Item 5.03. Amendments to Articles of Incorporation or
Bylaws; Change in Fiscal Year.
Designation of Term Preferred Stock
The Articles Supplementary (the Designation Articles Supplementary), designating 1,440,000 authorized but unissued shares of the Companys
Common Stock as additional shares of the Companys term preferred stock, par value $0.001 per share (the Term Preferred Stock), were filed with the State Department of Assessments and Taxation of Maryland on September 19, 2017.
After giving effect to such reclassification and designation of the Term Preferred Stock as set forth in the Designation Articles Supplementary, the Company has the authority to issue up to 44,560,000 shares of Common Stock and up to 5,440,000
shares of Term Preferred Stock, of which 2,460,118 shares are further designated as Series 2021 Term Preferred Stock. There has been no increase in the authorized shares of stock of the Company effected by these Designation Articles Supplementary.
The foregoing description of the Designation Articles Supplementary is qualified in its entirety by reference to
the full text of the Designation Articles Supplementary, which are filed as an exhibit to this Current Report on Form
8-K
and incorporated by reference herein.
Establishment and Fixing the Rights and Preferences of the Term Preferred Stock 6.00% Series 2024
In addition, the Articles Supplementary Establishing and Fixing the Rights and Preferences of the Term Preferred Shares, 6.00% Series 2024 and Exhibit A
thereto (the Articles Supplementary) setting forth the terms of the Series 2024 Term Preferred Stock created thereby, were filed with the State Department of Assessments and Taxation of Maryland on September 21, 2017. The Articles
Supplementary also reclassified and designated 20,118 authorized but unissued shares of Series 2021 Term Preferred Stock as Series 2024 Term Preferred Stock, for a total number of 2,979,882. The following is a summary of the material terms of the
Articles Supplementary, as it pertains specifically to the Series 2024 Term Preferred Stock:
Liquidation Preference
In the event of any liquidation, dissolution or winding up of the Companys affairs, holders of the Series 2024 Term Preferred Stock will be entitled to
receive a liquidation distribution per share equal to $25.00 per share (the Liquidation Preference), plus an amount equal to all unpaid dividends accumulated to (but excluding) the date fixed for distribution or payment, whether or not
earned or declared by the Company, but excluding interest thereon.
Dividends
The Series 2024 Term Preferred Stock will pay a monthly dividend at a fixed annual rate of 6.00% of the Liquidation Preference, or $1.50 per share per year.
The first dividend is expected to be paid on October 31, 2017 to holders of record on such date that the Companys Board of Directors shall determine.
Redemption
Term Redemption.
The Company is
required to redeem all outstanding Series 2024 Term Preferred Stock on September 30, 2024.
Mandatory and Optional Asset Coverage Redemptions.
The Company may also be required to redeem certain outstanding Series 2024 Term Preferred Stock if the Company fails to maintain an Asset Coverage ratio (as defined below) of at least 200% as of the close of business on any Business Day (as defined
in the Articles Supplementary) on which Asset Coverage is required to be calculated, and such failure is not cured by the close of business on the date that is 30 calendar days following the filing of the Companys SEC report with respect to
such date on which Asset Coverage is required to be calculated (referred to in this report as an Asset Coverage Cure Date). In such case, the Company is required to redeem, within 90 calendar days of the Asset Coverage Cure Date, shares of all of
the Companys capital stock classified as preferred stock under the Articles Supplementary, including shares of any series of the Companys Term Preferred Stock (the Preferred Stock), (including the Series 2024 Term Preferred
Stock) equal to the lesser of (1) the minimum number of shares of Preferred Stock that will result in the Company having an Asset Coverage ratio of at least 200% and (2) the maximum number of shares of Preferred Stock that can be redeemed
out of funds legally available for such redemption. Also, at the Companys sole discretion, the Company may redeem such number of shares of Preferred Stock (including the Series 2024 Term Preferred Stock) that will result in the Company having
an Asset Coverage ratio of up to and including 240%. Asset Coverage for purposes of the Preferred Stock is a ratio calculated under Sections 18(h) and 61 of the 1940 Act, as in effect on the date of the Articles Supplementary, and is determined
on the basis of values calculated as of a time within two days (excluding Sundays and holidays) preceding each determination.
Change of Control
Redemption.
Upon certain change of control triggering events, the Company will be required to redeem all of the outstanding Series 2024 Term Preferred Stock.
Optional Redemption.
Any time after the close of business on September 30, 2019, the Company may redeem the Series 2024 Term Preferred Stock in
whole or from time to time, in part at its option.
In each of the above cases of redemption, term redemption, mandatory and optional asset coverage
redemption, change of control redemption and optional redemption, the 2024 Term Preferred Stock are to be redeemed at a redemption price equal to $25.00 per share, plus an amount equal to all unpaid dividends and distributions on such shares
(whether or not earned or declared, but excluding interest thereon) accumulated to (but excluding) the redemption date, if such redemption date occurs after the applicable record date for a dividend but on or prior to the related dividend payment
date, the dividend payable on such dividend payment date to the holders of record of such shares shall be payable at the close of business on the applicable record date, and shall not be payable as part of the redemption price.
Voting
Except as otherwise provided in the Companys Articles of Amendment and Restatement to the Articles of Incorporation or as otherwise required by law,
(1) each holder of the Preferred Stock (including the Series 2024 Term Preferred Stock) will be entitled to one vote for each share of Preferred Stock held by such holder on each matter submitted to a vote of the Companys stockholders and
(2) the holders of all outstanding Preferred Stock and Common Stock will vote together as a single class; provided, however, that holders of Preferred Stock, voting separately as a class, will elect at all times two of the Companys
directors and will be entitled to elect a majority of the Companys directors if the Company fails to pay dividends on any outstanding shares of Preferred Stock in an amount equal to two full years of dividends and continuing during that period
until the Company corrects that failure. Preferred Stock holders will also vote separately as a class on any matter that materially and adversely affects any preference, right or power of holders of Preferred Stock.
Issuance of Additional Preferred Stock
So long as any
shares of the Term Preferred Stock (including the Series 2024 Term Preferred Stock) are outstanding, the Company may, without the vote or consent of the holders thereof, authorize, establish and create and issue and sell shares of one or more series
of a class of the Companys senior securities representing stock under Sections 18 and 61 of the 1940 Act, ranking on parity with the Term Preferred Stock as to payment of dividends and distribution of assets upon dissolution, liquidation or
the winding up of the Companys affairs, including additional Term Preferred Stock, in each case in accordance with applicable law, provided that the Company, immediately after giving effect to the issuance of such additional Preferred Stock
and to its receipt and application of the proceeds thereof, including to the redemption of Preferred Stock with such proceeds, has Asset Coverage of at least 200%.
The foregoing description of the Articles Supplementary is qualified in its entirety by reference to the full text of the Articles Supplementary, which are
filed as an exhibit to this Current Report on Form
8-K
and incorporated by reference herein.