on developers and development with respect to which we have made investments;
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•
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our ability to fund our outstanding and future investment commitments;
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•
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the future availability of borrowings under our credit facility (including borrowing base capacity, compliance with covenants and the availability of the accordion features);
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•
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availability and terms of equity and debt capital, as well as our rate of deployment of such capital (which may worsen as a result of the COVID-19 pandemic);
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•
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our ability to recognize the anticipated benefits from the internalization of our manager;
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•
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changes in the self-storage industry, interest rates or the general economy;
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•
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the degree and nature of our competition;
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•
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volatility in the value of our assets carried at fair market value created by the current economic turmoil or otherwise;
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•
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potential limitations on our ability to pay dividends at expected rates or other changes to our dividend rate;
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•
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limitations in our existing and future debt agreements on our ability to pay distributions;
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•
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the impact of our outstanding preferred stock on our ability to execute our business plan and pay distributions on our common stock;
|
•
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risks and uncertainties associated with the potential impact of legal or regulatory changes, including recent changes in U.S. tax laws and regulations; and
|
•
|
changes in real estate, tax, environmental, zoning and other laws and increases in real property tax rates.
|
1.
|
a proposal to approve the merger of Jernigan Capital, Inc. with and into NexPoint RE Merger, Inc. and the other transactions contemplated by the merger agreement;
|
2.
|
a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger; and
|
3.
|
a proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger and the other transactions contemplated by the merger agreement.
|
•
|
mark, sign, date and return the enclosed proxy card by mail;
|
•
|
authorize your proxy or voting instructions by telephone or through the Internet by following the instructions included with your proxy card; or
|
•
|
appear and vote in person by ballot at the special meeting.
|
•
|
by delivering, prior to the date of the special meeting, a written revocation of your proxy dated after the date of the proxy that is being revoked to our Secretary at 6410 Poplar Avenue, Suite 650, Memphis, Tennessee 38119;
|
•
|
by delivering to our Secretary a later-dated, duly executed proxy or by authorizing your proxy by telephone or by Internet at a date after the date of the previously authorized proxy relating to the same common shares; or
|
•
|
by attending the special meeting and voting in person.
|
•
|
the current and historical trading prices of our common shares, and the fact that the merger consideration of $17.30 per share in cash represents a premium of approximately 27.4%, 23.7% and 30.9% over the 30-day, 60-day and 90-day volume-weighted average share prices ending July 31, 2020, the last trading day before we entered into the merger agreement;
|
•
|
the fact that the merger consideration was the result of arm’s-length negotiations and that we negotiated price increases by NexPoint Advisors and Parent from their initial expression of interest at a price of approximately $17.10 - $17.20 per share, and the board’s belief that the merger consideration was the maximum price that NexPoint Advisors and Parent were willing to pay;
|
•
|
the board’s belief that, in light of other negotiations conducted with interested parties as detailed in “Background of the Merger,” Parent was the party likely to offer the highest value for the common shares of the Company;
|
•
|
uncertainty regarding the expected scope and duration of the impacts of COVID-19, as well as other unusual current macroeconomic and geopolitical factors, on the Company’s access to and cost of capital, operations and go-forward business plan;
|
•
|
the limited interest other REITs operating in the self-storage sector would likely have in acquiring the Company’s portfolio in light of its significant amount of lease-up that would need to be completed for the development properties, as well as the fact that despite inquiries from, and discussions with, certain other parties, representatives of those parties indicated that they were not interested in an acquisition of the Company on terms they believed would be acceptable to us or at all, and no other potential purchaser submitted an indication of interest for an acquisition of the Company;
|
•
|
the board’s belief that soliciting other potential buyers in a widely conducted process could jeopardize the availability of NexPoint Advisors’ proposal as well as potentially damage the Company’s ability to execute a standalone business plan if an acceptable transaction did not materialize;
|
•
|
the fact that prior to the No-Shop Period Start Date, our board of directors and its advisors are permitted to solicit, initiate, propose or induce the making, submission or announcement of, or encourage, facilitate or assist, any proposal or offer that could constitute an acquisition proposal from a person other than Parent, and are permitted to terminate the merger agreement to accept a Superior Proposal from such person as long as the Company pays the applicable termination fee to Parent and complies with certain other procedures in the merger agreement, as more fully described under “The Merger Agreement—The ‘Go-Shop’ Period”;
|
•
|
the Company’s right under the merger agreement, in response to unsolicited acquisition proposals during the period from and after the No-Shop Period Start Date, to furnish information to and conduct negotiations with third parties in certain circumstances;
|
•
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the board’s right, under the merger agreement, to withhold, withdraw, modify or qualify its recommendation that our stockholders vote to approve the merger and the other transactions contemplated by the merger agreement under certain circumstances, subject to payment of a termination fee if Parent elects to terminate the merger agreement in such circumstances;
|
•
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the Company’s right to terminate the merger agreement, under certain circumstances, in order to enter into a definitive agreement providing for the implementation of a superior proposal if the board of directors determines in good faith, after consultation with outside legal counsel and financial advisors, taking into account any changes to the merger agreement proposed in writing by Parent, that the superior proposal continues to constitute a superior proposal, upon payment of a termination fee;
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•
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the fact that in certain circumstances a lower termination fee of $16 million (or approximately $0.69 per outstanding common share), representing approximately 3.5% of the Company’s equity value, will be payable by the Company, and that the termination fee of $25.6 million, representing approximately 5.6% of the Company’s equity value, was viewed by the board of directors, after consultation with our legal and financial advisors, as reasonable under the circumstances and not likely to preclude any other party from making a competing acquisition proposal;
|
•
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the fact that the merger consideration is a fixed cash amount, providing our stockholders with certainty of value and liquidity immediately upon the closing of the merger, in comparison to the risks, uncertainties and longer potential timeline for realizing equivalent value from the Company’s standalone business plan or possible strategic alternatives involving transactions in which all or a portion of the consideration would be payable in equity or involving portfolio transactions particularly in light of the impact of COVID-19 on development and lease up timetables for completed, non-stabilized assets and development properties;
|
•
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the board’s knowledge of the business, operations, financial condition, earnings and prospects of the Company, as well as its knowledge of the current and prospective environment in which the Company operates, including economic and market conditions;
|
•
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the risks and uncertainties of remaining as an independent public company, including:
|
○
|
being able to expand the size of the Company’s portfolio of self-storage assets through development and acquisitions;
|
○
|
the Company’s ability to compete with other self-storage companies without an internal property management platform;
|
○
|
impacts on stabilization timeframes for the Company’s development assets in light of current levels of supply in the self-storage industry and the impact of delays in stabilization on the Company’s growth prospects;
|
○
|
alternative financing sources for developers that compete with the Company, which financing sources may have better access to capital than the Company at more attractive terms; and
|
○
|
uncertainty with respect to access to debt and equity capital markets given the Company’s relative market capitalization as compared to its publicly traded self-storage industry peers;
|
•
|
the belief that the merger is more favorable to the Company’s stockholders than other strategic alternatives available to the Company, including remaining as an independent public company, the feasibility of such alternatives and the significant risks and uncertainties associated with pursuing such alternatives;
|
•
|
the likelihood that the mergers would be completed based on, among other things, the absence of a financing condition and the $32 million reverse termination fee payable to the Company if the merger agreement is terminated in certain circumstances, which payment is secured by the ability of the Company to offset such fee against other amounts owed by the Company to the equity owners of Parent as described under “The Merger Agreement—Termination of the Merger Agreement—Termination by the Company”;
|
•
|
the fact that Jefferies delivered its oral opinion, subsequently confirmed in writing, that, as of August 2, 2020 and based upon and subject to the various assumptions made, procedures
|
•
|
the terms and conditions of the merger agreement, which were reviewed by the board of directors with our financial and legal advisors, and the fact that such terms were the product of arm’s-length negotiations between the parties;
|
•
|
the fact that the merger would be subject to the approval of our stockholders, and our stockholders would be free to reject the merger by voting against the merger for any reason, including if a higher offer were to be made prior to the stockholders’ meeting (in certain cases subject to payment by the Company of a $25.6 million termination fee if the Company subsequently were to enter into a definitive agreement relating to, or to consummate, an acquisition proposal), subject to our responsibility to reimburse NexPoint Advisors for its out-of-pocket expenses up to $5 million in the aggregate; and
|
•
|
the other terms of the merger agreement, including the conditions to the closing of the mergers, which other terms include: the merger agreement does not contain a financing condition with respect to any financing by Parent; the merger agreement requires Parent to use its reasonable best efforts to obtain any necessary regulatory approvals, subject to certain limitations described in the section entitled “The Merger Agreement—Regulatory Matters”; and the outside date under the merger agreement on which either party, subject to specified exceptions, can terminate the merger agreement, should provide sufficient time to consummate the mergers.
|
•
|
the limitations on our ability to solicit competing acquisition proposals after the No-Shop Period Start Date and the possibility that the $25.6 million termination fee (or $16 million termination fee under certain circumstances) payable by us upon the termination of the merger agreement under certain circumstances could discourage other potential bidders from making a competing bid to acquire us;
|
•
|
the fact that the merger consideration represents a discount of approximately 16% to the highest share price of our common shares over the 52-week period ended July 31, 2020, of $20.60 per share, which occurred on February 14, 2020;
|
•
|
the fact that, following the merger, the Company will no longer exist as an independent public company and our existing stockholders will not participate in our future earnings or growth;
|
•
|
the fact that the merger agreement does not permit our board of directors to authorize, declare or pay dividends with respect to our common shares during the term of the merger agreement without the consent of Parent, and that we have agreed to suspend our practice of declaring and paying quarterly dividends to our common stockholders;
|
•
|
the fact that the mergers might not be consummated in a timely manner or at all, due to a failure of certain conditions to the closing of the mergers;
|
•
|
the fact that if any of Parent or Parent OP fails to satisfy its obligations under the merger agreement, we will only be entitled to specifically enforce the merger agreement or the equity commitment letter in certain instances, and that if debt financing (if any)fails to close, our exclusive remedy, available if the merger agreement is terminated in that instance, would be limited to a reverse termination fee payable by Parent in the amount of $32 million (the payment of which may be offset by the Company against other amounts owed by the Company to the equity owners of Parent);
|
•
|
the restrictions on the conduct of our business prior to the completion of the mergers, which could delay or prevent us from undertaking business opportunities that may arise pending completion of the mergers;
|
•
|
the fact that an all-cash merger would be taxable to our stockholders for U.S. federal income tax purposes;
|
•
|
the fact that, under Maryland law and the Company’s articles of incorporation, our stockholders are not entitled to appraisal rights, dissenters’ rights or similar rights of an objecting stockholder in connection with the merger;
|
•
|
the significant costs involved in connection with entering into the merger agreement and completing the mergers and the substantial time and effort of management required to consummate the mergers and related disruptions to the operation of our business;
|
•
|
the fact that the announcement and pendency of the transactions contemplated by the merger agreement, the failure to complete the mergers, and/or actions that the Company may be required, or NexPoint Advisors may be permitted, to take under the merger agreement, could have an adverse impact on our existing and prospective business relationships with tenants and other third parties and on our employees; and
|
•
|
the fact that some of our directors and executive officers have interests in the mergers that are different from, or in addition to, our stockholders generally (see “—Interests of Our Directors and Executive Officers in the Mergers”).
|
|
| |
Projections(1)
|
||||||||||||
|
| |
Twelve Months Ending December 31
|
||||||||||||
|
| |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
Income Statement
|
| |
|
| |
|
| |
|
| |
|
| |
|
Owned Net Operating Income(2)
|
| |
$9.6
|
| |
$21.6
|
| |
$38.5
|
| |
$51.4
|
| |
$58.0
|
EBITDA(3)
|
| |
$24.0
|
| |
$28.4
|
| |
$40.3
|
| |
$48.7
|
| |
$53.6
|
Net Income
|
| |
$(79.2)
|
| |
$(1.9)
|
| |
$15.3
|
| |
$23.9
|
| |
$30.5
|
Unlevered Free Cash Flow(4)
|
| |
$38.3
|
| |
$(43.4)
|
| |
$23.6
|
| |
$37.1
|
| |
$53.4
|
Funds From Operations (“FFO”)(5)
|
| |
$(52.2)
|
| |
$0.60
|
| |
$23.7
|
| |
$37.0
|
| |
$43.4
|
FFO / Share(6)
|
| |
$(2.08)
|
| |
$0.02
|
| |
$0.62
|
| |
$0.93
|
| |
$1.07
|
(1)
|
Dollar amounts in millions, except per share values.
|
(2)
|
Owned Net Operating income is defined as owned operating revenue less owned property expenses.
|
(3)
|
EBITDA represents the Company’s Owned Net Operating Income, plus interest income, other income and joint venture income (excluding depreciation and amortization), less general and administrative expenses, management fees and incentive fees.
|
(4)
|
Unlevered Free Cash Flow represents EBITDA less stock-based compensation expenses, acquisition and capital additions, interest accrual adjustment and cash funding, plus loan repayments and external sales and plus other non-cash expenses.
|
(5)
|
FFO represents the Company’s Net Income plus depreciation and amortization (including joint ventures), less total fair market value gain / (loss) (including joint ventures) and realized gain.
|
(6)
|
FFO / Share is calculated as FFO divided by the projected number of weighted average shares outstanding, as adjusted for the dilutive impact of share-based compensation ((i) 25.1 million shares outstanding as of 2020, (ii) 31.8 million shares outstanding as of 2021, (iii) 38.1 million shares outstanding as of 2022, (iv) 39.7 million shares outstanding as of 2023 and (v) 40.6 million shares outstanding as of 2024).
|
(i)
|
reviewed a draft dated August 1, 2020 of the merger agreement;
|
(ii)
|
reviewed certain publicly available financial and other information about the Company and Parent;
|
(iii)
|
reviewed certain information furnished to Jefferies by the Company’s management, including financial forecasts and analyses, relating to the business, operations and prospects of the Company;
|
(iv)
|
held discussions with members of senior management of the Company and Parent concerning the matters described in clauses (ii) and (iii) above;
|
(v)
|
reviewed the share trading price history and valuation multiples for the Company’s common stock and compared them with those of certain publicly traded companies that Jefferies deemed relevant;
|
(vi)
|
compared the proposed financial terms of the mergers with the financial terms of certain other transactions that we deemed relevant; and
|
(vii)
|
conducted such other financial studies, analyses and investigations as Jefferies deemed appropriate.
|
•
|
CubeSmart
|
•
|
Extra Space Storage Inc.
|
•
|
Life Storage, Inc.
|
•
|
National Storage Affiliates Trust
|
•
|
Public Storage
|
•
|
the enterprise value divided by estimated EBITDA for calendar year 2022, which is referred to as “Enterprise Value/2022E EBITDA”; and
|
•
|
the equity value divided by estimated funds from operations, or FFO, for calendar year 2022, which is referred to as “Equity Value/2022E FFO”.
|
Selected Companies Multiples
|
||||||||||||
|
| |
Low
|
| |
Median
|
| |
Mean
|
| |
High
|
Enterprise Value/2022E EBITDA
|
| |
18.2x
|
| |
19.7x
|
| |
19.7x
|
| |
22.1x
|
Equity Value/2022E FFO
|
| |
16.1x
|
| |
18.2x
|
| |
18.2x
|
| |
20.4x
|
Transaction Date
|
| |
Acquiror
|
| |
Seller
|
June 2019
|
| |
Extra Space Storage
|
| |
Prudential Real Estate Investors / Storage Post
|
January 2019
|
| |
Strategic Storage Trust II
|
| |
Strategic Storage Growth Trust
|
July 2018
|
| |
National Storage Affiliates, Heitman Capital
|
| |
Simply Self Storage Management
|
May 2018
|
| |
ASB Capital Management
|
| |
William Warren Group, Carlyle Group
|
September 2017
|
| |
Prime Storage Group
|
| |
Storage Investment Management
|
June 2017
|
| |
Life Storage
|
| |
Spensa Development Group
|
December 2016
|
| |
Strategic Storage Trust II
|
| |
Mindful Capital Group
|
November 2016
|
| |
National Storage Affiliates
|
| |
Kayne Anderson
|
October 2016
|
| |
National Storage Affiliates, Heitman Capital
|
| |
iStorage
|
August 2016
|
| |
National Storage Affiliates
|
| |
W.P. Carey
|
July 2016
|
| |
Sovran Self Storage
|
| |
LifeStorage
|
June 2016
|
| |
Strategic Storage Trust II
|
| |
Mindful Capital Group
|
October 2015
|
| |
Extra Space Storage
|
| |
SmartStop Self Storage
|
June 2014
|
| |
Public Storage
|
| |
Veritage Management
|
October 2013
|
| |
Public Storage
|
| |
Morningstar Properties, Harrison Street
|
October 2011
|
| |
Cubesmart
|
| |
Storage Deluxe
|
Premiums Paid Percentages
|
|||||||||
Time Period Prior to Announcement
|
| |
25th
Percentile
|
| |
Median
|
| |
75th
Percentile
|
1-day unaffected premium
|
| |
11.8%
|
| |
15.6%
|
| |
20.1%
|
•
|
Parent obtains alternative equity or debt commitment letters that are, in each case, acceptable to us in our reasonable discretion, including with respect to the source of the financing and the conditionality in the relevant letter;
|
•
|
Parent’s entry into one or more credit agreements (excluding a commitment letter) that have been executed and delivered pursuant to an approved debt commitment letter with a financing source reasonably acceptable to us, which agreements provide funding that is subject only to the occurrence of the closing of the mergers and other customary “SunGard” or “certain funds” conditionality provisions reasonably acceptable to us; or
|
•
|
We obtain an amendment, amendment and restatement, waiver or consent under our existing revolving credit facility such that this facility remains in place and is available upon the closing of the mergers and related transactions.
|
Name
|
| |
Cash
($)(1)
|
| |
Equity
($)(2)
|
| |
Perquisites/
Benefits($)(3)
|
| |
Total
($)
|
John A. Good
|
| |
|
| |
|
| |
|
| |
|
Chief Executive Officer
|
| |
2,813,593
|
| |
1,300,867
|
| |
18,076
|
| |
4,132,536
|
Jonathan Perry
|
| |
|
| |
|
| |
|
| |
|
President and Chief Investment Officer
|
| |
2,392,624
|
| |
849,327
|
| |
30,407
|
| |
3,272,358
|
Kelly Luttrell
|
| |
|
| |
|
| |
|
| |
|
Senior Vice President, Chief Financial Officer, Treasurer and Corporate Secretary
|
| |
976,134
|
| |
352,566
|
| |
20,271
|
| |
1,348,971
|
(1)
|
Cash severance consists of the following components, all of which are “double-trigger” benefits contingent upon the occurrence of a termination of the executive officer’s employment without cause or the executive officer’s resignation with good reason during the 12 months following the effective time of the mergers:
|
(a)
|
For Messrs. Good and Perry, (i) a multiple of three times the sum of the executive officer’s (x) base salary plus (y) the average annual bonus earned by him in the two calendar years preceding the year of termination (or, in the case of Mr. Good, his 2020 Target Annual Bonus, assuming a termination occurring in 2020 immediately upon the effective time of the mergers), payable in a lump sum within 60 days after termination, and (ii) a cash payment equal to the prorated annual bonus for the year of termination, payable in a lump sum within 60 days after termination; and
|
(b)
|
For Ms. Luttrell, a lump sum cash payment equal to the sum of (i) two times of the sum of her base salary and her average annual bonus earned in the two calendar years prior to the year of termination, payable in a lump sum within 60 days after termination, and (ii) a cash payment equal to the prorated annual bonus target for the year of termination, payable in a lump sum within 60 days after termination.
|
Executive Officer
|
| |
Prorated Bonus
Target ($)
|
| |
Severance
Payment ($)
|
| |
Total ($)
|
John A. Good
|
| |
263,593
|
| |
2,550,000
|
| |
2,813,593
|
Jonathan Perry
|
| |
210,874
|
| |
2,181,750
|
| |
2,392,624
|
Kelly Luttrell
|
| |
96,134
|
| |
880,000
|
| |
976,134
|
(2)
|
For all executive officers, the treatment of equity awards at the effective time of the mergers is a “single-trigger” benefit contingent upon the occurrence of the mergers. The amounts set forth in the table above and the table below are estimates of the value each executive officer will receive in respect of his or her unvested equity awards. These estimates assume (a) achievement of maximum performance applicable to PSUs subject to performance-based vesting conditions under the terms of such awards and (b) all unvested Company restricted share awards and Company PSUs held by each executive officer as of August 14, 2020, the latest practicable date prior to the date of this filing, remain unvested as of the effective time of the mergers.
|
Executive Officer
|
| |
Value of
Company
Restricted Share
Awards ($)
|
| |
Value of
Company
Performance
Share
Awards ($)
|
| |
Value of
Company
Dividend
Equivalents ($)
|
| |
Total ($)
|
John A. Good
|
| |
856,938
|
| |
432,431
|
| |
11,498
|
| |
1,300,867
|
Jonathan Perry
|
| |
576,142
|
| |
266,109
|
| |
7,076
|
| |
849,327
|
Kelly Luttrell
|
| |
215,991
|
| |
133,037
|
| |
3,538
|
| |
352,566
|
(3)
|
Perquisites/Benefits. Messrs. Good and Perry are each entitled to receive continuation of subsidized health coverage for up to 18 months or a monthly cash payment equal to the cost of the monthly employer paid portion of health coverage for a period of 18 months. Ms. Luttrell is entitled to receive continuation of subsidized health coverage for up to 12 months or a monthly cash payment equal to the cost of the monthly employer paid portion of health coverage for a period of 12 months. The health coverage benefits are “double-trigger” benefits contingent upon the occurrence of a termination without cause or resignation with good reason during the 12 months following the effective time of the mergers. For further details regarding the perquisites and benefits, see “—Interests of Our Directors and Executive Officers in the Mergers—Executive Severance Benefits.”
|
•
|
an individual citizen or resident of the United States;
|
•
|
a corporation, or other entity classified as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state thereof, or the District of Columbia;
|
•
|
a trust (1) the administration of which is subject to the primary supervision of a U.S. court and which has one or more “United States persons” (as defined under the Code) who have the authority to control all substantial decisions of the trust, or (2) that has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person; or
|
•
|
an estate the income of which is subject to U.S. federal income tax regardless of its source.
|
•
|
the organization, valid existence, good standing, qualification to do business and power and authority to own, lease and operate its properties and assets and to carry on the businesses of each of us, the Operating Company and our subsidiaries;
|
•
|
our charter and bylaws and the similar organizational documents of the Operating Company;
|
•
|
the capital structure and indebtedness of, and the absence of restrictions or encumbrances with respect to the equity interests of each of us the Operating Company and our subsidiaries;
|
•
|
our and the Operating Company’s power and authority to execute and deliver the merger agreement, and, subject to the approval of our common stockholders, to consummate the transactions contemplated by the merger agreement;
|
•
|
the enforceability of the merger agreement against us and the Operating Company;
|
•
|
the absence of conflicts with, or violations of, laws or organizational documents and the absence of any consents under, conflicts with or defaults under contracts to which we, the Operating Company or any of our subsidiaries is a party, in each case as a result of us executing, delivering and performing under or consummating the transactions contemplated by, the merger agreement;
|
•
|
approvals of, filings with, or notices to, governmental entities required in connection with entering into, performing under or consummating the transactions contemplated by, the merger agreement;
|
•
|
our and the Operating Company’s SEC filings since January 1, 2017 and the financial statements contained in those filings;
|
•
|
our internal controls over financial reporting and the disclosure controls and procedures and compliance with the Sarbanes-Oxley Act and the regulations promulgated thereunder;
|
•
|
the accuracy of the information supplied by us in this proxy statement;
|
•
|
the absence of any material adverse effect (as discussed below) and certain other changes and events since December 31, 2019;
|
•
|
the absence of certain material joint ventures or off-balance sheet arrangements;
|
•
|
the absence of liabilities required to be recorded on a balance sheet under GAAP since December 31, 2019;
|
•
|
possession of all permits necessary for us and our subsidiaries to own, lease and operate our and our subsidiaries’ properties and assets and to carry on and operate our and our subsidiaries’ businesses as currently conducted, the absence of a failure by us or our subsidiaries to comply with such permits, and the conduct by us and our subsidiaries of our and our subsidiaries’ businesses in compliance with applicable laws;
|
•
|
our and our subsidiaries’ compliance with laws, including the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder;
|
•
|
the absence of any suit, claim, action, investigation or proceeding against us or our subsidiaries;
|
•
|
our and our subsidiaries’ employee benefit plans and material compliance with ERISA;
|
•
|
labor matters affecting us and our subsidiaries;
|
•
|
the absence of certain discrimination harassment or misconduct by our employees;
|
•
|
tax matters affecting us and our subsidiaries;
|
•
|
real property owned and leased by us and our subsidiaries; our and our subsidiaries’ ground leases, development projects and joint venture agreements;
|
•
|
environmental matters affecting us and our subsidiaries;
|
•
|
intellectual property used by, owned by or licensed by us and our subsidiaries;
|
•
|
our and our subsidiaries’ material contracts and the absence of any breach of or default under the terms of any material contract;
|
•
|
our and our subsidiaries’ insurance policies;
|
•
|
the receipt by our board of directors of a fairness opinion from Jefferies, to the effect that, as of the date of such fairness opinion, the merger consideration to be received by the holders of our common shares is fair, from a financial point of view, to such holders;
|
•
|
the exemption of the mergers and the merger agreement from the requirements of any moratorium, control share, fair price, affiliate transaction, business combination or other takeover laws and regulations, including in the MGCL or the Delaware Limited Liability Company Act;
|
•
|
the vote of our common stockholders required in connection with the approval of the merger and the other transactions contemplated by the merger agreement and the approval of us as the sole managing member of the Operating Company;
|
•
|
our and our subsidiaries’ status under the Investment Company Act of 1940, as amended;
|
•
|
the absence of any broker’s or finder’s fees, other than those payable to Jefferies, in connection with the transactions contemplated by the merger agreement; and
|
•
|
certain related party transactions between the Company and its affiliates.
|
•
|
the entry into or the announcement, pendency or performance of the merger agreement or the transactions contemplated by the merger agreement, including (i) the identity of Parent and its affiliates, (ii) by reason of any communication by Parent or any of its affiliates regarding the plans or intentions of Parent with respect to the conduct of our and our subsidiaries’ business following the company merger effective time, (iii) the failure to obtain any third party consent in connection with the transactions contemplated thereby and (iv) the impact of any of the foregoing on any relationships with customers, suppliers, vendors, business partners, employees or any other person;
|
•
|
any change, event or development in or affecting financial, economic, social or political conditions generally or the securities, credit or financial markets in general, including interest rates or exchange rates, or any changes therein, in the United States or other countries in which we or our subsidiaries conduct operations or any change, event or development generally affecting the industries in which we and our subsidiaries operate;
|
•
|
any change in the market price or trading volume of our equity securities or of our or our subsidiaries’ equity or credit ratings or our or our subsidiaries’ ratings outlook by any applicable rating agency; provided, however, that the exception in this bullet point shall not prevent the underlying facts giving rise or contributing to such change, if not otherwise excluded from the definition of material adverse effect, from being taken into account in determining whether a material adverse effect has occurred;
|
•
|
the suspension of trading in securities generally on the New York Stock Exchange or any other exchange or system of quotations;
|
•
|
any adoption, implementation, proposal or change after the date of the merger agreement in any applicable law or GAAP or interpretation of any of the foregoing;
|
•
|
any action taken or not taken to which Parent has consented in writing;
|
•
|
any action expressly required to be taken by the merger agreement or taken at the request of Parent;
|
•
|
the failure of us or our subsidiaries to meet any internal or public projections, budgets, forecasts or estimates of revenues, earnings or other financial results or metrics for any period ending on or after the date of the merger agreement; provided, however, that the exception in this bullet point shall not prevent the underlying facts giving rise or contributing to such failure, if not otherwise excluded from the definition of material adverse effect, from being taken into account in determining whether a material adverse effect has occurred; and provided, further, that this bullet point shall not be construed as implying that we are making any representation or warranty with respect to any internal or public projections, budgets, forecasts or estimates of revenues, earnings or other financial results for any period;
|
•
|
the commencement, occurrence, continuation or escalation of any war, armed hostilities or acts of terrorism;
|
•
|
any actions or claims made or brought by any of our or our subsidiaries’ current or former stockholders or equityholders (or on their behalf or on behalf of us or our subsidiaries, but in any event only in their capacities as current or former stockholders or equityholders) arising out of the merger agreement or the mergers; or
|
•
|
the existence, occurrence or continuation of any force majeure events, including any earthquakes, floods, hurricanes, tropical storms, fires, contagion events (including the COVID-19 pandemic) or other natural disasters or any national, international or regional calamity;
|
•
|
their organization, valid existence, good standing, qualification to do business and power and authority to own, lease and operate its properties and assets and to carry on their businesses;
|
•
|
their power and authority to execute and deliver the merger agreement and to consummate the transactions contemplated by the merger agreement;
|
•
|
the enforceability of the merger agreement against them;
|
•
|
the absence of conflicts with, or violations of, laws or organizational or governing documents and the absence of any consents under, conflicts with or defaults under contracts to which they are a party, in each case as a result of them executing, delivering and performing under or consummating the transactions contemplated by, the merger agreement;
|
•
|
approvals of, filings with, or notices to, governmental entities required in connection with entering into, performing under or consummating the transactions contemplated by, the merger agreement;
|
•
|
the accuracy of the information supplied by them in this proxy statement;
|
•
|
the absence of any suit, claim, action or proceeding against them which would reasonably be expected to prevent or materially delay the consummation of the transactions contemplated by the merger agreement;
|
•
|
that Parent has taken all requisite actions to exempt the mergers from the requirements of certain anti-takeover statutes and regulations;
|
•
|
no broker, finder, investment banker or financial advisor (other than Raymond James & Associates, Inc. and KeyBank, N.A.) being entitled to any brokerage, finder’s or other fee or commission in connection with the mergers;
|
•
|
the ownership of Parent and Parent OP and absence of prior business or assets, liabilities or obligations of any nature (other than those incident to its formation pursuant to the merger agreement and the transactions contemplated thereby) of Parent and Parent OP;
|
•
|
Parent having received an executed equity commitment letter (of which we are an express third-party beneficiary) from the NexPoint Entities, committing, subject only to the terms expressly set forth therein, to provide equity financing of up to $769,619,409, and the absence of side letters, other agreements or arrangements related to the equity financing, and, subject to the qualifications therein, that, Parent will have the financial capability and sufficient funds available sufficient to satisfy all of Parent’s and Parent OP’s obligations under the merger agreement, including the payment of the merger consideration, the payment of the amounts contemplated by the treatment of equity-based awards and the payment of all associated fees, costs and expenses contemplated by the merger agreement or payable in connection with the transactions contemplated thereby by Parent and Parent OP; and
|
•
|
the solvency of the Surviving Company and each of its subsidiaries, including the Surviving OC, immediately following the company merger effective time and after giving effect to all of the transactions contemplated by the merger agreement.
|
•
|
to carry on our and our subsidiaries’ respective businesses in the ordinary course of business, in a manner materially consistent with the certain budgets that we have provided to Parent and past practice (other than with respect to any action taken in response to any contagion event (including the COVID-19 pandemic) that has been consented to by Parent;
|
•
|
to maintain and preserve substantially intact our and our subsidiaries’ current business organizations;
|
•
|
to retain the services of our and our subsidiaries’ respective current officers and key employees;
|
•
|
to preserve our and our subsidiaries’ goodwill and relationships with borrowers and developers to whom we have provided financing and others having business dealings with us and our subsidiaries; and
|
•
|
to preserve our and our subsidiaries’ assets and properties in good repair and condition (normal wear and tear excepted).
|
•
|
amend or propose to amend our or the Operating Company’s organizational documents, or, other than in the ordinary course of business consistent with past practice, our other wholly owned subsidiaries’ organizational documents;
|
•
|
authorize for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver any shares of any class or any equity equivalents (including any share options or share appreciation rights) or any other securities convertible into or exchangeable for any shares or any equity equivalents (including any share options or share appreciation rights), except for the issuance or sale of our common shares (1) pursuant to the exercise or vesting or redemption of our restricted stock awards outstanding on the date of the merger agreement in accordance with the merger agreement or (2) issuable upon exchange or redemption of Operating Company Units in accordance with the terms of the limited liability company agreement of the Operating Company, which we refer to as the Operating Company LLC Agreement;
|
•
|
split, combine or reclassify any of our or any of our subsidiaries’ stock or other equity interests, except (1) with the prior written consent of Parent, (2) for the payment of dividends or other distributions declared prior to the date of the merger agreement, (3) in transactions between us and one or more of our wholly owned subsidiaries or solely between our wholly owned subsidiaries, or (4) for distributions by any Company subsidiary that is not wholly owned, directly or indirectly, by us, as may be required by the organizational documents of such Company Subsidiary, authorize, declare, set aside or pay any dividend or other distribution in respect of our or our subsidiaries’ stock or other equity interests or make any actual, constructive or deemed distribution in respect of any shares of our or our subsidiaries’ share capital or other equity interests or otherwise make any payments to equityholders in their capacity as such;
|
•
|
redeem, repurchase or otherwise acquire, directly or indirectly, any of our or our subsidiaries’ securities or any securities of any of our or our subsidiaries’ subsidiaries, except (1) as may be required by our charter or the Operating Company LLC Agreement, (2) for the withholding of our common shares from an restricted stock award or acquisition of our common shares from a holder of a restricted stock award, in each case, in satisfaction of tax withholding obligations or in payment of the applicable exercise price in accordance with the terms of our applicable equity plan, or (3) as may be reasonably necessary for us to maintain our status as a REIT under the Code or avoid the payment of any income or excise tax;
|
•
|
enter into any contract with respect to the voting or registration of any share of stock or equity interest of us or our subsidiaries;
|
•
|
authorize, recommend, propose or announce an intention to adopt or effect, or adopt or effect a plan of complete or partial liquidation, dissolution, merger, consolidation, conversion, restructuring, recapitalization or other reorganization;
|
•
|
incur, assume, refinance or guarantee any indebtedness for borrowed money or issue any debt securities, or assume or guarantee any indebtedness for borrowed money of any person, except (1) for borrowings and guarantees under existing loan documents in the ordinary course of business consistent with past practice, (2) in connection with certain allowed acquisitions of any interest in any person or any assets, real property, personal property, equipment, business or other rights (subject to certain requirements, as described below);
|
•
|
prepay, refinance or amend any indebtedness, except for (1) repayments under our existing credit facilities in the ordinary course of business consistent with past practice (specifically excluding the loans secured, directly or indirectly, by any of our real property), and (2) mandatory payments under the terms of any indebtedness in accordance with its terms;
|
•
|
make loans, advances or capital contributions to or investments in any person (other than as required by any joint venture agreement or as otherwise permitted under the merger agreement (including certain capital expenditures or development expenditures, in each case, in the ordinary course of business consistent with past practice));
|
•
|
create or suffer to exist any lien (other than certain permitted liens) on shares of stock or other equity interests of any of our subsidiaries;
|
•
|
except as required by the terms of any Company employee benefit plan or applicable law, or otherwise permitted under the merger agreement, (1) enter into, adopt, amend or terminate any company employee benefit plan, (2) enter into, adopt, amend or terminate any agreement, arrangement, plan or policy between us or any of our subsidiaries and one or more of our or our subsidiaries’ (i) employees with an annual base salary of $100,000 or above or (ii) directors, (3) increase in any manner the compensation or fringe benefits of any employee, officer or director, (4) grant to any officer, director or employee the right to receive any severance, change of control or termination pay or termination benefits or any increase in the right to receive any severance, change of control or termination pay or termination benefits (provided, however, that for the purposes of retaining the services of current officers and key employees, as described above, the Company may either provide retention bonuses to or adopt a severance plan for the benefit of employees below the title of Senior Vice President so long as the aggregate amount payable under such severance plan does not exceed $300,000), (5) enter into any new employment, loan, retention, consulting, indemnification, change-in-control, termination or similar agreement with respect to any employee with an annual base salary below $100,000, (6) grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or company employee benefit plan (including the grant of stock options, stock appreciation rights, stock-based or stock-related awards, performance units or restricted stock, or long-term incentive units, under the Company equity plan or not), (7) hire any new employee, (8) take any action to fund, accelerate or in any way secure the payment of compensation or benefits under any employee plan, agreement, contract or arrangement or company employee benefit plan, (9) terminate the employment of any employee with an annual base salary of $100,000 or above, other than for “cause,” or (x) enter into a collective bargaining agreement;
|
•
|
other than in the ordinary course of business, sell, mortgage, transfer, assign, ground lease, dispose of, pledge or encumber (other than certain permitted liens) any of our or our subsidiaries’ material personal property, equipment or assets (other than as provided in the merger agreement) other than execution of easements, covenants, rights of way, restrictions and other similar instruments in the ordinary course of business;
|
•
|
sell, mortgage transfer, ground lease, dispose of, pledge, or encumber (other than certain permitted liens) any real property (including our real property) other than execution of easements, covenants, rights of way, restrictions and other similar instruments in the ordinary course of business, except in connection with the incurrence of any indebtedness permitted to be incurred by the Company pursuant to the merger agreement;
|
•
|
make any material change to any financial accounting policies or financial accounting procedures that would materially affect the consolidated assets, liabilities or results of operations of us or any of our subsidiaries or fail to maintain all financial books and records in all material respects in accordance with GAAP, except as may be required as a result of a change in law or in GAAP or statutory or regulatory accounting rules or interpretations with respect thereto or any governmental entity or quasi-governmental entity;
|
•
|
acquire or agree to inquire any interest in any person (or equity interests thereof) or any assets, real property, personal property, equipment, business or other rights, other than acquisitions of personal property (and not real property) in the ordinary course of business consistent with past practice for consideration that does not exceed $ 250,000 individually or in the aggregate;
|
•
|
except in each case if we determine, after prior consultation with Parent, that such action is reasonably necessary to preserve our status as a REIT or to preserve the status of any Company subsidiary as a REIT, partnership, disregarded entity, taxable REIT subsidiary or qualified REIT subsidiary, for U.S. federal tax purposes, (1) incur any taxes outside of the ordinary course of business, (2) file any tax return inconsistent with past practice, (3) amend any income or other material tax return, (4) make or change any material tax election, (5) settle or compromise any material tax claim or assessment by any governmental entity, (6) change any material accounting method with respect to taxes, (7) enter into any agreement with respect to any tax or tax returns of the Company or any Company subsidiary (including a closing agreement), with a taxing authority, (8) surrender any right to claim a refund of a material amount of taxes, or (9) consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment;
|
•
|
take any action that would, or fail to take any action, the failure of which to be taken would, reasonably be expected to cause us to fail to qualify as a REIT;
|
•
|
waive, release, assign, settle or compromise any claim, suit or proceeding against us or any of our subsidiaries (or for which we or any of our subsidiaries would be financially responsible) (other than claims, suits or proceedings with respect to taxes), except for (1) settlements or compromises providing solely for payment of monetary damages less than $500,000 individually, or $1,000,000 in the aggregate, or (2) claims, suits or proceedings arising from the ordinary course of our operations involving collection matters or personal injury which are fully covered by adequate insurance (subject to customary deductibles);
|
•
|
enter into any new line of business;
|
•
|
amend or terminate, or waive compliance with the terms of or breaches under, or assign, or renew or extend (except as may be required under the terms thereof), any material contract, or enter into any new contract that, if entered into prior to the date of the merger agreement, would have been a material contract;
|
•
|
make, enter into any contract for, or otherwise commit to any capital expenditures or development expenditures on, relating to, or adjacent to any of our real property, except for (1) capital expenditures and development expenditures required by law, (2) capital expenditures up to certain specified thresholds subject to a budget, (3) development expenditures up to certain specified thresholds subject to a budget and (4) emergency capital expenditures and development expenditures to repair any casualty losses in an amount not exceeding $500,000;
|
•
|
initiate or consent to any material zoning reclassification of any of our real property or any material change to any approved site plan (in each case, that is material to our real property or plan, as applicable), special use permit or other land use entitlement affecting any of our material real property in any material respect;
|
•
|
amend, modify or terminate, or authorize any person to amend, modify, terminate or allow to lapse, any material company permit;
|
•
|
fail to use commercially reasonable efforts to maintain in full force and effect our or our subsidiaries’ existing insurance policies or to replace our insurance policies with comparable insurance policies covering us and our subsidiaries and our subsidiaries’ respective properties, assets and businesses (including real property);
|
•
|
issue shares of our common stock pursuant to our current “at-the-market” facility or enter into any similar program or facility;
|
•
|
enter into, amend or modify any tax protection agreement, or take any action or fail to take any action that would violate or be inconsistent with any tax protection agreement or otherwise give rise to a material liability with respect thereto; and
|
•
|
authorize or enter into any contract or arrangement to do any of the actions described in the foregoing bullet points.
|
•
|
any merger, consolidation, share exchange, recapitalization, dissolution, liquidation, business combination or other similar transaction involving us or the Operating Company;
|
•
|
any sale, lease, exchange, mortgage, pledge, transfer or other disposition, directly or indirectly, by merger, consolidation, sale of equity interests, share exchange, joint venture, business combination or otherwise, of 15% or more of the consolidated assets of us, the Operating Company and our other subsidiaries, taken as a whole (as determined on a book-value basis (including indebtedness secured solely by such assets)), in a single transaction or series of related transactions;
|
•
|
any issue, sale or other disposition (including by way of merger, consolidation, sale of equity interests, share exchange, joint venture, business combination or otherwise) of securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing 15% or more of our voting power or 15% or more of the equity interests in the Operating Company;
|
•
|
any tender offer or exchange offer for 15% or more of any class of our equity securities or 15% or more of the equity interests in the Operating Company;
|
•
|
any other transaction or series of related transactions pursuant to which any third party proposes to acquire control of our or the Operating Company’s and our respective subsidiaries’ assets having a fair market value equal to or greater than 15% of the fair market value of all of our, the Operating Company’s and our respective subsidiaries’ assets, taken as a whole, immediately prior to such transaction; or
|
•
|
any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing.
|
•
|
to the extent necessary to ensure that any required supplement or amendment to this proxy statement is provided to our stockholders within a reasonable amount of time in advance of a vote on the merger and the other transactions contemplated by the merger agreement;
|
•
|
for the absence of a quorum; or
|
•
|
if additional time is reasonably required to solicit proxies in favor of the approval of the merger, provided that, in the case of this third bullet point, without the written consent of Parent, in no event will the special meeting (as so postponed or adjourned) be held on a date that is more than 30 days after the date for which the special meeting was originally scheduled.
|
•
|
preparing and filing as promptly as practicable with the objective of being in a position to consummate the mergers as promptly as practicable following the date of the special meeting, all documentation to effect all necessary or advisable applications, notices, petitions, filings, and other documents and to obtain as promptly as practicable all consents, waivers, licenses, orders, registrations, approvals, permits, rulings, authorizations and clearances necessary or advisable to be obtained from any governmental entity or third party in connection with the transactions contemplated by the merger agreement, including any that are required to be obtained under any federal, state or local law or contract to which we or our subsidiaries are a party or by which any of our or our subsidiaries’ properties or assets are bound;
|
•
|
defending all lawsuits or other legal proceedings against us or our affiliates relating to or challenging the merger agreement or the consummation of the mergers; and
|
•
|
effecting all necessary or advisable registrations and other filings required under the Exchange Act or any other federal, state or local law relating to the mergers.
|
•
|
solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, discussion, offer, request or proposal that constitutes, or could reasonably be expected to lead to, a company acquisition proposal (which we refer to as an inquiry) including by providing information (including
|
•
|
engage in any discussions or negotiations regarding, or furnish to any third party any non-public information in connection with, or knowingly facilitate in any way any effort by, any third party in furtherance of any company acquisition proposal or inquiry;
|
•
|
approve or recommend a company acquisition proposal;
|
•
|
enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar definitive agreement (but excluding an Acceptable Confidentiality Agreement) providing for a company acquisition proposal or requiring us or the Operating Company to abandon, terminate or fail to consummate the transactions contemplated by the merger agreement; or
|
•
|
propose or agree to do any of the foregoing.
|
•
|
furnish non-public information to such third party (and such third party’s representatives including potential financing sources of such third party) if, prior to furnishing such information, we receive from the third party an executed Acceptable Confidentiality Agreement and any material non-public information concerning us or any of our subsidiaries that is provided to such third party (or its representatives) shall, to the extent not previously provided to Parent, be provided to Parent as promptly as practicable after providing it to such third party (and in any event within 24 hours thereafter); and
|
•
|
engage in discussions or negotiations with such third party (and such third party’s representatives including potential financing sources of such third party) with respect to the company acquisition proposal.
|
•
|
change, withhold, withdraw, modify or qualify in any manner adverse to Parent (or resolve to or publicly propose to or announce an intention to change, withhold, withdraw, modify or qualify in a manner adverse to Parent) our board of directors’ recommendation with respect to the merger;
|
•
|
approve, adopt or recommend (or resolve to or publicly propose to or announce an intention to approve, adopt or recommend) any company acquisition proposal;
|
•
|
fail to include our board of directors’ recommendation with respect to the merger in this proxy statement;
|
•
|
within five business days of Parent’s written request, fail to make or reaffirm our board of directors’ recommendation with respect to the merger following the date any company acquisition proposal or any material modification thereto is first published or sent or given to the stockholders of the Company;
|
•
|
fail to recommend, in a Solicitation/Recommendation Statement on Schedule 14D-9, against any company acquisition proposal that is a tender offer or exchange offer subject to Regulation 14D promulgated under the Exchange Act within 10 business days after the commencement (within the meaning of Rule 14d-2 under the Exchange Act) of such tender offer or exchange offer; or
|
•
|
publicly propose or agree to any of the foregoing;
|
•
|
approve, adopt, declare advisable or recommend (or agree to, resolve or propose to approve, adopt, declare advisable or recommend), or cause or permit us or any of our subsidiaries to enter into, any letter of intent, memorandum of understanding, agreement in principle, acquisition
|
•
|
may effect an adverse recommendation change if an intervening event has occurred and our board of directors determines, after consultation with its outside legal counsel, that the failure to take such action would reasonably be expected to be inconsistent with our directors’ duties under applicable law;
|
•
|
may effect an adverse recommendation change and/or terminate the merger agreement to enter into a definitive agreement providing for the implementation of a superior proposal in response to an unsolicited written bona fide company acquisition proposal (and we are not in material breach of provisions described above under “—Restriction on Solicitation of Company Acquisition Proposals”) that our board of directors determines, after consultation with outside legal counsel and financial advisors, constitutes a superior proposal, after having complied with, and giving effect to all of the adjustments to the merger agreement which may be offered by Parent, and such company acquisition proposal is not withdrawn and our board of directors determines, after consultation with its outside legal counsel, that the failure to take such action would reasonably be expected to be inconsistent with the directors’ duties under applicable Law;
|
•
|
may effect an adverse recommendation change and/or terminate the merger agreement if the following requirements are satisfied:
|
○
|
if we provide prior written notice to Parent of our intention to, take such action (which we refer to as a notice of change of recommendation), identifying the person making the superior proposal and describing the material terms and conditions of the superior proposal or intervening event, as applicable, that is the basis for such action including, if applicable, copies of any written proposals or offers and any proposed written agreements related to a superior proposal (it being agreed that the delivery of such notice will not constitute an adverse recommendation change);
|
○
|
if we negotiate with Parent in good faith for a period of four business days following Parent’s receipt of the notice of change of recommendation described in the bullet point immediately above (which we refer to as a notice of change period) to make such adjustments in the terms and conditions of the merger agreement, so that, in the case of a superior proposal, such superior proposal ceases to constitute a superior proposal, or in the case of an intervening event, in order to obviate the need to make such adverse recommendation change; and
|
○
|
if our board of directors, following the end of the notice of change period after Parent’s receipt of the notice of change of recommendation, has determined in good faith, after consultation with outside legal counsel and financial advisors, taking into account any changes to the merger agreement proposed in writing by Parent in response to the notice of change of recommendation or otherwise, that (1) the superior proposal giving rise to the notice of change of recommendation continues to constitute a superior proposal or (2) in the case of an intervening event, the failure of the board to effect an adverse recommendation change would reasonably be expected to be inconsistent with our directors’ duties under applicable law.
|
•
|
the receipt, existence of or terms of an inquiry or a company acquisition proposal or any matter relating thereto or consequence thereof;
|
•
|
changes in the market price or trading volume of our common shares or the fact that we meet or exceed internal or published projections, budgets, forecasts or estimates of revenues, earnings or other financial results for any period, provided, however, that the underlying causes of such change or fact will not be excluded by the provision described in this bullet point; and
|
•
|
any event, development or change in circumstances with respect to Parent, Parent OP or their respective affiliates.
|
•
|
to the extent expressly required of Parent by a financing commitment letter, assisting in preparation for and participation in marketing efforts;
|
•
|
providing to Parent certain financial information;
|
•
|
providing reasonable access to representatives of the alternative financing sources to conduct appraisals and inspections of the Company’s owned real properties and leased real properties that do not involve a Phase II environmental site assessment or invasive testing or sampling of soil, groundwater, indoor air or other environmental media; and
|
•
|
executing and delivering definitive agreements with respect to the debt financing contemplated by an alternative financing commitment letter, subject to the occurrence of the closing of the merger, including executing an amendment, an amendment and restatement, waiver or consent under the Company’s existing credit facility such that the Company’s existing credit facility remains in place and is available upon the company merger effective time and upon the consummation of the mergers and transactions contemplated by the merger agreement.
|
•
|
be required to take any action that would result in a violation of applicable law or breach of any contract (including the merger agreement) or subject it to actual or potential liability;
|
•
|
be required to bear any cost or expense;
|
•
|
be required to pay any commitment fees, expenses or other amounts or make any other payment or incur any other liability or provide or agree to provide any indemnity prior to the closing of the mergers;
|
•
|
be required to take any action in the capacity as a member of the board of directors or board of managers or similar body to authorize or approve such financing;
|
•
|
have any liability or any obligation under any definitive financing agreement or any related document or other agreement or document related to such financing, other than any such liability or obligation of the Company following the closing of the mergers;
|
•
|
be required to incur any other liability in connection with the financing, other than any other liability incurred by the Company following the closing of the mergers;
|
•
|
be required to disclose or provide any information the disclosure of which, in the reasonable judgment of the Company, is restricted by contract, applicable law, order, is subject to attorney-client privilege or could result in the disclosure of any trade secrets of third parties or violate any obligation of the Company with respect to confidentiality;
|
•
|
be required to issue a private placement memoranda, confidential information memoranda or prospectus (and no such private placement memoranda or prospectus will reflect the Company or any Company subsidiary as the issuer);
|
•
|
be required to issue any offering or information document or provide or deliver any legal opinion; or
|
•
|
be required to participate in “road shows” or similar sales or marketing events.
|
•
|
giving Parent and its authorized representatives reasonable access to our and our subsidiaries’ properties, facilities, personnel and books and records;
|
•
|
the filing of this proxy statement with the SEC, and cooperation in preparing this proxy statement and in responding to any comments received from the SEC on this proxy statement;
|
•
|
actions necessary to exempt the merger agreement and the transactions contemplated by the merger agreement from, or mitigate, the effect of any applicable anti-takeover statutes;
|
•
|
the consultation regarding any press releases or other public statements with respect to the merger agreement or the mergers;
|
•
|
the indemnification of our and our subsidiaries’ directors and officers;
|
•
|
notification of certain matters; and
|
•
|
certain tax matters.
|
•
|
the merger and the other transactions contemplated by the merger agreement must be approved by the affirmative vote of the holders of our common shares entitled to cast not less than a majority of all the votes entitled to be cast on the matter; and
|
•
|
no governmental entity of competent jurisdiction has enacted, issued, promulgated, enforced or entered any law or order (whether temporary, preliminary or permanent) which is then in effect and has the effect of making the mergers illegal or otherwise restricting, preventing or prohibiting the consummation of the mergers.
|
•
|
our and the Operating Company’s representations and warranties must be true and correct (determined without regard to any materiality or material adverse effect qualifications therein) as of the date of the merger agreement and as of the closing date as though made on and as of the closing date (except to the extent a representation or warranty is made as of a specific date, in which case such representation or warranty must be true and correct at and as of such date, without regard to any such qualifications therein), except where the failure of such representations and warranties to be true and correct has not had, or would not, individually or in the aggregate, reasonably be expected to have a material adverse effect, except for (i) certain of our and the Operating Company’s representations and warranties regarding our, the Operating Company’s and our other subsidiaries’ organizational standing, legal authority and obligations to brokers, which must be true and correct in all material respects; (ii) certain of our and the Operating Company’s representations and warranties regarding our, the Operating Company’s and our other subsidiaries’ capitalization, which must be true and correct in all respects, except to the extent of any de minimus inaccuracies and (2) our and the Operating Company’s representations and warranties regarding the absence of a material adverse effect, which must be true and correct in all respects;
|
•
|
we and the Operating Company must have performed and complied, in all material respects, with all of our and its obligations, agreements and covenants required by the merger agreement to be performed or complied with on or prior to the closing date (other than certain obligations to assist and cooperate with the Parent’s financing, so long as such failure to perform is not the result of a willful or intentional breach by us or the Operating Company, or our obligations to provide landlord estoppels to Parent);
|
•
|
Parent must have received the written tax opinion of our counsel, King & Spalding LLP or such other law firm as may be reasonably acceptable to Parent, dated as of the closing date, concluding for all taxable periods commencing with our taxable year ended December 31, 2015 we have been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code; and
|
•
|
from the date of the merger agreement through the closing date, there must not have occurred a change, event, state of facts or development which has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect.
|
•
|
the representations and warranties of Parent and Parent OP must be true and correct in all material respects as of the date of the merger agreement and as of the closing date as though made on and as of the closing date (except to the extent a representation or warranty is made as of a specific date, in which case such representation or warranty must be true and correct at and as of such date, without regard to any such qualifications therein), except where the failure of such representation or warranty to be true and correct would not individually or in the aggregate reasonably be expected to have a parent material adverse effect, except that certain our parents representations and warranties certain of Parent’s and Parent OP’s representations and warranties regarding such parties’ capitalization, which must be true and correct in all respects; and
|
•
|
each of Parent and Parent OP must have performed and complied, in all material respects, with all of their obligations, agreements and covenants required by the merger agreement to be performed or complied with on or prior to the closing date.
|
•
|
any governmental entity of competent authority has issued an order, decree or ruling or taken any other action in each case permanently restraining, enjoining or otherwise prohibiting the mergers substantially on the terms contemplated by the merger agreement and such order, decree, ruling or other action has become final and non-appealable, provided, that the right to terminate the merger agreement pursuant to this bullet point is not available to a party if the issuance of such final, non-appealable order, decree or ruling or taking of such other action was primarily due to the failure of us or the Operating Company, in the case of termination by us, or Parent or Parent OP, in the case of termination by Parent, to perform any of its obligations under the merger agreement;
|
•
|
the mergers have not been consummated by December 31, 2020, provided that the right to terminate the merger agreement under this bullet point is not available to us, if the Company or the Operating Company, or to Parent, if Parent or Parent OP, as applicable, has breached in any material respect its obligations under the merger agreement in any manner that has caused or resulted in the failure to consummate the mergers on or before December 31, 2020; or
|
•
|
the requisite vote of our common stockholders to approve the merger and the other transactions contemplated by the merger agreement has not been obtained at the duly held special meeting or any adjournment or postponement thereof at which the merger is voted on.
|
•
|
prior to obtaining the requisite vote of our common stockholders to approve the merger and the other transactions contemplated by the merger agreement, our board of directors effects an adverse recommendation change in accordance with the requirements described above under “—Obligation of the Board of Directors with Respect to Its Recommendation” in connection with a superior proposal and our board of directors has approved, and concurrently with the termination under the provision described in this bullet point, we enter into, a definitive agreement providing for the implementation of a superior proposal, but only if we are not then in material breach of our obligations described under “—Restriction on Solicitation of Company Acquisition Proposals,” provided that such termination will not be effective until we have paid the company termination fee (as described below);
|
•
|
Parent or Parent OP has breached or failed to perform any of its representations, warranties, covenants or other agreements contained in the merger agreement such that a closing condition relating to its representations, warranties, covenants or agreements would be incapable of being satisfied by December 31, 2020 (subject to a 20-day cure period after written notice by the Company to Parent informing Parent of such breach or failure to perform and Company’s intention to terminate the merger agreement, except that no cure period is required for a breach or failure that by its nature cannot be cured prior to December 31, 2020); provided that neither we nor the Operating Company have breached or failed to perform any of our or its representations, warranties, covenants or other agreements contained in the merger agreement in any material respect; or
|
•
|
all of the following requirements are satisfied:
|
○
|
all of the mutual conditions to the parties’ obligations to effect the mergers and the additional conditions to the obligations of Parent and Parent OP to effect the mergers have been satisfied or waived by Parent (other than those conditions that by their nature are to be satisfied at the closing of the mergers, provided that such conditions to be satisfied at the closing of the mergers would be satisfied as of the date of the notice referenced in the immediately following bullet point if the closing of the mergers were to occur on the date of such notice);
|
○
|
on or after the date the closing of the mergers should have occurred pursuant to the merger agreement, we have delivered irrevocable written notice to Parent to the effect that all of the mutual conditions to the parties’ obligations to effect the mergers and the additional conditions to the obligations of Parent and Parent OP to effect the mergers have been satisfied or waived by Parent (other than those conditions that by their nature are to be satisfied at the closing of the mergers, provided that such conditions to be satisfied at the closing of the mergers would be satisfied as of the date of such notice if the closing of the mergers were to occur on the date of such notice) and we and the Operating Company are ready, willing and able to consummate the closing of the mergers; and
|
○
|
Parent and Parent OP fail to consummate the closing of the mergers on or before the third business day after delivery of the notice referenced in the immediately preceding bullet point, and we and the Operating Company stood ready, willing and able to consummate the closing of the mergers during such three business day period.
|
•
|
we or the Operating Company have breached or failed to perform any of our or the Operating Company’s representations, warranties, covenants or other agreements contained in the merger agreement such that the closing conditions relating to our and the Operating Company’s
|
•
|
our board of directors has effected, or resolved to effect, an adverse recommendation change, or we enter into a letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar definitive agreement providing for or relating to a company acquisition proposal or requiring us or the Operating Company to abandon, terminate or fail to consummate the transactions contemplated by the merger agreement (other than an acceptable confidentiality agreement).
|
•
|
Parent terminates the merger agreement pursuant to the provision described in the second bullet point under “—Termination of the Merger Agreement—Termination by Parent”;
|
•
|
we terminate the merger agreement pursuant to the provision described in the first bullet point under “—Termination of the Merger Agreement—Termination by the Company”; or
|
•
|
all of the following requirements are satisfied:
|
○
|
we or Parent terminate the merger agreement pursuant to the provisions described in the second bullet point under “—Termination of the Merger Agreement—Termination by either the Company or Parent” or Parent terminates the merger agreement pursuant to the provision described in the first bullet point under “—Termination of the Merger Agreement—Termination by Parent”; and
|
○
|
(1) a company acquisition proposal has been received by us or our representatives or any person has publicly proposed or publicly announced an intention (whether or not conditional) to make a company acquisition proposal and (2) within twelve months after a termination referred to in the immediately preceding sub-bullet point we enter into a definitive agreement relating to, or consummate, any company acquisition proposal (with, for purposes of this clause (2), the references to “15%” in the definition of “company acquisition proposal” being deemed to be references to “50%”).
|
Year
|
| |
Range
|
| |
Cash
Dividend
per Share
|
|||
|
High
|
| |
Low
|
| ||||
Fiscal Year Ended December 31, 2018
|
| |
|
| |
|
| |
|
First Quarter
|
| |
$19.09
|
| |
$16.13
|
| |
$0.35
|
Second Quarter
|
| |
$20.28
|
| |
$17.63
|
| |
$0.35
|
Third Quarter
|
| |
$20.01
|
| |
$18.05
|
| |
$0.35
|
Fourth Quarter
|
| |
$21.99
|
| |
$18.95
|
| |
$0.35
|
Fiscal Year Ended December 31, 2019
|
| |
|
| |
|
| |
|
First Quarter
|
| |
$22.01
|
| |
$19.63
|
| |
$0.35
|
Second Quarter
|
| |
$21.73
|
| |
$20.30
|
| |
$0.35
|
Third Quarter
|
| |
$20.83
|
| |
$19.13
|
| |
$0.35
|
Fourth Quarter
|
| |
$19.96
|
| |
$17.31
|
| |
$0.35
|
Fiscal Year Ending December 31, 2020
|
| |
|
| |
|
| |
|
First Quarter
|
| |
$20.54
|
| |
$9.34
|
| |
$0.23
|
Second Quarter
|
| |
$16.16
|
| |
$10.55
|
| |
$0.23
|
Third Quarter (through [•], 2020)
|
| |
$[•]
|
| |
$[•]
|
| |
$[•]
|
•
|
all shares the investor actually owns beneficially or of record;
|
•
|
all shares over which the investor has or shares voting or dispositive control (such as in the capacity as a general partner of an investment fund); and
|
•
|
all shares the investor has the right to acquire within 60 days (such as upon exercise of options that are currently vested or which are scheduled to vest within 60 days) after August 18, 2020.
|
Name of Beneficial Owner
|
| |
Number of
Shares
Beneficially
Owned
|
| |
Percentage
of
All Shares(1)
|
| |
Number of
OC Units
Beneficially
Owned
|
| |
Percentage
of All
Shares and
OC Unit(1)(2)
|
Named Executive Officers (“NEOs”):
|
| |
|
| |
|
| |
|
| |
|
John A. Good
|
| |
313,567(3)
|
| |
1.3%
|
| |
179,487(8)(9)
|
| |
1.9%
|
Kelly P. Luttrell
|
| |
41,774(4)
|
| |
*
|
| |
—
|
| |
*
|
Jonathan L. Perry
|
| |
73,729(5)
|
| |
*
|
| |
76,923(9)
|
| |
*
|
Independent Directors:
|
| |
|
| |
|
| |
|
| |
|
Mark O. Decker
|
| |
29,716
|
| |
*
|
| |
—
|
| |
*
|
James Dondero
|
| |
572,414(6)
|
| |
2.5%
|
| |
—
|
| |
2.2%
|
Rebecca Owen
|
| |
7,071
|
| |
*
|
| |
—
|
| |
*
|
Howard A. Silver
|
| |
25,386
|
| |
*
|
| |
—
|
| |
*
|
Dr. Harry J. Thie
|
| |
30,905(7)
|
| |
*
|
| |
—
|
| |
*
|
All directors and executive officers as a group (9 persons)(10)
|
| |
1,118,281
|
| |
4.8%
|
| |
256,410(9)
|
| |
5.2%
|
5% or Greater Owners
|
| |
|
| |
|
| |
|
| |
|
The Vanguard Group(11)
|
| |
2,300,596
|
| |
9.9%
|
| |
—
|
| |
—
|
BlackRock, Inc.(12)
|
| |
2,316,011
|
| |
10.0%
|
| |
—
|
| |
—
|
Ranger Global Real Estate Advisors, LLC(13)
|
| |
1,266,799
|
| |
5.5%
|
| |
—
|
| |
—
|
Strategic Storage Growth Trust II, Inc.(14)
|
| |
1,466,214
|
| |
6.3%
|
| |
|
| |
|
*
|
Less than 1% of our outstanding common stock.
|
(1)
|
Based on an aggregate of 23,263,130 shares of our common stock outstanding as of August 18, 2020.
|
(2)
|
Based on an aggregate of 2,386,935 Operating Company Units outstanding as of August 18, 2020.
|
(3)
|
Includes 49,534 shares of unvested restricted common stock and 24,996 shares of common stock underlying PSU awards, assuming attainment of maximum performance under such PSU awards.
|
(4)
|
Includes 12,485 shares of unvested restricted common stock and 7,690 shares of common stock underlying PSU awards, assuming attainment of maximum performance under such PSU awards.
|
(5)
|
Includes 33,303 shares of unvested restricted common stock and 15,382 shares of common stock underlying PSU awards, assuming attainment of maximum performance under such PSU awards.
|
(6)
|
Includes 133,150 shares held by Highland Capital Management Fund Advisors, L.P. (“HCMFA”) indirectly through advised accounts and 439,264 shares held by NexPoint Advisors indirectly through advised accounts. Mr. Dondero is the sole stockholder and director of Strand Advisors XVI, Inc., HCMFA’s general partner, and may be deemed to be an indirect beneficial owner of shares held by HCMFA. Mr. Dondero is the sole member of NexPoint Advisor’s general partner, and may be deemed to be an indirect beneficial owner of shares held by NexPoint Advisors. Mr. Dondero disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein.
|
(7)
|
Includes 2,000 shares of common stock owned by Dr. Thie’s wife.
|
(8)
|
Mr. Good intends to pledge his OC Units as collateral for a personal line of credit.
|
(9)
|
In addition, each of Messrs. Good and Perry will be entitled to 76,923 Operating Company Units, which we refer to as Earn-Out Consideration, upon the earlier of: (1) the Company’s common stock trading at or above a daily volume weighted price of $25.00 per share for at least 30 days during any trailing 365-day period prior to December 31, 2024 or (2) a “change of control” of the Company approved by our board of directors and our stockholders that occurs prior to December 31, 2024, including the mergers. See “The Mergers—Interests of our Directors and Executive Officers in the Merger—Operating Company Units Granted As Earn-Out Consideration in Connection with the Internalization Transactions.”
|
(10)
|
Includes 23,719 shares of common stock owned by David Corak, our Senior Vice President, Corporate Finance.
|
(11)
|
The indicated ownership is based solely on a Schedule 13G/A filed with the SEC by the beneficial owner on February 12, 2020. The Schedule 13G/A indicates that the entity has sole voting power over 23,009 shares, shared voting power over 5,285 shares, shared dispositive power over 24,010 shares and sole dispositive power over 2,276,586 shares. The principal business address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
|
(12)
|
The indicated ownership is based solely on a Schedule 13G/A filed with the SEC by the beneficial owner on July 10, 2020. The Schedule 13G/A indicates that the entity has sole voting power over 2,316,011 shares and sole dispositive power over 2,349,923 shares. The principal business address of Black Rock, Inc. is 55 East 52nd Street New York, New York 10055.
|
(13)
|
The indicated ownership is based solely on a Schedule 13G/A filed with the SEC by the beneficial owner on April 1, 2020. The Schedule 13G/A indicates that the entity has sole voting power over 1,266,799 shares and sole dispositive power over all 1,266,799 shares. The principal business address of Ranger Global Real Estate Advisors, LLC is 1801 Wewatta Street, 11th Floor, Denver, CO 80202.
|
(14)
|
The indicated ownership is based solely on a Schedule 13D filed with the SEC by the beneficial owner on April 28, 2020. The Schedule 13D indicates that the entity has sole voting power over 1,466,214 shares and sole dispositive power over all 1,466,214 shares. The principal business address of Strategic Storage Growth Trust II, Inc. is 10 Terrace Road, Ladera Ranch, CA 92694.
|
Name and Address of Beneficial Owner(1)
|
| |
Amount and Nature of
Beneficially Ownership
|
| |
Percentage of Class
|
NexPoint Strategic Opportunities Fund
|
| |
78,896
|
| |
56.4%
|
NREF OP IV REIT SUB, LLC
|
| |
41,254
|
| |
29.5%
|
Highland Income Fund
|
| |
17,755
|
| |
12.7%
|
NexPoint Real Estate Strategies Fund
|
| |
1,970
|
| |
1.4%
|
(1)
|
The principal business address of each of NexPoint Strategic Opportunities Fund, NREF OP IV REIT SUB, LLC, Highland Income Fund, and NexPoint Real Estate Strategies Fund is 300 Crescent Court, Suite 700, Dallas, TX 75201.
|
•
|
our Annual Report on Form 10-K for the year ended December 31, 2019;
|
•
|
our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020;
|
•
|
our Definitive Proxy Statement on Schedule 14A filed with the SEC on March 19, 2020;
|
•
|
our Current Reports on Form 8-K filed with the SEC on February 6, 2020, February 24, 2020, March 27, 2020, April 30, 2020 and August 3, 2020; and
|
•
|
all documents filed by us with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement and prior to the date of the special meeting.
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| | | |
Exhibit A
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| |
Form of Company Tax Representation Letter
|
Exhibit B
|
| |
Form of Company REIT Opinion
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Term
|
| |
Section
|
Adverse Recommendation Change
|
| |
Section 6.6(e)
|
Agreement
|
| |
Preamble
|
Alternative Acquisition Agreement
|
| |
Section 6.6(b)
|
Alternative Financing
|
| |
Section 6.15(a)
|
Alternative Financing Commitment Letter
|
| |
Section 6.15(a)
|
Bankruptcy and Equity Exception
|
| |
Section 4.3(a)
|
Book-Entry Share
|
| |
Section 3.1(b)
|
Capital Expenditure Budget
|
| |
Section 4.14(d)
|
Capital Expenditures
|
| |
Section 4.14(d)
|
Capitalization Date
|
| |
Section 4.2(a)
|
Certificate
|
| |
Section 3.1(b)
|
Chosen Courts
|
| |
Section 9.4(b)
|
Closing
|
| |
Section 2.3
|
Closing Date
|
| |
Section 2.3
|
COBRA
|
| |
Section 4.11(d)
|
Code
|
| |
Background
|
Company
|
| |
Preamble
|
Company Board
|
| |
Background
|
Company Bylaws
|
| |
Section 4.1(b)
|
Company Charter
|
| |
Section 4.1(b)
|
Company Disclosure Letter
|
| |
Article IV
|
Company Employee
|
| |
Section 6.9(a)
|
Company Employee Benefit Plan
|
| |
Section 4.11(a)
|
Company Financial Statements
|
| |
Section 4.5(a)
|
Term
|
| |
Section
|
Company Intellectual Property Rights
|
| |
Section 4.16(b)
|
Company JV Entity
|
| |
Section 4.1(d)
|
Company Leased Real Property
|
| |
Section 4.14(b)
|
Company Leases
|
| |
Section 4.14(b)
|
Company Material Contract
|
| |
Section 4.17(b)
|
Company Merger
|
| |
Background
|
Company Merger Articles of Merger
|
| |
Section 2.2(a)
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Company Merger Effective Time
|
| |
Section 2.2(a)
|
Company Permits
|
| |
Section 4.9(a)
|
Company Recommendation
|
| |
Section 6.4
|
Company REIT Opinion
|
| |
Section 7.2(c)
|
Company Related Parties
|
| |
Section 8.3(g)
|
Company Requisite Vote
|
| |
Section 4.21
|
Company SEC Documents
|
| |
Section 4.5(a)
|
Company Series A Preferred Shares
|
| |
Section 4.2(a)
|
Company Series B Preferred Shares
|
| |
Section 4.2(a)
|
Company Shares
|
| |
Section 4.2(a)
|
Company Stockholders’ Meeting
|
| |
Section 6.4
|
Company Termination Fee
|
| |
Section 8.3(b)
|
Confidentiality Agreement
|
| |
Section 6.2(b)
|
Definitive Debt Financing Agreements
|
| |
Section 6.15(a)
|
Definitive Equity Financing Agreements
|
| |
Section 6.14(a)
|
Definitive Financing Agreements
|
| |
Section 6.15(a)
|
Development Expenditures
|
| |
Section 4.14(d)
|
Development Projects
|
| |
Section 4.14(d)
|
DFS Provisions
|
| |
Section 9.5(b)
|
DLLCA
|
| |
Background
|
DRULPA
|
| |
Background
|
DSOS
|
| |
Section 2.2(b)
|
Equity Commitment Letter
|
| |
Section 5.9
|
Equity Financing
|
| |
Section 5.9
|
Equity Sponsors
|
| |
Section 5.9
|
ERISA
|
| |
Section 4.11(a)
|
Exchange Agent
|
| |
Section 3.4(a)
|
Exchange Fund
|
| |
Section 3.4(a)
|
Existing Loan Documents
|
| |
Section 4.17(b)(iii)
|
FCPA
|
| |
Section 4.9(c)
|
Financing
|
| |
Section 6.15(a)
|
Financing Commitment Letters
|
| |
Section 6.15(a)
|
Financing Indemnitees
|
| |
Section 6.15(b)
|
GAAP
|
| |
Section 4.5(a)
|
Indemnified Liabilities
|
| |
Section 6.8(a)
|
Indemnified Party
|
| |
Section 6.8(a)
|
Inquiry
|
| |
Section 6.6(a)
|
Intellectual Property Rights
|
| |
Section 4.16(b)
|
Interim Period
|
| |
Section 6.1
|
IRS
|
| |
Section 4.11(c)
|
Letter of Transmittal
|
| |
Section 3.4(c)(i)
|
Maximum Amount
|
| |
Section 6.8(b)
|
Merger Consideration
|
| |
Section 3.1(b)
|
Term
|
| |
Section
|
Mergers
|
| |
Background
|
MGCL
|
| |
Background
|
MRL
|
| |
Background
|
No-Shop Period Start Date
|
| |
Section 6.6(a)
|
Notice of Change of Recommendation
|
| |
Section 6.6(f)
|
Notice of Change Period
|
| |
Section 6.6(f)
|
Operating Company
|
| |
Preamble
|
Operating Company Book-Entry Share
|
| |
Section 3.2
|
Operating Company Certificate
|
| |
Section 3.2
|
Operating Company LLC Agreement
|
| |
Section 4.1(b)
|
Operating Company Merger
|
| |
Background
|
Operating Company Merger Certificate
|
| |
Section 2.2(b)
|
Operating Company Merger Consideration
|
| |
Section 3.2
|
Operating Company Merger Effective Time
|
| |
Section 2.2(b)
|
Operating Company Units
|
| |
Background
|
Outside Date
|
| |
Section 8.1(b)(ii)
|
Owned Real Property
|
| |
Section 4.14(a)
|
Parent
|
| |
Preamble
|
Parent Board
|
| |
Background
|
Parent Disclosure Letter
|
| |
Article V
|
Parent OP
|
| |
Preamble
|
Parent Plans
|
| |
Section 6.9(a)
|
Parent Related Parties
|
| |
Section 8.3(g)
|
Parent Termination Amount
|
| |
Section 8.3(e)
|
Permit
|
| |
Section 4.9(a)
|
QRS
|
| |
Section 4.13(c)
|
Qualifying Income
|
| |
Section 8.3(j)(i)
|
Registered Company Intellectual Property Assets
|
| |
Section 4.16(a)
|
REIT
|
| |
Section 4.13(c)
|
Sarbanes-Oxley Act
|
| |
Section 4.5(a)
|
SDAT
|
| |
Section 2.2(a)
|
Series A Preferred Book-Entry Share
|
| |
Section 3.1(c)(i)
|
Series A Preferred Certificate
|
| |
Section 3.1(c)(i)
|
Series A Preferred Merger Consideration
|
| |
Section 3.1(c)(i)
|
Series B Preferred Book-Entry Share
|
| |
Section 3.1(c)(ii)
|
Series B Preferred Certificate
|
| |
Section 3.1(c)(ii)
|
Series B Preferred Merger Consideration
|
| |
Section 3.1(c)(ii)
|
Surviving Company
|
| |
Section 2.1(a)
|
Surviving OC
|
| |
Section 2.1(b)
|
Takeover Statutes
|
| |
Section 4.20
|
Transaction Litigation
|
| |
Section 6.5(b)
|
Transfer Taxes
|
| |
Section 6.12(d)
|
TRS
|
| |
Section 4.13(c)
|
WARN
|
| |
Section 4.12(f)
|
|
| |
JERNIGAN CAPITAL, INC.
|
||||||
|
| |
|
| |
|
| |
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|
| |
By:
|
| |
/s/ John A. Good
|
|||
|
| |
|
| |
Name:
|
| |
John A. Good
|
|
| |
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
|
| |
|
| |
|
|
| |
JERNIGAN CAPITAL OPERATING COMPANY, LLC
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
JERNIGAN CAPITAL, INC., its sole managing member
|
|||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ John A. Good
|
|||
|
| |
|
| |
Name:
|
| |
John A. Good
|
|
| |
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
|
| |
|
| |
|
|
| |
NEXPOINT RE MERGER, INC.
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Brian Mitts
|
|||
|
| |
|
| |
Name:
|
| |
Brian Mitts
|
|
| |
|
| |
Title:
|
| |
President
|
|
| |
|
| |
|
| |
|
|
| |
NEXPOINT RE MERGER OP, LLC
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Brian Mitts
|
|||
|
| |
|
| |
Name:
|
| |
Brian Mitts
|
|
| |
|
| |
Title:
|
| |
President
|
(i)
|
reviewed a draft dated August 1, 2020 of the Merger Agreement;
|
(ii)
|
reviewed certain publicly available financial and other information about the Company and Parent;
|
(iii)
|
reviewed certain information furnished to us by the Company’s management, including financial forecasts and analyses, relating to the business, operations and prospects of the Company;
|
(iv)
|
held discussions with members of senior management of the Company and Parent concerning the matters described in clauses (ii) and (iii) above;
|
(v)
|
reviewed the share trading price history and valuation multiples for the Common Stock and compared them with those of certain publicly traded companies that we deemed relevant;
|
(vi)
|
compared the proposed financial terms of the Merger with the financial terms of certain other transactions that we deemed relevant; and
|
(vii)
|
conducted such other financial studies, analyses and investigations as we deemed appropriate.
|
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