Sponsor Funding Agreement
On November 1, 2023, the Company entered into a sponsor funding agreement (the “Sponsor Funding Agreement”) by and among the Company, Strategic Storage Operating Partnership VI, L.P., the Company’s operating partnership (the “Operating Partnership”), and the Sponsor pursuant to which the Sponsor has agreed to fund the payment of (i) the upfront 3% sales commission for the sale of Class Y Shares, (ii) the upfront 3% dealer manager fee for the Class Y Shares, and (iii) the estimated 1% organization and offering expenses for the sale of Class Y Shares and Class Z Shares. In addition, the Sponsor has agreed to reimburse the Company in cash to cover the dilution from the one-time stock dividends described below. The Sponsor Funding Agreement will terminate immediately upon the date that the Company ceases to offer Class Y Shares and Class Z Shares in the Offering.
In consideration for the Sponsor providing the funding for the front-end sales load described above and the cash to cover the dilution from the stock dividends described below, the Operating Partnership will issue a number of Series C Units (as defined below) to the Sponsor equal to the dollar amount of such funding divided by the then-current offering price (initially $9.30 per share) for the Class Y Shares and Class Z Shares sold in the Offering. Pursuant to the Sponsor Funding Agreement, the Sponsor shall reimburse the Company monthly within 30 days after the end of each calendar month for the applicable front-end sales load it agreed to fund, and the Operating Partnership shall issue the Series C Units on a monthly basis, effective as of the respective funding date.
Amendment No. 3 to Second Amended and Restated Limited Partnership Agreement
On November 1, 2023, the Company entered into Amendment No. 3 to the Second Amended and Restated Limited Partnership Agreement (“Amendment No. 3 to the Operating Partnership Agreement”) of the Operating Partnership, in order to (i) establish two new classes of partnership units, Class Y partnership units and Class Z partnership units and provide that Class Y partnership units will be issued in connection with the Company’s contribution of net proceeds from the sale of Class Y Shares and Class Z partnership units will be issued in connection with the Company’s contribution of net proceeds from the sale of Class Z Shares; (ii) clarify any special allocations to classes of partnership units, including reduction of distributions on Class Y partnership units to pay the stockholder servicing fee with respect to the Class Y Shares and reduction of distributions on Class Z partnership units to pay the dealer manager servicing fee with respect to the Class Z Shares; and (iii) create Series C Subordinated Convertible Units of limited partnership interest in the Operating Partnership (the “Series C Units”) having economic terms and designations, powers, preferences, rights and restrictions as set forth in Amendment No. 3 to the Operating Partnership Agreement. The Series C Units shall initially have no distribution, voting, liquidation, or other rights to participate in the Operating Partnership unless and until such Series C Units are converted into Class A Units of limited partnership interest in the Operating Partnership (the “Class A Units”). The Series C Units shall automatically convert into Class A Units on a one-to-one basis upon the Company’s disclosure of an estimated net asset value per share equal to at least $10.00 per share for each of the Class A Shares, Class T Shares, Class W Shares, Class P shares of common stock, $0.001 par value per share (the “Class P Shares”), Class Y Shares, and Class Z Shares calculated net of the value of the Series C Units to be converted.
The foregoing summaries of Amendment No. 2 to the Dealer Manager Agreement, the Sponsor Funding Agreement, and Amendment No. 3 to the Operating Partnership Agreement do not purport to be complete and are qualified in their entirety by reference to Amendment No. 2 to the Dealer Manager Agreement, the Sponsor Funding Agreement, and Amendment No. 3 to the Operating Partnership Agreement, respectively, copies of which were filed as Exhibits 1.1, 10.1, and 10.2, respectively, to Post-Effective Amendment No. 4 to the Company’s registration statement on November 1, 2023, and are incorporated by reference in this Current Report on Form 8-K (this “Current Report”).
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On November 1, 2023, the Company filed Articles Supplementary (“Articles Supplementary”) to the Company’s First Articles of Amendment and Restatement, as amended, pursuant to which, effective as of November 1, 2023, the Company reclassified 200,000,000 authorized but unissued Class T Shares as new Class Y Shares, and reclassified 70,000,000 authorized but unissued Class A Shares as new Class Z Shares. The Class Y Shares and Class Z Shares have similar voting rights and rights upon liquidation to each other as well as to the Class A shares, Class P Shares, Class T shares, and Class W shares, although distributions are expected to differ to pay the stockholder servicing fee associated with the Class Y Shares and the dealer manager servicing fee associated with the Class Z