Common use of Restrictions on Ownership and Transfer Clause in Contracts

Restrictions on Ownership and Transfer. To qualify as a REIT under the Internal Revenue Code of 1986, as amended, (the “Code”), shares of our capital stock must be owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made). We elected to be taxed as a REIT beginning with our taxable year ended December 31, 2013, in which case, these ownership limits applied to us beginning with our taxable year ending December 31, 2014. Our charter imposes restrictions on the ownership and transfer of our capital stock. The relevant sections of our charter provide that, subject to the exceptions described below, no person or entity may own, or be deemed to own, beneficially or by virtue of the applicable constructive ownership provisions of the Code, more than 3.3% in value of the aggregate of the outstanding shares of all classes and series of our capital stock or more than 3.3% in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock. We refer to this limit as the “ownership limit.” An individual or entity that becomes subject to the ownership limit or any of the other restrictions on ownership and transfer of our capital stock described below is referred to as a “prohibited owner” if, had the violative transfer or other event been effective, the individual or entity would have been a beneficial owner or, if appropriate, a record owner of shares of our capital stock. The constructive ownership rules under the Code are complex and may cause shares of capital stock owned actually or constructively by a group of related individuals and/or entities to be owned constructively by one individual or entity. As a result, the acquisition of less than 3.3% in value of the outstanding shares of all classes and series of our capital stock or in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock (or the acquisition of an interest in an entity that owns, actually or constructively, shares of our capital stock by an individual or entity), could, nevertheless, cause that individual or entity, or another individual or entity, to own constructively in excess of the ownership limit. Our board of directors may, in its sole discretion, subject to such conditions as it may determine and the receipt of certain representations and undertakings, prospectively or retroactively, waive the ownership limit or establish a different limit on ownership, or excepted holder limit, for a particular stockholder if the stockholder’s ownership in excess of the ownership limit would not result in our failing to qualify as a REIT. As a condition of its waiver or grant of excepted holder limit, our board of directors may, but is not required to, require an opinion of counsel or Internal Revenue Service (“IRS”) ruling satisfactory to our board of directors in order to determine or ensure our qualification as a REIT. Our charter contains or our board of directors has created excepted holder limits for Xxxxx Xxxxxxxxx and the Gladstone Future Trust, a trust for the benefit of Xx. Xxxxxxxxx’x adult children. The excepted holder limits, which our charter contains or our board of directors approved, allow Xxxxx Xxxxxxxxx and Gladstone Future Trust to hold up to 33.3% and 17%, respectively, in value of the aggregate of outstanding shares of our capital stock, or 33.3% and 17% in value or number of shares, whichever is more restrictive, of our outstanding shares of common stock. Additionally, our charter permits certain qualified institutional investors to each hold up to 9.8% by value or number of shares of the aggregate of the outstanding shares of capital stock or up to 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of common stock (excluding any outstanding shares of capital or common stock not treated as outstanding for federal income tax purposes). As of March 6, 2020, Xxxxx Xxxxxxxxx holds approximately 11.8% of the number of shares of capital stock outstanding and Gladstone Future Trust holds approximately 3.1% of the number of shares of capital stock outstanding (which shares will be attributed to Xx. Xxxxxxxxx for purposes of the REIT stock ownership diversification requirements). Our board of directors may from time to time increase or decrease the ownership limit for other individuals and entities unless after giving effect to such increase, five or fewer individuals could beneficially or constructively own in the aggregate, more than 49.9% in value of the shares then outstanding. A reduced ownership limit will not apply to any person or entity whose percentage ownership of our common stock or capital stock of all classes and series, as applicable, is in excess of such decreased ownership limit until such time as such individual’s or entity’s percentage ownership of our common stock or capital stock of all classes and series, as applicable, equals or falls below the decreased ownership limit, but any further acquisition of shares of our common stock or capital stock of any other class or series, as applicable, in excess of such percentage ownership of our common stock or capital stock of all classes and series will be in violation of the ownership limit. Our charter further prohibits: • any person from beneficially or constructively owning, applying certain attribution rules of the Code, shares of our capital stock that would result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or otherwise cause us to fail to qualify as a REIT; and • any person from transferring shares of our capital stock if such transfer would result in shares of our capital stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution). Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our capital stock that will or may violate the ownership limit or any of the other foregoing restrictions on ownership and transfer of our capital stock, or who would have owned shares of our capital stock transferred to a trust as described below, must immediately give us written notice of the event or, in the case of an attempted or proposed transaction, must give at least 15 days prior written notice to us and provide us with such other information as we may request in order to determine the effect of such transfer on our qualification as a REIT. The foregoing restrictions on ownership and transfer of our capital stock will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance with the restrictions and limitations on ownership and transfer of our capital stock as described above is no longer required in order for us to qualify as a REIT. If any transfer of shares of our capital stock would result in shares of our capital stock being beneficially owned by fewer than 100 persons, such transfer will be null and void and the intended transferee will acquire no rights in such shares. In addition, if any purported transfer of shares of our capital stock or any other event would otherwise result in any person violating the ownership limit or an excepted holder limit established by our board of directors or in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or our failure to qualify as a REIT, then that number of shares (rounded up to the nearest whole share) that would cause us to violate such restrictions will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us and the intended transferee will acquire no rights in such shares. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a transfer to the trust. Any dividend or other distribution paid to the prohibited owner, prior to our discovery that the shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand for distribution to the beneficiary by the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limit or our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT, then our charter provides that the transfer of the shares will be null and void. Shares of capital stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (1) the price paid by the prohibited owner for the shares (or, in the case of a devise or gift, the last reported sales price on the principal securities exchange on which our shares are listed at the time of such devise or gift) and (2) the market price on the date we accept, or our designee accepts, such offer. We may reduce the amount payable by the amount of any dividend or other distribution that we have paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed to the trustee as described above and we may pay the amount of any such reduction to the trustee for the benefit of the charitable beneficiary. We have the right to accept such offer of sale until the trustee has sold the shares of our capital stock held in the trust as discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates, the trustee must distribute the net proceeds of the sale to the prohibited owner and any dividends or other distributions held by the trustee with respect to such shares of capital stock will be paid to the charitable beneficiary. If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limit or the other restrictions on ownership and transfer of our capital stock. After the sale of the shares, the interest of the charitable beneficiary in the shares transferred to the trust will terminate and the trustee must distribute to the prohibited owner an amount equal to the lesser of (1) the price paid by the prohibited owner for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares at market price, the last reported sales price on the principal securities exchange on which our shares are listed on the day of the event which resulted in the transfer of such shares of capital stock to the trust) and (2) the sales proceeds (net of commissions and other expenses of sale) received by the trust for the shares. The trustee may reduce the amount payable to the prohibited owner by the amount of any dividend or other distribution that we paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed to the trustee as described above. Any net sales proceeds in excess of the amount payable to the prohibited owner will be immediately paid to the charitable beneficiary, together with any dividends or other distributions thereon. In addition, if, prior to discovery by us that shares of capital stock have been transferred to a trust, such shares of capital stock are sold by a prohibited owner, then such shares will be deemed to have been sold on behalf of the trust and to the extent that the prohibited owner received an amount for or in respect of such shares that exceeds the amount that such prohibited owner was entitled to receive, such excess amount will be paid to the trustee upon demand. The prohibited owner has no rights in the shares held by the trustee. The trustee will be designated by us and will be unaffiliated with us and with any prohibited owner. Prior to the sale of any shares by the trust, the trustee will receive, in trust for the beneficiary of the trust, all dividends and other distributions paid by us with respect to the shares held in trust and may also exercise all voting rights with respect to the shares held in trust. These rights will be exercised for the exclusive benefit of the beneficiary of the trust. Any dividend or other distribution paid prior to our discovery that shares of capital stock have been transferred to the trust will be paid by the recipient to the trustee upon demand. Subject to the MGCL, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority, at the trustee’s sole discretion: • to rescind as void any vote cast by a prohibited owner prior to our discovery that the shares have been transferred to the trust; and • to recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust. However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote. In addition, if our board of directors determines in good faith that a proposed transfer or other event would violate the restrictions on ownership and transfer of our capital stock, our board of directors may take such action as it deems advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us to redeem the shares of capital stock, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer. Every owner of 5% (or such lower percentage as required by the Code or the regulations promulgated thereunder) or more of our capital stock, within 30 days after the end of each taxable year, must give us written notice, stating the stockholder’s name and address, the number of shares of each class and series of our capital stock that the stockholder beneficially owns and a description of the manner in which the shares are held. Each such owner must provide to us in writing such additional information as we may request in order to determine the effect, if any, of the stockholder’s beneficial ownership on our qualification as a REIT and to ensure compliance with the ownership limit. In addition, each stockholder must provide to us in writing such information as we may request in good faith in order to determine our qualification as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance. These restrictions on ownership and transfer could delay, defer or prevent a transaction or a change in control that might involve a premium price for the common stock or otherwise be in the best interest of the stockholders.

Appears in 2 contracts

Samples: Dealer Manager Agreement, Dealer Manager Agreement

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Restrictions on Ownership and Transfer. To In order for us to qualify as a REIT under the Internal Revenue Code of 1986, as amended, amended (or the Internal Revenue Code”), ) shares of our capital stock must be owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which we made an election to be taxed as a REIT has been madeREIT) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) during the last half of a taxable year (other than the first year for which we make an election to be a REIT has been made). We elected to be taxed as a REIT beginning REIT). To assist us in complying with our taxable year ended December 31, 2013, in which case, these ownership limits applied to us beginning with our taxable year ending December 31, 2014. Our charter imposes restrictions such limitations on the ownership and transfer concentration of our capital stock. The relevant sections of ownership, among other purposes, our charter provide provides that, subject to the exceptions described below, no person or entity may own, or be deemed to own, beneficially or by virtue of the applicable constructive ownership provisions of the Internal Revenue Code, more than 3.39.8% in value or in number, whichever is more restrictive, of the aggregate outstanding shares of our common stock (or the common share ownership limit), or 9.8% in value or in number, whichever is more restrictive, of the outstanding shares of all classes and series of our capital stock (or more than 3.3% in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stockaggregate share ownership limit). We refer to this the common share ownership limit and the aggregate share ownership limit collectively as the “ownership limit.” An individual A person or entity that becomes subject to the ownership limit or any by virtue of the other restrictions on ownership and a violative transfer of our capital stock that results in a transfer to a trust, as described below below, is referred to as a “prohibited ownerpurported transferee” if, had the violative transfer or other event been effective, the individual person or entity would have been a record owner and beneficial owner or, if appropriate, or solely a record beneficial owner of shares of our capital stock. The constructive ownership rules under the Internal Revenue Code are complex and may cause shares of capital stock owned actually or constructively by a group of related individuals and/or entities to be owned constructively by one individual or entity. As a result, the acquisition of less than 3.39.8% in value or in number, whichever is more restrictive, of the outstanding shares of our common stock, or 9.8% in value or in number, whichever is more restrictive, of the outstanding shares of all classes and series of our capital stock or in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock (or the acquisition of an interest in an entity that owns, actually or constructively, shares of our capital stock by an individual or entity), could, nevertheless, cause that individual or entity, or another individual or entity, to own constructively in excess of the ownership limit. Our board of directors Board may, in its sole discretion, subject to such conditions as it may determine and the receipt of certain representations and undertakings, prospectively or retroactively, waive the ownership limit or establish a different limit on ownership, or excepted holder limit, for a particular stockholder if the stockholder’s ownership in excess of the ownership limit would not result in our Company being “closely held” within the meaning of Section 856(h) of the Internal Revenue Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise would result in us failing to qualify as a REIT. As a condition of its waiver or grant of excepted holder limitwaiver, our board of directors Board may, but is not required to, require an opinion of counsel or the Internal Revenue Service (or IRS) ruling satisfactory to our board of directors in order the Board with respect to determine or ensure our its qualification as a REIT. Our charter contains In connection with granting a waiver of the ownership limit or our board of directors has created creating an excepted holder limits for Xxxxx Xxxxxxxxx and the Gladstone Future Trust, a trust for the benefit of Xx. Xxxxxxxxx’x adult children. The excepted holder limits, which our charter contains limit or our board of directors approved, allow Xxxxx Xxxxxxxxx and Gladstone Future Trust to hold up to 33.3% and 17%, respectively, in value of the aggregate of outstanding shares of our capital stock, or 33.3% and 17% in value or number of shares, whichever is more restrictive, of our outstanding shares of common stock. Additionallyat any other time, our charter permits certain qualified institutional investors to each hold up to 9.8% by value or number of shares of the aggregate of the outstanding shares of capital stock or up to 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of common stock (excluding any outstanding shares of capital or common stock not treated as outstanding for federal income tax purposes). As of March 6, 2020, Xxxxx Xxxxxxxxx holds approximately 11.8% of the number of shares of capital stock outstanding and Gladstone Future Trust holds approximately 3.1% of the number of shares of capital stock outstanding (which shares will be attributed to Xx. Xxxxxxxxx for purposes of the REIT stock ownership diversification requirements). Our board of directors Board may from time to time increase the ownership limit for one or more persons or entities and decrease the ownership limit for all other individuals persons and entities unless unless, after giving effect to such increase, five or fewer individuals could beneficially or constructively own in the aggregate, more than 49.9% in value of the shares then outstandingoutstanding or our Company would be “closely held” within the meaning of Section 856(h) of the Internal Revenue Code (without regard to whether the ownership interest is held during the last half of a taxable year) or we would otherwise fail to qualify as a REIT. A reduced ownership limit will not apply to any person or entity whose percentage ownership of our common stock or capital stock of all classes and series, as applicable, is in excess of such decreased ownership limit until such time as such individualperson’s or entity’s percentage ownership of our common stock or capital stock of all classes and series, as applicable, equals or falls below the decreased ownership limit, but any further acquisition of shares of our common stock or capital stock of any other class or series, as applicable, in excess of such percentage ownership of our common stock or capital stock of all classes and series will be in violation of the ownership limit. Our charter further prohibits: • any person from beneficially or constructively owning, applying certain attribution rules of the Internal Revenue Code, shares of our capital stock that would result in our Company being “closely held” under Section 856(h) of the Internal Revenue Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or otherwise cause us our Company to fail to qualify as a REIT; and • any person from transferring shares of our capital stock if such transfer would result in shares of our capital stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution). Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our capital stock that will or may violate the ownership limit or any of the other foregoing restrictions on relating to transferability and ownership and transfer of our capital stock, or who would have owned shares of our capital stock transferred to a trust as described below, must immediately give us written notice of the event to our Company or, in the case of an a proposed or attempted or proposed transaction, must give at least 15 days days’ prior written notice to us and provide us our Company with such other information as we our Company may request in order to determine the effect of such transfer on our qualification as a REIT. The foregoing restrictions provisions on transferability and ownership and transfer of our capital stock will not apply if our board of directors Board determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance with the restrictions and limitations on ownership and transfer of our capital stock as described above is no longer required in order for us to qualify as a REIT. If any transfer of shares of our capital stock would result in shares of our capital stock being beneficially owned by fewer than 100 persons, such transfer will be null and void and the intended transferee will acquire no rights in such shares. In addition, if any purported transfer of shares of our capital stock or any other event would otherwise result in any person violating the ownership limit or an excepted holder limit established by our board of directors Board or in our Company being “closely held” under Section 856(h) of the Internal Revenue Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or our failure otherwise failing to qualify as a REIT, then that number of shares (rounded up to the nearest whole share) that would cause us our Company to violate such restrictions will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us our Company and the intended transferee will acquire no rights in such shares. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a transfer to the trust. Any dividend or other distribution paid to the prohibited ownerpurported transferee, prior to our discovery that the shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand for distribution to the beneficiary by the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limit or excepted holder limit or our Company being “closely held” under Section 856(h) of the Internal Revenue Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT, then our charter provides that the transfer of the shares will be null and voidvoid and the purported transferee will acquire no rights in such shares. Shares of capital stock transferred to the trustee of the charitable trust are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (1) the price paid by the prohibited owner purported transferee for the shares (or, in the case of a devise or gift, the last reported sales market price on the principal securities exchange on which our shares are listed at the time of such devise or gift) and (2) the market price on the date we acceptwe, or our designee acceptsdesignee, accepts such offer. We may reduce the amount payable to the purported transferee by the amount of any dividend or dividends and other distribution that we distributions which have been paid to the prohibited owner before we discovered that purported transferee and are owed by the shares had been automatically transferred purported transferee to the trust and that are then owed to the trustee as described above and we may pay the amount of any such reduction to the trustee for the benefit of the charitable beneficiarytrustee. We have the right to accept such offer of sale until the trustee of the charitable trust has sold the shares of our capital stock held in the trust as pursuant to the clauses discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates, the trustee of the charitable trust must distribute the net proceeds of the sale to the prohibited owner purported transferee and any dividends or other distributions held by the trustee with respect to such shares of capital stock will be paid to the charitable beneficiary. If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limit or the other restrictions on relating to the ownership and transfer of our capital stock. After the sale of the shares, the interest of the charitable beneficiary in the shares transferred to the trust will terminate and the trustee must distribute to the prohibited owner purported transferee an amount equal to the lesser of (1) the price paid by the prohibited owner purported transferee for the shares (or, if the purported transferee did not give value for the shares in connection with the event which resulted causing the shares to be held in the transfer to the trust did not involve a purchase of such shares at market pricetrust, the last reported sales market price on of the principal securities exchange on which our shares are listed on the day of the event which resulted in the transfer of such shares of capital stock to the trust) and (2) the sales proceeds (net of commissions and other expenses of sale) received by the trust for the shares. The trustee may reduce the amount payable to the prohibited owner by the amount of any dividend or other distribution that we paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed to the trustee as described above. Any net sales proceeds in excess of the amount payable to the prohibited owner purported transferee will be immediately paid to the charitable beneficiarybeneficiary of the trust, together with any dividends or other distributions thereon. In addition, if, prior to discovery by us our Company that shares of capital stock have been transferred to a trust, such shares of capital stock are sold by a prohibited ownerpurported transferee, then such shares will be deemed to have been sold on behalf of the trust and to the extent that the prohibited owner purported transferee received an amount for or in respect of such shares that exceeds the amount that such prohibited owner purported transferee was entitled to receive, such excess amount will be paid to the trustee upon demand. The prohibited owner purported transferee has no rights in the shares held by the trustee. The trustee of the charitable trust will be designated by us our Company and will be unaffiliated with us our Company and with any prohibited ownerpurported transferee. Prior to the sale of any shares by the trust, the trustee will receive, in trust for the beneficiary of the trust, all dividends and other distributions paid by us our Company with respect to the shares held in trust and may also exercise all voting rights with respect to the shares held in trust. These rights will be exercised for the exclusive benefit of the beneficiary of the trust. Any dividend or other distribution paid prior to our discovery that shares of capital stock have been transferred to the trust will be paid by the recipient to the trustee upon demand. Any dividend or other distribution authorized but unpaid will be paid when due to the trustee. Subject to the MGCLMaryland law, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority, at the trustee’s sole discretion: • to rescind as void any vote cast by a prohibited owner purported transferee prior to our discovery that the shares have been transferred to the trust; and • to recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust. However, if we have our Company has already taken irreversible corporate action, then the trustee may not rescind and recast the vote. In addition, if our board of directors Board determines in good faith that a proposed transfer or other event has taken place that would violate the restrictions on relating to the ownership and transfer of our capital stockstock or that a person intends or has attempted to acquire beneficial or constructive ownership of stock in violation of such restrictions (whether or not such violation is intended), our board of directors may Board will take such action as it deems advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, including causing us our Company to redeem the shares of capital stock, refusing to give effect to the transfer on our its books or instituting proceedings to enjoin the transfer. Every owner of 5% or more (or such lower percentage as required by the Internal Revenue Code or the regulations promulgated thereunder) or more of our capital stock, within 30 days after the end of each taxable year, must give us our Company written notice, stating the stockholder’s name and address, the number of shares of each class and series of our capital stock that the stockholder beneficially owns and a description of the manner in which the shares are held. Each such owner must provide to us in writing our Company with such additional information as we our Company may request in order to determine the effect, if any, of the stockholder’s beneficial ownership on our qualification as a REIT and to ensure compliance with the ownership limit. In addition, each stockholder must provide to us in writing our Company with such information as we our Company may request in good faith in order to determine our its qualification as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance. Any certificates representing shares of our stock will bear a legend referring to the restrictions described above. These restrictions on relating to ownership and transfer will not apply if our Board determines that it is no longer in our best interests to continue to qualify as a REIT. These ownership limits could delay, defer or prevent a transaction or a change in control that might involve a premium price for the our common stock or otherwise be in the best interest of the our stockholders. American Stock Transfer & Trust Company, LLC acts as our transfer agent and registrar for our shares of common stock and OP units.

Appears in 1 contract

Samples: Sales Agreement

Restrictions on Ownership and Transfer. To For us to qualify as a REIT under the Internal Revenue Code of 1986Code, as amendedamong other things, (the “Code”), shares not more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals (defined in the Code to include certain entities) during the last half of a taxable year, and such capital stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of To ensure that we continue to meet the value of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year (other than the first year requirements for which an election to be a REIT has been made). We elected to be taxed qualification as a REIT beginning with REIT, our taxable year ended December 31, 2013, in which case, these ownership limits applied to us beginning with our taxable year ending December 31, 2014. Our charter imposes restrictions on the ownership and transfer of our capital stock. The relevant sections of our charter provide thatcharter, subject to the exceptions described belowcertain exceptions, provides that no person or entity holder may own, or be deemed to own, beneficially or own by virtue of the applicable constructive ownership attribution provisions of the Code, more than 3.3% in value of the aggregate of the our outstanding shares of all classes and series of our capital stock or more than 3.3% in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock. We refer to this limit as the “ownership limit.” An individual or entity that becomes subject to the ownership limit or any of the other restrictions on ownership and transfer of our capital stock described below is referred to as a “prohibited owner” if, had the violative transfer or other event been effective, the individual or entity would have been a beneficial owner or, if appropriate, a record owner of shares of our capital stock. The constructive ownership rules under the Code are complex and Our Board of Directors may cause shares of capital stock owned actually or constructively by a group of related individuals and/or entities to be owned constructively by one individual or entity. As a result, the acquisition of less than 3.3% in value of the outstanding shares of all classes and series of our capital stock or in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock (or the acquisition of an interest in an entity that owns, actually or constructively, shares of our capital stock by an individual or entity), could, nevertheless, cause that individual or entity, or another individual or entity, to own constructively in excess of the ownership limit. Our board of directors may, in its sole discretion, subject to such conditions as it may determine and the receipt of certain representations and undertakings, prospectively or retroactively, waive the this ownership limit or establish with respect to a different limit on ownership, or excepted holder limit, for a particular stockholder if the stockholder’s ownership in excess of the ownership limit would not result in our failing to qualify as a REIT. As a condition of its waiver or grant of excepted holder limit, our board of directors may, but is not required to, require an opinion of counsel or Internal Revenue Service (“IRS”) ruling evidence satisfactory to our board Board of directors Directors and our tax counsel is presented that the changes in order to determine ownership will not then or ensure our qualification as a REIT. Our charter contains or our board of directors has created excepted holder limits for Xxxxx Xxxxxxxxx and the Gladstone Future Trust, a trust for the benefit of Xx. Xxxxxxxxx’x adult children. The excepted holder limits, which our charter contains or our board of directors approved, allow Xxxxx Xxxxxxxxx and Gladstone Future Trust to hold up to 33.3% and 17%, respectively, in value of the aggregate of outstanding shares of our capital stock, or 33.3% and 17% in value or number of shares, whichever is more restrictive, of our outstanding shares of common stock. Additionally, our charter permits certain qualified institutional investors to each hold up to 9.8% by value or number of shares of the aggregate of the outstanding shares of capital stock or up to 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of common stock (excluding any outstanding shares of capital or common stock not treated as outstanding for federal income tax purposes). As of March 6, 2020, Xxxxx Xxxxxxxxx holds approximately 11.8% of the number of shares of capital stock outstanding and Gladstone Future Trust holds approximately 3.1% of the number of shares of capital stock outstanding (which shares will be attributed to Xx. Xxxxxxxxx for purposes of the REIT stock ownership diversification requirements). Our board of directors may from time to time increase or decrease the ownership limit for other individuals and entities unless after giving effect to such increase, five or fewer individuals could beneficially or constructively own in the aggregate, more than 49.9% in value of the shares then outstanding. A reduced ownership limit will not apply to any person or entity whose percentage ownership of future jeopardize our common stock or capital stock of all classes and series, as applicable, is in excess of such decreased ownership limit until such time as such individual’s or entity’s percentage ownership of our common stock or capital stock of all classes and series, as applicable, equals or falls below the decreased ownership limit, but any further acquisition of shares of our common stock or capital stock of any other class or series, as applicable, in excess of such percentage ownership of our common stock or capital stock of all classes and series will be in violation of the ownership limit. Our charter further prohibits: • any person from beneficially or constructively owning, applying certain attribution rules of the Code, shares of our capital stock that would result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or otherwise cause us to fail to qualify as a REIT; and • any person from transferring shares of our capital stock if such transfer would result in shares of our capital stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution). Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our capital stock that will or may violate the ownership limit or any of the other foregoing restrictions on ownership and transfer of our capital stock, or who would have owned shares of our capital stock transferred to a trust as described below, must immediately give us written notice of the event or, in the case of an attempted or proposed transaction, must give at least 15 days prior written notice to us and provide us with such other information as we may request in order to determine the effect of such transfer on our qualification as a REIT. The foregoing restrictions on ownership and transfer of our capital stock will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance with the restrictions and limitations on ownership and transfer of our capital stock as described above is no longer required in order for us to qualify status as a REIT. If any transfer of shares of our capital stock would result in shares of our capital stock being beneficially owned by fewer than 100 persons, such transfer will be null and void and the intended transferee will acquire no rights in such shares. In addition, if any purported transfer of shares of our capital stock or any other event would otherwise result in any person violating the ownership limit or an excepted holder limit established by our board Board of directors Directors or in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or our failure to qualify as a REIT, then that number of shares (rounded up to the nearest whole share) that would cause us to violate such restrictions will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us and the intended transferee will acquire no rights in such shares. , as more fully described in the accompanying prospectus under the caption “Description of Capital Stock—Restrictions on Ownership and Transfer.” The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a transfer to the trust. Any dividend or other distribution paid to the prohibited owner, prior to our discovery that the shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand for distribution to the beneficiary by the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limit or our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT, then our charter provides that the transfer of the shares will be null agent and void. Shares of capital stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (1) the price paid by the prohibited owner registrar for the shares (orSeries E Preferred Stock is Computershare, in the case of a devise or gift, the last reported sales price on the principal securities exchange on which our shares are listed at the time of such devise or gift) and (2) the market price on the date we accept, or our designee accepts, such offer. We may reduce the amount payable by the amount of any dividend or other distribution that we have paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed to the trustee as described above and we may pay the amount of any such reduction to the trustee for the benefit of the charitable beneficiary. We have the right to accept such offer of sale until the trustee has sold the shares of our capital stock held in the trust as discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates, the trustee must distribute the net proceeds of the sale to the prohibited owner and any dividends or other distributions held by the trustee with respect to such shares of capital stock will be paid to the charitable beneficiary. If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limit or the other restrictions on ownership and transfer of our capital stock. After the sale of the shares, the interest of the charitable beneficiary in the shares transferred to the trust will terminate and the trustee must distribute to the prohibited owner an amount equal to the lesser of (1) the price paid by the prohibited owner for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares at market price, the last reported sales price on the principal securities exchange on which our shares are listed on the day of the event which resulted in the transfer of such shares of capital stock to the trust) and (2) the sales proceeds (net of commissions and other expenses of sale) received by the trust for the shares. The trustee may reduce the amount payable to the prohibited owner by the amount of any dividend or other distribution that we paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed to the trustee as described above. Any net sales proceeds in excess of the amount payable to the prohibited owner will be immediately paid to the charitable beneficiary, together with any dividends or other distributions thereon. In addition, if, prior to discovery by us that shares of capital stock have been transferred to a trust, such shares of capital stock are sold by a prohibited owner, then such shares will be deemed to have been sold on behalf of the trust and to the extent that the prohibited owner received an amount for or in respect of such shares that exceeds the amount that such prohibited owner was entitled to receive, such excess amount will be paid to the trustee upon demand. The prohibited owner has no rights in the shares held by the trustee. The trustee will be designated by us and will be unaffiliated with us and with any prohibited owner. Prior to the sale of any shares by the trust, the trustee will receive, in trust for the beneficiary of the trust, all dividends and other distributions paid by us with respect to the shares held in trust and may also exercise all voting rights with respect to the shares held in trust. These rights will be exercised for the exclusive benefit of the beneficiary of the trust. Any dividend or other distribution paid prior to our discovery that shares of capital stock have been transferred to the trust will be paid by the recipient to the trustee upon demand. Subject to the MGCL, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority, at the trustee’s sole discretion: • to rescind as void any vote cast by a prohibited owner prior to our discovery that the shares have been transferred to the trust; and • to recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust. However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote. In addition, if our board of directors determines in good faith that a proposed transfer or other event would violate the restrictions on ownership and transfer of our capital stock, our board of directors may take such action as it deems advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us to redeem the shares of capital stock, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer. Every owner of 5% (or such lower percentage as required by the Code or the regulations promulgated thereunder) or more of our capital stock, within 30 days after the end of each taxable year, must give us written notice, stating the stockholder’s name and address, the number of shares of each class and series of our capital stock that the stockholder beneficially owns and a description of the manner in which the shares are held. Each such owner must provide to us in writing such additional information as we may request in order to determine the effect, if any, of the stockholder’s beneficial ownership on our qualification as a REIT and to ensure compliance with the ownership limit. In addition, each stockholder must provide to us in writing such information as we may request in good faith in order to determine our qualification as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance. These restrictions on ownership and transfer could delay, defer or prevent a transaction or a change in control that might involve a premium price for the common stock or otherwise be in the best interest of the stockholders.Inc.

Appears in 1 contract

Samples: Dealer Manager Agreement

Restrictions on Ownership and Transfer. To For us to qualify as a REIT under the Internal Revenue Code of 1986Code, as amendedamong other things, (the “Code”), shares not more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals (defined in the Code to include certain entities) during the last half of a taxable year, and such capital stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of To ensure that we continue to meet the value of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year (other than the first year requirements for which an election to be a REIT has been made). We elected to be taxed qualification as a REIT beginning with REIT, our taxable year ended December 31, 2013, in which case, these ownership limits applied to us beginning with our taxable year ending December 31, 2014. Our charter imposes restrictions on the ownership and transfer of our capital stock. The relevant sections of our charter provide thatcharter, subject to the exceptions described belowcertain exceptions, provides that no person or entity holder may own, or be deemed to own, beneficially or own by virtue of the applicable constructive ownership attribution provisions of the Code, more than 3.3% in value of our outstanding capital stock. Our Board of Directors may waive this ownership limit with respect to a stockholder if evidence satisfactory to our Board of Directors and our tax counsel is presented that the aggregate changes in ownership will not then or in the future jeopardize our status as a REIT. Any transfer of the outstanding shares of all classes and series of our capital stock or more than 3.3% in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock. We refer to this limit as the “ownership limit.” An individual or entity that becomes subject to the ownership limit or any of the other restrictions on ownership and transfer of our security convertible into capital stock described below is referred to as that would result in a “prohibited owner” if, had the violative transfer direct or other event been effective, the individual or entity would have been a beneficial owner or, if appropriate, a record owner of shares of our capital stock. The constructive indirect ownership rules under the Code are complex and may cause shares of capital stock owned actually or constructively by a group of related individuals and/or entities to be owned constructively by one individual or entity. As a result, the acquisition of less than 3.3% in value of the outstanding shares of all classes and series of our capital stock or in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock (or the acquisition of an interest in an entity that owns, actually or constructively, shares of our capital stock by an individual or entity), could, nevertheless, cause that individual or entity, or another individual or entity, to own constructively in excess of the ownership limit. Our board of directors may, in its sole discretion, subject to such conditions as it may determine and the receipt of certain representations and undertakings, prospectively or retroactively, waive the ownership limit or establish a different limit on ownership, or excepted holder limit, for a particular stockholder if the stockholder’s ownership in excess of the ownership limit or that would not result in our failing failure to qualify as a REIT. As a condition of its waiver or grant of excepted holder limit, our board of directors may, but is not required to, require an opinion of counsel or Internal Revenue Service (“IRS”) ruling satisfactory to our board of directors in order to determine or ensure our meet the requirements for qualification as a REIT. Our charter contains or our board of directors has created excepted holder limits for Xxxxx Xxxxxxxxx and , including any transfer that results in the Gladstone Future Trust, a trust for the benefit of Xx. Xxxxxxxxx’x adult children. The excepted holder limits, which our charter contains or our board of directors approved, allow Xxxxx Xxxxxxxxx and Gladstone Future Trust to hold up to 33.3% and 17%, respectively, in value of the aggregate of outstanding shares of our capital stock, or 33.3% and 17% in value or number of shares, whichever is more restrictive, of our outstanding shares of common stock. Additionally, our charter permits certain qualified institutional investors to each hold up to 9.8% by value or number of shares of the aggregate of the outstanding shares of capital stock being owned by fewer than 100 persons or up to 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of common stock (excluding any outstanding shares of capital or common stock not treated as outstanding for federal income tax purposes). As of March 6, 2020, Xxxxx Xxxxxxxxx holds approximately 11.8% of the number of shares of capital stock outstanding and Gladstone Future Trust holds approximately 3.1% of the number of shares of capital stock outstanding (which shares will be attributed to Xx. Xxxxxxxxx for purposes of the REIT stock ownership diversification requirements). Our board of directors may from time to time increase or decrease the ownership limit for other individuals and entities unless after giving effect to such increase, five or fewer individuals could beneficially or constructively own in the aggregate, more than 49.9% in value of the shares then outstanding. A reduced ownership limit will not apply to any person or entity whose percentage ownership of our common stock or capital stock of all classes and series, as applicable, is in excess of such decreased ownership limit until such time as such individual’s or entity’s percentage ownership of our common stock or capital stock of all classes and series, as applicable, equals or falls below the decreased ownership limit, but any further acquisition of shares of our common stock or capital stock of any other class or series, as applicable, in excess of such percentage ownership of our common stock or capital stock of all classes and series will be in violation of the ownership limit. Our charter further prohibits: • any person from beneficially or constructively owning, applying certain attribution rules of the Code, shares of our capital stock that would result results in our being “closely held” under Section within the meaning of section 856(h) of the Code (without regard Code, will be null and void, and the intended transferee will acquire no rights to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or otherwise cause us to fail to qualify as a REIT; and • any person from transferring shares of our capital stock if such transfer would result in shares of our capital stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution). Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our capital stock that will or may violate the ownership limit or any of the other foregoing restrictions on ownership and transfer of our capital stock, or who would have owned shares of our capital stock transferred to a trust as described below, must immediately give us written notice of the event or, in the case of an attempted or proposed transaction, must give at least 15 days prior written notice to us and provide us with such other information as we may request in order to determine the effect of such transfer on our qualification as a REIT. The foregoing restrictions on transferability and ownership and transfer of our capital stock will not apply if our board Board of directors Directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance with the restrictions and limitations on ownership and transfer of our capital stock as described above is no longer required in order for us to qualify as a REIT. If any transfer Capital stock owned, or deemed to be owned, or transferred to a stockholder in excess of shares of our capital stock would result in shares of our capital stock being beneficially owned by fewer than 100 persons, such transfer will be null and void and the intended transferee will acquire no rights in such shares. In addition, if any purported transfer of shares of our capital stock or any other event would otherwise result in any person violating the 3.3% ownership limit or an excepted holder limit established by our board of directors or in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or our failure to qualify as a REIT, then that number of shares (rounded up to the nearest whole share) that would cause us to violate such restrictions will be automatically transferred to, and held by, to a charitable trust for the exclusive benefit of one or a charitable beneficiary as more charitable organizations selected by us fully described in the accompanying prospectus under the caption “Description of Capital Stock— Restrictions on Ownership and the intended transferee will acquire no rights in such sharesTransfer”. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a transfer to the trust. Any dividend or other distribution paid to the prohibited owner, prior to our discovery that the shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand for distribution to the beneficiary by the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limit or our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT, then our charter provides that the transfer of the shares will be null agent and void. Shares of capital stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (1) the price paid by the prohibited owner registrar for the shares (orSeries C Preferred Stock is Computershare, in the case of a devise or gift, the last reported sales price on the principal securities exchange on which our shares are listed at the time of such devise or gift) and (2) the market price on the date we accept, or our designee accepts, such offer. We may reduce the amount payable by the amount of any dividend or other distribution that we have paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed to the trustee as described above and we may pay the amount of any such reduction to the trustee for the benefit of the charitable beneficiary. We have the right to accept such offer of sale until the trustee has sold the shares of our capital stock held in the trust as discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates, the trustee must distribute the net proceeds of the sale to the prohibited owner and any dividends or other distributions held by the trustee with respect to such shares of capital stock will be paid to the charitable beneficiary. If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limit or the other restrictions on ownership and transfer of our capital stock. After the sale of the shares, the interest of the charitable beneficiary in the shares transferred to the trust will terminate and the trustee must distribute to the prohibited owner an amount equal to the lesser of (1) the price paid by the prohibited owner for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares at market price, the last reported sales price on the principal securities exchange on which our shares are listed on the day of the event which resulted in the transfer of such shares of capital stock to the trust) and (2) the sales proceeds (net of commissions and other expenses of sale) received by the trust for the shares. The trustee may reduce the amount payable to the prohibited owner by the amount of any dividend or other distribution that we paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed to the trustee as described above. Any net sales proceeds in excess of the amount payable to the prohibited owner will be immediately paid to the charitable beneficiary, together with any dividends or other distributions thereon. In addition, if, prior to discovery by us that shares of capital stock have been transferred to a trust, such shares of capital stock are sold by a prohibited owner, then such shares will be deemed to have been sold on behalf of the trust and to the extent that the prohibited owner received an amount for or in respect of such shares that exceeds the amount that such prohibited owner was entitled to receive, such excess amount will be paid to the trustee upon demand. The prohibited owner has no rights in the shares held by the trustee. The trustee will be designated by us and will be unaffiliated with us and with any prohibited owner. Prior to the sale of any shares by the trust, the trustee will receive, in trust for the beneficiary of the trust, all dividends and other distributions paid by us with respect to the shares held in trust and may also exercise all voting rights with respect to the shares held in trust. These rights will be exercised for the exclusive benefit of the beneficiary of the trust. Any dividend or other distribution paid prior to our discovery that shares of capital stock have been transferred to the trust will be paid by the recipient to the trustee upon demand. Subject to the MGCL, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority, at the trustee’s sole discretion: • to rescind as void any vote cast by a prohibited owner prior to our discovery that the shares have been transferred to the trust; and • to recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust. However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote. In addition, if our board of directors determines in good faith that a proposed transfer or other event would violate the restrictions on ownership and transfer of our capital stock, our board of directors may take such action as it deems advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us to redeem the shares of capital stock, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer. Every owner of 5% (or such lower percentage as required by the Code or the regulations promulgated thereunder) or more of our capital stock, within 30 days after the end of each taxable year, must give us written notice, stating the stockholder’s name and address, the number of shares of each class and series of our capital stock that the stockholder beneficially owns and a description of the manner in which the shares are held. Each such owner must provide to us in writing such additional information as we may request in order to determine the effect, if any, of the stockholder’s beneficial ownership on our qualification as a REIT and to ensure compliance with the ownership limit. In addition, each stockholder must provide to us in writing such information as we may request in good faith in order to determine our qualification as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance. These restrictions on ownership and transfer could delay, defer or prevent a transaction or a change in control that might involve a premium price for the common stock or otherwise be in the best interest of the stockholders.Inc.

Appears in 1 contract

Samples: Dealer Manager Agreement

Restrictions on Ownership and Transfer. To In order for DLR to qualify as a REIT under the Internal Revenue Code of 1986Code, as amended, (the “Code”), shares of our capital its stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entitiesentities such as qualified pension plans) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made). We elected to be taxed as a REIT beginning with our taxable year ended December 31, 2013, in which case, these ownership limits applied to us beginning with our taxable year ending December 31, 2014. Our DLR’s charter imposes contains restrictions on the ownership and transfer of our the common stock, preferred stock and capital stockstock that are intended to assist DLR in complying with these requirements and continuing to qualify as a Table of Contents REIT. The relevant sections of our the charter provide that, subject to the exceptions described below, no person or entity may beneficially own, or be deemed to own, beneficially or own by virtue of the applicable constructive ownership provisions of the Code, more than 3.39.8% in value of the aggregate of the outstanding shares of all classes and series of our capital stock or more than 3.3% in (by value or in by number of shares (shares, whichever is more restrictive) of the outstanding shares of our the common stock or of any series of preferred stock, or more than 9.8% of the value of DLR’s outstanding capital stock. We refer DLR refers to this limit these restrictions as the “common stock ownership limit.,An individual the “preferred stock ownership limit” and the “aggregate stock ownership limit,” respectively. A person or entity that becomes subject to one of the ownership limit or any limits by virtue of the other restrictions on ownership and a violative transfer of our capital stock described below that results in a transfer to a trust, as set forth below, is referred to as a “prohibited ownerpurported beneficial transferee” if, had the violative transfer or other event been effective, the individual person or entity would have been a record owner and beneficial owner oror solely a beneficial owner of the common stock, if appropriateany series of preferred stock, or the capital stock, as applicable, or is referred to as a “purported record transferee” if, had the violative transfer been effective, the person or entity would have been solely a record owner of shares the common stock, any series of our the preferred stock, or the capital stock, as applicable. The constructive ownership rules under the Code are complex and may cause shares of capital stock owned actually or constructively by a group of related individuals and/or entities to be owned constructively by one individual or entity. As a result, the acquisition of less than 3.39.8% in of the common stock or any series of the preferred stock or less than 9.8% of the value of the outstanding shares of all classes and series of our capital stock or in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock (or the acquisition of an interest in an entity that owns, actually or constructively, shares of our DLR’s capital stock stock) by an individual or entity), entity could, nevertheless, cause that individual or entity, or another individual or entity, to own constructively in excess more than 9.8% of the outstanding common stock or a series of the preferred stock or capital stock, as applicable, and thereby subject such stock to the applicable ownership limit. Our The DLR board of directors may, in its sole discretion, subject to such conditions as it may determine and the receipt of certain representations and undertakingsdiscretion waive, prospectively or retroactively, waive the common stock ownership limit or establish a different aggregate stock ownership limit on ownership, or excepted holder limit, for with respect to a particular stockholder if it: • determines that such waiver will not cause any individual’s beneficial ownership of shares of DLR’s capital stock to violate the stockholderaggregate stock ownership limit and that any exemption from the applicable ownership limit will not jeopardize DLR’s ownership status as a REIT; and • determines that such stockholder does not and will not own, actually or constructively, an interest in excess a tenant of DLR that would cause DLR to own, actually or constructively, more than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant or that any such ownership limit would not result in our failing cause DLR to fail to qualify as a REITREIT under the Code. As The DLR board may also, in its sole discretion waive, prospectively or retroactively, the preferred stock ownership limit with respect to a condition particular stockholder if it determines that such waiver will not: (1) cause any individual’s beneficial ownership of its waiver or grant shares of excepted holder DLR’s capital stock to violate the aggregate stock ownership limit, our board of directors may, but is not required to, require an opinion of counsel or Internal Revenue Service (“IRS”2) ruling satisfactory to our board of directors in order to determine or ensure our qualification jeopardize DLR’s status as a REIT. Our charter contains In connection with a waiver of an ownership limit or our at any other time, the DLR board of directors has created excepted holder limits for Xxxxx Xxxxxxxxx and may increase the Gladstone Future Trust, a trust for the benefit of Xx. Xxxxxxxxx’x adult children. The excepted holder limits, which our charter contains or our board of directors approved, allow Xxxxx Xxxxxxxxx and Gladstone Future Trust to hold up to 33.3% and 17%, respectively, in value of the aggregate of outstanding shares of our capital stock, or 33.3% and 17% in value or number of shares, whichever is more restrictive, of our outstanding shares of common stock. Additionally, our charter permits certain qualified institutional investors to each hold up to 9.8% by value or number of shares of the aggregate of the outstanding shares of capital stock or up to 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of common stock (excluding any outstanding shares of capital or common stock not treated as outstanding for federal income tax purposes). As of March 6, 2020, Xxxxx Xxxxxxxxx holds approximately 11.8% of the number of shares of capital stock outstanding and Gladstone Future Trust holds approximately 3.1% of the number of shares of capital stock outstanding (which shares will be attributed to Xx. Xxxxxxxxx for purposes of the REIT stock ownership diversification requirements). Our board of directors may from time to time increase or decrease the applicable ownership limit for one or more persons and decrease the applicable ownership limit for all other individuals persons and entities unless after giving effect to such increaseentities; provided, five or fewer individuals could beneficially or constructively own in however, that the aggregate, more than 49.9% in value of the shares then outstanding. A reduced decreased ownership limit will not apply to be effective for any person or entity whose percentage ownership in the common stock, any series of our common the preferred stock or capital stock of all classes and seriesstock, as applicable, is in excess of such exceeds the decreased ownership limit until such time as such individual’s person or entity’s percentage ownership of our common stock or capital stock of all classes and series, as applicable, equals or falls below the decreased ownership limit, ; but any further acquisition of shares of our common stock the common, preferred or capital stock of any other class or seriesstock, as applicable, in excess of such percentage ownership of our common stock or capital stock of all classes and series will be in violation of the applicable ownership limit. Our charter further prohibits: • any person from Additionally, the new ownership limit, as applicable, may not allow five or fewer stockholders to beneficially or constructively owning, applying certain attribution rules own more than 49% in value of the Code, shares of our DLR’s outstanding capital stock that would result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or otherwise cause us to fail to qualify as a REIT; and • any person from transferring shares of our capital stock if such transfer would result in shares of our capital stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution)stock. Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our capital DLR’s stock that will or may violate the ownership limit or any of the other foregoing restrictions on transferability and ownership and transfer of our capital stock, or who would have owned shares of our capital stock transferred will be required to a trust as described below, must give notice immediately give us written notice of the event or, in the case of an attempted or proposed transaction, must give at least 15 days prior written notice to us DLR and provide us it with such other information as we it may request in order to determine the effect of such transfer on our qualification its status as a REIT. The foregoing restrictions provisions on transferability and Table of Contents ownership and transfer of our capital stock will not apply if our the DLR board of directors determines that it is no longer in our DLR’s best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance with the restrictions and limitations on ownership and transfer of our capital stock as described above is no longer required in order for us to qualify as a REIT. If any transfer of shares of our capital stock would result in shares of our capital stock being beneficially owned by fewer than 100 persons, such transfer will be null and void and the intended transferee will acquire no rights in such shares. In additionPursuant to DLR’s charter, if any purported transfer of shares of our capital DLR’s stock or any other event would otherwise result in any person violating the ownership limits or such other limit or an excepted holder limit as established by our the DLR board of directors or would result in our DLR’s being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or our failure otherwise failing to qualify as a REIT, then that number of shares in excess of the applicable ownership limit or causing DLR to be “closely held” or otherwise to fail to qualify as a REIT (rounded up to the nearest whole share) that would cause us to violate such restrictions will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us DLR and the intended transferee will acquire no rights in such shares. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a the transfer to the trust. Any dividend or other distribution paid to the prohibited ownerpurported record transferee, prior to our DLR’s discovery that the shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand for distribution to the beneficiary of the trust, and the trustee may reduce the amount payable to the purported record transferee upon the sale of the shares transferred to the trustee (as described below) by the trustamount of any such dividends or other distributions which have not been repaid to the trustee. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent a violation of the applicable ownership limit or our the DLR’s being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT, then our the charter provides that the transfer of the shares in excess of the ownership limit will be null void. If any transfer would result in shares of DLR’s stock being beneficially owned by fewer than 100 persons, then any such purported transfer will be void and voidof no force or effect and the intended transferee will acquire no rights in the shares. Shares of capital DLR’s stock transferred to the trustee are deemed offered for sale to usDLR, or our its designee, at a price per share equal to the lesser of (1) the price paid by the prohibited owner purported record transferee for the shares (or, if the event which resulted in the case transfer to the trust did not involve a purchase of a devise or giftsuch shares of DLR’s stock at market price, the last reported sales price reported on the principal securities exchange NYSE on the trading day immediately preceding the day of the event which our shares are listed at resulted in the time transfer of such devise or giftshares of DLR’s stock to the trust) and (2) the market price on the date we acceptDLR, or our designee acceptsits designee, accepts such offer. We DLR may reduce the amount payable to the purported record transferee by the amount of any dividend or other distribution that we dividends and distributions which have been paid to the prohibited owner before we discovered that purported record transferee and are owed by the shares had been automatically transferred purported record transferee to the trust and that are then owed to the trustee as described above and we may trustee. DLR will pay the amount of any such reduction to the trustee for the benefit of the charitable beneficiary. We have DLR has the right to accept such offer of sale until the trustee has sold the shares of our capital DLR’s stock held in the trust as pursuant to the clauses discussed below. Upon a sale to usDLR, the interest of the charitable beneficiary in the shares sold terminates, terminates and the trustee must distribute the net proceeds of the sale to the prohibited owner purported record transferee and any dividends or other distributions held by the trustee with respect to such shares of capital stock will be paid to the charitable beneficiary. If we do DLR does not buy the shares, the trustee must, within 20 days of receiving notice from us DLR of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the common stock ownership limit or the preferred stock ownership limit, as applicable, and the aggregate stock ownership limit or such other restrictions on ownership and transfer of our capital stocklimit as established by the DLR board. After the sale of the sharesthat, the interest of the charitable beneficiary in the shares transferred to the trust will terminate and the trustee must distribute to the prohibited owner purported record transferee an amount equal to the lesser of (1) the price paid by the prohibited purported record transferee or owner for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares at market price, the last reported sales price reported on the principal securities exchange NYSE on which our shares are listed on the trading day immediately preceding the day of the event which resulted in the transfer of such shares of capital DLR’s stock to the trust) and (2) the sales proceeds (net of commissions and other expenses of sale) received by the trust trustee for the shares. The trustee may reduce the amount payable to the prohibited owner purported record transferee by the amount of any dividend or other distribution that we dividends and distributions which have been paid to the prohibited owner before we discovered that purported record transferee and are owed by the shares had been automatically transferred purported record transferee to the trust and that are then owed to the trustee as described abovetrustee. Any net sales proceeds in excess of the amount payable to the prohibited owner purported record transferee will be immediately paid to the charitable beneficiary, together with any dividends or other distributions thereon. In addition, if, if prior to discovery by us DLR that shares of capital its stock have been transferred to a trust, such shares of capital stock are sold by a prohibited ownerpurported record transferee, then such shares will shall be deemed to have been sold on behalf of the trust and to the extent that the prohibited owner purported record transferee received an amount for or in Table of Contents respect of such shares that exceeds the amount that such prohibited owner purported record transferee was entitled to receive, such excess amount will shall be paid to the trustee upon demand. The prohibited owner purported beneficial transferee or purported record transferee has no rights in the shares held by the trustee. The trustee will be designated by us and will be unaffiliated with us and with any prohibited owner. Prior to the sale of any shares by the trust, the trustee will receive, in trust for the beneficiary of the trust, all dividends and other distributions paid by us with respect to the shares held in trust and may also exercise all voting rights with respect to the shares held in trust. These rights will be exercised for the exclusive benefit of the beneficiary of the trust. Any dividend or other distribution paid prior to our discovery that shares of capital stock have been transferred to the trust will be paid by the recipient to the trustee upon demand. Subject to the MGCL, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority, at the trustee’s sole discretion: • to rescind as void any vote cast by a prohibited owner prior to our discovery that the shares have been transferred to the trust; and • to recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust. However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote. In addition, if our the DLR board of directors determines or other permitted designees determine in good faith that a proposed transfer or other event would violate the restrictions on ownership and transfer of our capital stockset forth in the charter, our the DLR board of directors may or other permitted designees will take such action as it deems or they deem advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us DLR to redeem the shares of capital common stock or preferred stock, refusing to give effect to the transfer on our DLR’s books or instituting proceedings to enjoin the transfer. Every Any beneficial owner of 5% (or such lower percentage as required by the Code or the regulations promulgated thereunder) or more of our capital stock, within 30 days after the end of each taxable year, must give us written notice, stating the stockholder’s name and address, the number constructive owner of shares of each class DLR’s stock and series of our capital stock that any person or entity (including the stockholder beneficially owns of record) who is holding shares of DLR’s stock for a beneficial owner must, on request, provide DLR with a completed questionnaire containing the information regarding the ownership of such shares, as set forth in the applicable Treasury Regulations. In addition, any person or entity that is a beneficial owner or constructive owner of shares of DLR’s stock and any person or entity (including the stockholder of record) who is holding shares of DLR’s stock for a description of the manner in which the shares are held. Each such beneficial owner must provide or constructive owner shall, on request, be required to us disclose to DLR in writing such additional information as we DLR may request in order to determine the effect, if any, of the such stockholder’s beneficial actual and constructive ownership of shares of DLR’s stock on our qualification its status as a REIT and to ensure compliance with the common stock ownership limit, the preferred stock ownership limit and the aggregate stock ownership limit, or as otherwise permitted by the DLR board. In addition, each stockholder must provide to us in writing such information as we may request in good faith in order to determine our qualification as a REIT and to comply with the requirements All certificates representing shares of any taxing authority or governmental authority or to determine such compliance. These restrictions on ownership and transfer could delay, defer or prevent a transaction or a change in control that might involve a premium price for the DLR’s common stock or otherwise be in and preferred stock bear a legend referring to the best interest of the stockholdersrestrictions described above.

Appears in 1 contract

Samples: Purchase Agreement (Digital Realty Trust, Inc.)

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Restrictions on Ownership and Transfer. To For the Company to qualify as a REIT under the Internal Revenue Code of 1986, as amended, (the “Code”), shares of our capital stock must be owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the Company’s issued and outstanding shares of our capital stock Equity Stock (as defined below) may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year (other than year, and the first year for which an election to Equity Stock must be beneficially owned by 100 or more persons during at least 335 days of a REIT has been made). We elected to be taxed as a REIT beginning with our taxable year ended December 31of 12 months or during a proportionate part of a shorter taxable year. In addition, 2013, in which case, these ownership limits applied to us beginning with our taxable year ending December 31, 2014certain percentages of the Company’s gross income must be from particular activities. Our charter imposes The Charter contains restrictions on the ownership and transfer of our capital stockshares of Equity Stock to enable the Company to qualify as a REIT. The relevant sections of our charter provide thatSubject to certain exceptions specified in the Charter, subject to the exceptions described belowCharter provides that no holder, no person or entity other than an excepted holder, may beneficially own, or be deemed to own, beneficially or own by virtue of the applicable constructive ownership attribution provisions of the Code, more than 3.39.8% (in value or in number of shares, whichever is more restrictive) of the outstanding shares of the common stock, or more than 9.8% (in value) of the aggregate of the outstanding shares of all classes and series of our capital the Company’s stock or more than 3.3% in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock. We refer to this limit as collectively, the “ownership limit.” An individual or entity that becomes subject to the ownership limit or any Equity Stock”). Each of the other these restrictions on ownership and transfer of our capital stock described below is referred to as a an prohibited ownerOwnership Limitif, had and collectively as the violative transfer or other event been effective, the individual or entity would have been a beneficial owner or, if appropriate, a record owner of shares of our capital stock. “Ownership Limits.” The constructive ownership rules under the Code are complex and may cause shares of capital stock owned actually or constructively by a group of related individuals and/or entities to be owned constructively by one individual or entity. As a result, the acquisition of less than 3.3% in value of the outstanding shares of all classes and series of our capital stock or in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock (or the acquisition of an interest in an entity that owns, actually or constructively, shares of our capital stock by an individual or entity), could, nevertheless, cause that individual or entity, or another individual or entity, to own constructively in excess of the ownership limit. Our board of directors Board may, in its sole and absolute discretion, subject to such conditions as it may determine and the receipt of certain representations and undertakings, prospectively or retroactively, waive either or both of the ownership limit Ownership Limits with respect to a particular stockholder or establish a different limit on ownership, or ownership (an “excepted holder limit”), for a particular stockholder which excepted holder limit is subject to adjustment from time to time, if the stockholder’s ownership Board makes certain determinations set forth in excess of the ownership limit would not result in our failing to qualify as a REITCharter. As a condition of its waiver or grant of excepted holder limitany such exemption, our board of directors may, but is not required to, the Board may require an opinion of counsel or a ruling from the Internal Revenue Service (“IRS”) ruling or an opinion of counsel satisfactory to our board of directors the Board in its sole and absolute discretion, as specified in the Charter, in order to determine or ensure our qualification its status as a REIT, or such representations and/or undertakings from the person requesting the waiver as the Board may require in its sole and absolute discretion to make such determinations. Our charter contains Notwithstanding the receipt of any such ruling or our board of directors has created excepted holder limits for Xxxxx Xxxxxxxxx and opinion, the Gladstone Future Trust, a trust for Board may impose such conditions or restrictions as it deems appropriate in connection with granting such an exception. Subject to the benefit of Xx. Xxxxxxxxx’x adult children. The excepted holder limits, which our charter contains or our board of directors approved, allow Xxxxx Xxxxxxxxx and Gladstone Future Trust to hold up to 33.3% and 17%, respectively, in value provisions of the aggregate Charter, the Charter provides that an underwriter or placement agent that participates in a public offering or a private placement of outstanding shares of our capital stockthe Equity Stock, or 33.3% and 17% in value or number of shares, whichever is more restrictive, of our outstanding shares of common stock. Additionally, our charter permits certain qualified institutional investors to each hold up to 9.8% by value or number of shares an initial purchaser of the aggregate of the outstanding shares of capital stock or up to 9.8% by value or number of sharesEquity Stock in a transaction reliant upon Rule 144A, whichever is more restrictive, of our outstanding shares of common stock (excluding any outstanding shares of capital or common stock not treated as outstanding for federal income tax purposes). As of March 6, 2020, Xxxxx Xxxxxxxxx holds approximately 11.8% of the number of shares of capital stock outstanding and Gladstone Future Trust holds approximately 3.1% of the number of shares of capital stock outstanding (which shares will be attributed to Xx. Xxxxxxxxx for purposes of the REIT stock ownership diversification requirements). Our board of directors may from time to time increase or decrease the ownership limit for other individuals and entities unless after giving effect to such increase, five or fewer individuals could beneficially own or constructively own in the aggregate, more than 49.9% in value shares of the shares then outstanding. A reduced ownership limit will not apply to any person or entity whose percentage ownership of our common stock or capital stock of all classes and series, as applicable, is Equity Stock in excess of such decreased ownership limit until such time as such individual’s or entity’s percentage ownership of our common stock or capital stock of all classes and series, as applicable, equals or falls below the decreased ownership limitOwnership Limits, but any further acquisition of shares of our common stock only to the extent necessary to facilitate such public offering, private placement or capital stock of any other class or series, as applicable, in excess of such percentage ownership of our common stock or capital stock of all classes and series will be in violation of the ownership limit. Our charter further prohibits: • any person from beneficially or constructively owning, applying certain attribution rules of the Code, shares of our capital stock that would result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or otherwise cause us to fail to qualify as a REIT; and • any person from transferring shares of our capital stock if such transfer would result in shares of our capital stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution). Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our capital stock that will or may violate the ownership limit or any of the other foregoing restrictions on ownership and transfer of our capital stock, or who would have owned shares of our capital stock transferred to a trust as described below, must immediately give us written notice of the event or, in the case of an attempted or proposed Rule 144A transaction, must give at least 15 days prior written notice to us and provide us with such other information as we may request in order to determine the effect of such transfer on our qualification as a REIT. The foregoing restrictions on transferability and ownership and transfer of our capital stock will not apply if our board of directors the Board determines that it is no longer in our the Company’s best interests to attempt to qualify, or to continue to qualify, qualify as a REIT REIT. In addition, the Charter provides that no person may beneficially or constructively own shares of Equity Stock to the extent that compliance with such ownership would result in the restrictions and limitations on ownership and transfer Company being closely held within the meaning of our capital stock as described above is no longer required Section 856(h) of the Code or which would otherwise result in order for us the Company failing to qualify as a REIT. If any transfer of shares of our capital stock Equity Stock which would result in shares of our capital stock being cause the Company to be beneficially owned by fewer less than 100 personspersons are issued or transferred to any person, the Charter provides that such issuance or transfer will shall be null and void ab initio, and the intended transferee will would acquire no rights in to the stock; however, the Board may waive this transfer restriction if it determines that such shares. In addition, if any purported transfer of shares of our capital stock or any other event would otherwise result in any person violating not adversely affect the ownership limit or an excepted holder limit established by our board of directors or in our being “closely held” under Section 856(h) of the Code (without regard Company’s ability to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or our failure continue to qualify as a REIT, then . The Charter provides that number shares transferred in excess of the Ownership Limits and shares (rounded up to the nearest whole share) transferred that would cause us the Company to violate such restrictions be closely held or otherwise fail to qualify as a REIT will be automatically transferred to, and held by, a trust to one or more trusts for the exclusive benefit of one or more charitable organizations selected by us and the intended transferee will acquire no rights in such sharesbeneficiaries. The automatic Such transfer will be deemed to be effective as of the close of business on the business day prior to the date purported transfer. The Charter further provides that the Prohibited Owner (as defined herein) will have no rights in the shares held by the trustee and will not benefit economically from ownership of any such shares held in trust by the trustee, will have no rights to dividends or other distributions and will not possess any rights to vote or other rights attributable to such shares held in trust. While these shares are held in trust, the trustee will be entitled to vote and to share in any dividends or other distributions with respect to shares of Equity Stock held in trust, which rights will be exercised for the exclusive benefit of the violative transfer or other event charitable beneficiary. Within 20 days of receiving notice from the Company that results in a transfer shares of Equity Stock have been transferred to the trust, the trustee will sell the shares to any person who may hold such shares without violating the limitations on ownership and transfer set forth in the Charter. Any dividend or other distribution paid Upon such sale, the interest of the charitable beneficiary in the shares sold will terminate, and the trustee will distribute the net proceeds of the sale to the prohibited owner, prior to our discovery that person who owned the shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand for distribution to the beneficiary by the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent of Equity Stock in violation of the applicable Ownership Limits or the other ownership limit or our being restrictions described above (the closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REITProhibited Owner”), then our charter provides that the transfer of the shares who will be null and void. Shares of capital stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to receive the lesser of (1) the price paid by the prohibited owner Prohibited Owner for the shares (or, in the case of a devise or gift, the last reported sales price on the principal securities exchange on which our shares are listed at the time of such devise or gift) and (2) the market price on the date we accept, or our designee accepts, such offer. We may reduce the amount payable by the amount of any dividend or other distribution that we have paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed to the trustee as described above and we may pay the amount of any such reduction to the trustee for the benefit of the charitable beneficiary. We have the right to accept such offer of sale until the trustee has sold the shares of our capital stock held in the trust as discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates, the trustee must distribute the net proceeds of the sale to the prohibited owner and any dividends or other distributions held by the trustee with respect to such shares of capital stock will be paid to the charitable beneficiary. If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limit or the other restrictions on ownership and transfer of our capital stock. After the sale of the shares, the interest of the charitable beneficiary in the shares transferred to the trust will terminate and the trustee must distribute to the prohibited owner an amount equal to the lesser of (1) the price paid by the prohibited owner for the shares (or, if the Prohibited Owner did not give value for the shares in connection with the event which resulted causing the shares to be held in the transfer to the trust did not involve a purchase of such shares at market pricetrust, the last reported sales market price on of the principal securities exchange on which our shares are listed on the day of the event which resulted causing the shares to be held in the transfer of such shares of capital stock to the trust) trust and (2) the sales proceeds (net of commissions and other expenses of sale) price per share received by the trust for trustee from the sharessale or other disposition of the shares held in the trust. The trustee may will reduce the amount payable to the prohibited owner Prohibited Owner by the amount of any dividend or dividends and other distribution distributions that we have been paid to the prohibited owner before we discovered that Prohibited Owner and are owed by the shares had been automatically transferred to the trust and that are then owed Prohibited Owner to the trustee as described above. Any and will pay any net sales proceeds in excess of the amount payable to the prohibited owner will be immediately paid Prohibited Owner to the charitable beneficiary, together with any dividends or other distributions thereon. In addition, if, prior to discovery by us that shares of capital stock have been transferred to a trust, such shares of capital Equity Stock held in trust are purchasable by the Company until the trustee has sold the shares at a price equal to the lesser of the price paid for the stock are sold by a prohibited owner, then in the transaction that resulted in such shares will be deemed transfer to have been sold on behalf of the trust and the market price for the stock on the date the Company determines to purchase the stock. All certificates representing shares of Equity Stock will bear a legend referring to the extent restrictions described above. In order for the Company to comply with its recordkeeping requirements, the Charter requires that the prohibited each beneficial or constructive owner received an amount of Equity Stock and each person (including stockholders of record) who holds stock for a beneficial or in respect of such shares that exceeds the amount that such prohibited owner was entitled to receiveconstructive owner, such excess amount will be paid shall provide to the trustee upon demand. The prohibited owner has no rights in the shares held by the trustee. The trustee will be designated by us and will be unaffiliated with us and with any prohibited owner. Prior to the sale of any shares by the trust, the trustee will receive, in trust for the beneficiary of the trust, all dividends and other distributions paid by us with respect to the shares held in trust and may also exercise all voting rights with respect to the shares held in trust. These rights will be exercised for the exclusive benefit of the beneficiary of the trust. Any dividend or other distribution paid prior to our discovery that shares of capital stock have been transferred to the trust will be paid by the recipient to the trustee upon demand. Subject to the MGCL, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority, at the trustee’s sole discretion: • to rescind as void any vote cast by a prohibited owner prior to our discovery that the shares have been transferred to the trust; and • to recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust. However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote. In addition, if our board of directors determines in good faith that a proposed transfer or other event would violate the restrictions on ownership and transfer of our capital stock, our board of directors may take Company such action as it deems advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us to redeem the shares of capital stock, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer. Every owner of 5% (or such lower percentage as required by the Code or the regulations promulgated thereunder) or more of our capital stock, within 30 days after the end of each taxable year, must give us written notice, stating the stockholder’s name and address, the number of shares of each class and series of our capital stock that the stockholder beneficially owns and a description of the manner in which the shares are held. Each such owner must provide to us in writing such additional information as we the Company may request in order to determine the effect, if any, of the stockholder’s beneficial ownership on our qualification its status as a REIT and to ensure compliance with the ownership limitOwnership Limits. The Charter also requires each owner of a specified percentage of Equity Stock to provide, no later than January 30 of each year, written notice to the Company stating the name and address of such owner, the number of shares of Equity Stock beneficially owned, and a description of how such shares are held. In addition, each such stockholder must provide to us in writing such additional information as we the Company may request in good faith in order to determine our qualification the effect of such stockholder’s beneficial ownership of Equity Stock on the Company’s status as a REIT and to comply ensure compliance with the requirements of any taxing authority or governmental authority or to determine such complianceOwnership Limits. These Ownership Limits may have the effect of precluding acquisition of control of the Company by a third party unless the Board determines that maintenance of REIT status is no longer in the Company’s best interest. No restrictions on ownership and transfer could delay, defer or prevent a transaction or a change in control that might involve a premium price for will preclude the common stock or otherwise be in settlement of transactions entered into through the best interest facilities of the stockholdersNYSE.

Appears in 1 contract

Samples: Forward Sale Agreement

Restrictions on Ownership and Transfer. To In order to qualify as a REIT under the Internal Revenue Code of 1986, as amended, (or the Code”), our shares of our capital stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the our outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made). We elected Because our Board of Directors believes it is at present in our best interests for us to be taxed qualify as a REIT beginning with REIT, among other purposes, our taxable year ended December 31charter, 2013subject to certain exceptions, in which case, these ownership limits applied to us beginning with contains restrictions on the number of shares of our taxable year ending December 31, 2014stock that a person may own. Our charter imposes restrictions on the ownership and transfer of our capital stock. The relevant sections of our charter provide provides that, subject to the exceptions described belowcertain exceptions, no person or entity may own, or be deemed to own, beneficially or by virtue of the applicable constructive ownership provisions of the Code, constructively own more than 3.3% in value of the aggregate of the outstanding shares of all classes and series of our capital stock or more than 3.39.8% in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock. We refer to this limit as the “ownership limit.” An individual or entity that becomes subject to the ownership limit or any of the other restrictions on ownership and transfer of our capital stock described below is referred to as a “prohibited owner” if, had the violative transfer or other event been effective, the individual or entity would have been a beneficial owner or, if appropriate, a record owner of shares of our capital stock. The constructive ownership rules under the Code are complex and may cause shares of capital stock owned actually or constructively by a group of related individuals and/or entities to be owned constructively by one individual or entity. As a result, the acquisition of less than 3.3% in value of the outstanding shares of all classes and series of our capital stock or in value or in number of shares (whichever is more restrictive) of the outstanding shares of our common stock (or the acquisition of an interest in an entity that owns, actually or constructively, shares of our capital stock by an individual or entity), could, nevertheless, cause that individual or entity, or another individual or entity, to own constructively in excess of the ownership limit. Our board of directors may, in its sole discretion, subject to such conditions as it may determine and the receipt of certain representations and undertakings, prospectively or retroactively, waive the ownership limit or establish a different limit on ownership, or excepted holder limit, for a particular stockholder if the stockholder’s ownership in excess of the ownership limit would not result in our failing to qualify as a REIT. As a condition of its waiver or grant of excepted holder limit, our board of directors may, but is not required to, require an opinion of counsel or Internal Revenue Service (“IRS”) ruling satisfactory to our board of directors in order to determine or ensure our qualification as a REIT. Our charter contains or our board of directors has created excepted holder limits for Xxxxx Xxxxxxxxx and the Gladstone Future Trust, a trust for the benefit of Xx. Xxxxxxxxx’x adult children. The excepted holder limits, which our charter contains or our board of directors approved, allow Xxxxx Xxxxxxxxx and Gladstone Future Trust to hold up to 33.3% and 17%, respectively, in value of the aggregate of outstanding shares of our capital stock, or 33.3% and 17% in value or number of shares, whichever is more restrictive, of our outstanding shares of common stock. Additionally, our charter permits certain qualified institutional investors to each hold up to 9.8% by value or number of shares of the aggregate of the outstanding shares of capital stock any class or up to 9.8% by value or number of shares, whichever is more restrictive, series of our outstanding shares of common stock (excluding any outstanding shares of capital stock, or common stock not treated as outstanding for federal income tax purposes). As of March 6, 2020, Xxxxx Xxxxxxxxx holds approximately 11.8% of the number of shares of capital stock outstanding and Gladstone Future Trust holds approximately 3.1% of the number of shares of capital stock outstanding (which shares will be attributed to Xx. Xxxxxxxxx for purposes of the REIT stock ownership diversification requirements)Ownership Limit. Our board of directors may from time to time increase or decrease the ownership limit for other individuals and entities unless after giving effect to such increase, five or fewer individuals could charter also prohibits any person from: • beneficially or constructively own in the aggregate, more than 49.9% in value of the shares then outstanding. A reduced ownership limit will not apply to any person owning or entity whose percentage ownership of our common stock or capital stock of all classes and series, as applicable, is in excess of such decreased ownership limit until such time as such individual’s or entity’s percentage ownership of our common stock or capital stock of all classes and series, as applicable, equals or falls below the decreased ownership limit, but any further acquisition of shares of our common stock or capital stock of any other class or series, as applicable, in excess of such percentage ownership of our common stock or capital stock of all classes and series will be in violation of the ownership limit. Our charter further prohibits: • any person from beneficially or constructively owning, applying certain attribution rules of the Code, transferring shares of our capital stock that if such ownership or transfer would result in our being “closely held” under within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) ); • transferring shares of our capital stock if such transfer would result in our capital stock being owned by fewer than 100 persons, effective beginning on the date on which we first have 100 stockholders; • beneficially or our constructively owning shares of our capital stock to the extent such beneficial or constructive ownership would cause us to constructively own 10% or more of the ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property within the meaning of Section 856(d)(2)(B) of the Code; or • beneficially or constructively owning or transferring shares of our capital stock if such beneficial or constructive ownership or transfer would otherwise cause us to fail to qualify as a REIT; and • any REIT under the Code. Our Board of Directors, in its sole discretion, may exempt (prospectively or retroactively) a person from transferring the 9.8% ownership limit and other restrictions in our charter and may establish or increase an excepted holder percentage limit for such person if our Board of Directors obtains such representations, covenants and undertakings as it deems appropriate in order to conclude that granting the exemption and/or establishing or increasing the excepted holder percentage limit will not cause us to fail to qualify as a REIT. Our Board of Directors may require a ruling from the Internal Revenue Service, or the IRS, or an opinion of counsel, in either case in form and substance satisfactory to our Board of Directors, in its sole discretion, in order to determine or ensure our status as a REIT. Any attempted transfer of shares of our capital stock which, if such transfer effective, would violate any of the restrictions described above will result in the number of shares of our capital stock causing the violation (rounded up to the nearest whole share) to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries, except that any transfer that results in the violation of the restriction relating to shares of our capital stock being beneficially owned by fewer than 100 persons will be void ab initio. In either case, the proposed transferee will not acquire any rights in those shares. The automatic transfer will be deemed to be effective as of the close of business on the business day prior to the date of the purported transfer or other event that results in the transfer to the trust. Shares held in the trust will be issued and outstanding shares. The proposed transferee will not benefit economically from ownership of any shares held in the trust, will have no rights to dividends or other distributions and will have no rights to vote or other rights attributable to the shares held in the trust. The trustee of the trust will have all voting rights and rights to dividends or other distributions with respect to shares held in the trust. These rights will be exercised for the exclusive benefit of the charitable beneficiary. Any dividend or other distribution paid prior to our discovery that shares have been transferred to the trust will be paid by the recipient to the trustee upon demand. Any dividend or other distribution authorized but unpaid will be paid when due to the trustee. Any dividend or other distribution paid to the trustee will be held in trust for the charitable beneficiary. Subject to Maryland law, the trustee will have the authority (determined without reference in the trustee’s sole discretion) (1) to rescind as void any rules vote cast by the proposed transferee prior to our discovery that the shares have been transferred to the trust and (2) to recast the vote in accordance with the desires of attributionthe trustee acting for the benefit of the charitable beneficiary. However, if we have already taken irreversible corporate action, then the trustee will not have the authority to rescind and recast the vote. Within 20 days of receiving notice from us that shares of our stock have been transferred to the trust, the trustee will sell the shares to a person, designated by the trustee, whose ownership of the shares will not violate the above ownership and transfer limitations. Upon the sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the proposed transferee and to the charitable beneficiary as follows. The proposed transferee will receive the lesser of (1) the price paid by the proposed transferee for the shares or, if the proposed transferee did not give value for the shares in connection with the event causing the shares to be held in the trust (e.g., a gift, devise or other similar transaction), the market price (as defined in our charter) of the shares on the day of the event causing the shares to be held in the trust and (2) the price per share received by the trustee (net of any commission and other expenses of sale) from the sale or other disposition of the shares. The trustee may reduce the amount payable to the proposed transferee by the amount of dividends and other distributions that have been paid to the proposed transferee and are owed by the proposed transferee to the trustee. Any net sale proceeds in excess of the amount payable to the proposed transferee will be paid immediately to the charitable beneficiary. If, prior to our discovery that shares of our stock have been transferred to the trust, the shares are sold by the proposed transferee, then (1) the shares shall be deemed to have been sold on behalf of the trust and (2) to the extent that the proposed transferee received an amount for the shares that exceeds the amount he or she was entitled to receive, the excess shall be paid to the trustee upon demand. In addition, shares of our stock held in the trust will be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of (1) the price per share in the transaction that resulted in the transfer to the trust (or, in the case of a devise or gift, the market price at the time of the devise or gift) and (2) the market price on the date we, or our designee, accept the offer, which we may reduce by the amount of dividends and distributions that have been paid to the proposed transferee and are owed by the proposed transferee to the trustee. We will have the right to accept the offer until the trustee has sold the shares. Upon a sale to us, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the proposed transferee. If a transfer to a charitable trust, as described above, would be ineffective for any reason to prevent a violation of a restriction, the transfer that would have resulted in a violation will be void ab initio, and the proposed transferee shall acquire no rights in those shares. Any certificate representing shares of our capital stock, and any notices delivered in lieu of certificates with respect to the issuance or transfer of uncertificated shares, will bear a legend referring to the restrictions described above. We do not expect to issue certificates representing shares of our capital stock. Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our capital stock that will or may violate the ownership limit or any of the other foregoing restrictions on ownership and transfer of our capital stocktransfer, or any person who would have owned shares of our capital stock transferred that resulted in a transfer of shares to a trust as described belowcharitable trust, must immediately is required to give us written notice of the event orimmediately to us, or in the case of an a proposed or attempted or proposed transaction, must to give at least 15 days days’ prior written notice to us notice, and provide us with such other information as we may request in order to determine the effect of such the transfer on our qualification status as a REIT. The foregoing restrictions on ownership and transfer of our capital stock will not apply if our board Board of directors Directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance with the restrictions and limitations on ownership and transfer of our capital stock as described above is no longer required necessary in order for us to qualify as a REIT. If any transfer of shares of our capital stock would result in shares of our capital stock being beneficially owned by fewer than 100 persons, such transfer will be null and void and the intended transferee will acquire no rights in such shares. In addition, if any purported transfer of shares of our capital stock or any other event would otherwise result in any person violating the ownership limit or an excepted holder limit established by our board of directors or in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) ) or our constructively owning 10% or more of ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property or our failure to qualify as a REIT, then that number of shares (rounded up to the nearest whole share) that would cause us to violate such restrictions will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us and the intended transferee will acquire no rights in such shares. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a transfer to the trust. Any dividend or other distribution paid to the prohibited owner, prior to our discovery that the shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand for distribution to the beneficiary by the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limit or our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT, then our charter provides that the transfer of the shares will be null and void. Shares of capital stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (1) the price paid by the prohibited owner for the shares (or, in the case of a devise or gift, the last reported sales price on the principal securities exchange on which our shares are listed at the time of such devise or gift) and (2) the market price on the date we accept, or our designee accepts, such offer. We may reduce the amount payable by the amount of any dividend or other distribution that we have paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed to the trustee as described above and we may pay the amount of any such reduction to the trustee for the benefit of the charitable beneficiary. We have the right to accept such offer of sale until the trustee has sold the shares of our capital stock held in the trust as discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates, the trustee must distribute the net proceeds of the sale to the prohibited owner and any dividends or other distributions held by the trustee with respect to such shares of capital stock will be paid to the charitable beneficiary. If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limit or the other restrictions on ownership and transfer of our capital stock. After the sale of the shares, the interest of the charitable beneficiary in the shares transferred to the trust will terminate and the trustee must distribute to the prohibited owner an amount equal to the lesser of (1) the price paid by the prohibited owner for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares at market price, the last reported sales price on the principal securities exchange on which our shares are listed on the day of the event which resulted in the transfer of such shares of capital stock to the trust) and (2) the sales proceeds (net of commissions and other expenses of sale) received by the trust for the shares. The trustee may reduce the amount payable to the prohibited owner by the amount of any dividend or other distribution that we paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed to the trustee as described above. Any net sales proceeds in excess of the amount payable to the prohibited owner will be immediately paid to the charitable beneficiary, together with any dividends or other distributions thereon. In addition, if, prior to discovery by us that shares of capital stock have been transferred to a trust, such shares of capital stock are sold by a prohibited owner, then such shares will be deemed to have been sold on behalf of the trust and to the extent that the prohibited owner received an amount for or in respect of such shares that exceeds the amount that such prohibited owner was entitled to receive, such excess amount will be paid to the trustee upon demand. The prohibited owner has no rights in the shares held by the trustee. The trustee will be designated by us and will be unaffiliated with us and with any prohibited owner. Prior to the sale of any shares by the trust, the trustee will receive, in trust for the beneficiary of the trust, all dividends and other distributions paid by us with respect to the shares held in trust and may also exercise all voting rights with respect to the shares held in trust. These rights will be exercised for the exclusive benefit of the beneficiary of the trust. Any dividend or other distribution paid prior to our discovery that shares of capital stock have been transferred to the trust will be paid by the recipient to the trustee upon demand. Subject to the MGCL, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority, at the trustee’s sole discretion: • to rescind as void any vote cast by a prohibited owner prior to our discovery that the shares have been transferred to the trust; and • to recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust. However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote. In addition, if our board of directors determines in good faith that a proposed transfer or other event would violate the restrictions on ownership and transfer of our capital stock, our board of directors may take such action as it deems advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us to redeem the shares of capital stock, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer. Every owner of more than 5% (or such any lower percentage as required by the Code or the regulations promulgated thereunder) in number or more value of the outstanding shares of our capital stock, within 30 days after the end of each taxable year, must is required to give us written notice, stating the stockholder’s his or her name and address, the number of shares of each class and series of shares of our capital stock that the stockholder he or she beneficially owns and a description of the manner in which the shares are held. Each such owner of these owners must provide to us in writing such with additional information as that we may request in order to determine the effect, if any, of the stockholder’s his or her beneficial ownership on our qualification status as a REIT and to ensure compliance with the ownership limitlimitations. In addition, each stockholder must will upon demand be required to provide to us in writing such with information as that we may request in good faith in order to determine our qualification status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such our compliance. These restrictions on ownership and transfer limitations could delay, defer or prevent a transaction or a change in control that might involve a premium price for the common shares of our capital stock or otherwise be in the best interest of the our stockholders.

Appears in 1 contract

Samples: Sales Agreement

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