Exhibit 3.4
SUPPLEMENT TO
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
SL Investment Fund II LLC
FOR
12.0% SERIES A CUMULATIVE PREFERRED UNITS
This Supplement (the “Series A Supplement”) to the Second Amended and Restated Limited Liability Company Agreement of SL Investment Fund II LLC, (the “Company”), dated as of September 12, 2024 (as in effect from time to time, the “LLC Agreement”) is entered into pursuant to Section 4.3 of the LLC Agreement. Capitalized terms used but not defined herein shall have the meaning set forth in the LLC Agreement.
WHEREAS, the Board of Directors of the Company desires to amend the LLC Agreement to approve the designations, preferences and relative participating, optional and other special rights of a series of preferred units of the Company designated as the 12.0% Series A Cumulative Preferred Units, which are set forth as follows:
ARTICLE I
NUMBER OF UNITS; RANKING
1.1 Designation and Number. A series of Preferred Units, designated the “12.0% Series A Cumulative Preferred Units” (the “Series A Preferred Units”), is hereby established. The total number of authorized Series A Preferred Units shall be five hundred fifteen (515).
1.2 Rank. The Series A Preferred Units shall, with respect to distribution and redemption rights and rights upon liquidation, dissolution or winding up of the Company, rank senior to all classes or series of common units of the Company (“Common Units”) and will rank on parity with any other class or series of Preferred Units, whether such class or series is now existing or is created in the future; provided, however that the consent of the holders of a majority of the outstanding Preferred Units, including the Series A Preferred Units, voting as a separate class, shall be required for the authorization or issuance of any class or series of Preferred Units ranking on parity with the Series A Preferred Units, as further described in Section 5.3 below.
ARTICLE II
DISTRIBUTIONS
2.1 Payment of Distributions. Each holder of the then outstanding Series A Preferred Units shall be entitled to receive, when and as authorized by the Board, out of funds legally available for the payment of distributions, cumulative preferential cash distributions at the rate of 12.0% per annum of the total of $3,000.00 per share plus all accumulated and unpaid distributions thereon. Such distributions shall accrue on a daily basis and be cumulative from the earlier of (1) the first date on which any Series A Preferred Unit is issued, such issue date to be contemporaneous with the receipt by the Company of subscription funds for the Series A Preferred Unit (the “Original Issue Date”), or (2) the date that is 30 business days after the Funding Notice Date (as defined below), which may occur prior to the first date on which any Series A Preferred Unit is issued. Upon written instruction from the Company (via email sufficient), H&L Equities, LLC (“H&L”) will instruct its escrow agent for custody of subscription funds (the “Escrow Agent”) to remit to the Company all subscription funds in exchange for the issuance of the Series A Preferred Units, such issue date to be contemporaneous with the receipt by the Company of such subscription funds. Distributions on the Series A Preferred Units shall be payable semi-annually in arrears on or before June 30 and December 31 of each year (each a “Distribution Payment Date”); provided, however, that if any Distribution Payment Date is not a business day, then the distribution which would otherwise have been payable on such Distribution Payment Date may be paid on the preceding business day or the following business day with the same force and effect as if paid on such Distribution Payment Date. Any distributions payable on the Series A Preferred Units for any partial distribution period will be computed on the basis of a 360-day year consisting of twelve 30-day months. A “distribution period” shall mean, with respect to the first “distribution period,” the period from and including the earlier of (i) the first date on which any Series A Preferred Unit is issued or (ii) the date that falls 30 business days after the Funding Notice Date, to and including the first Distribution Payment Date, and with respect to each subsequent “distribution period,” the period from but excluding a Distribution Payment Date to and including the next succeeding Distribution Payment Date or other date as of which accrued distributions are to be calculated. Distributions will be payable to holders of record as they appear in the records of the Company at the close of business on the applicable record date, which shall be the fifteenth day of the calendar month in which the applicable Distribution Payment Date falls or on such other date designated by the Board for the payment of distributions that is not more than 30 nor less than 10 days prior to such Distribution Payment Date (each, a “Distribution Record Date”). As used herein, “Funding Notice Date” means the date on which any agent of H&L first notified the Company or any representative thereof in writing (via email being sufficient) that five hundred fifteen (515) eligible offerees of Series A Preferred Units have (x) properly completed and executed subscription documents for shares of Series A Preferred Units and (y) submitted subscription funds for the Series A Preferred Units to the Escrow Agent that are ready to be transferred to the Company.
2.2 Prohibition of Distributions. No distributions on Series A Preferred Units shall be declared by the Company or paid or set apart for payment by the Company at such time as the terms and provisions of any written agreement between the Company and any party that is not an affiliate of the Company, including any agreement relating to its indebtedness, prohibit such declaration, payment or setting apart for payment or provide that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by the Investment Company Act of 1940, as amended (the “1940 Act”), the Delaware Limited Liability Company Act, or any other applicable law. For purposes of this Certificate of Designation, “affiliate” shall mean any party that controls, is controlled by or is under common control with the Company.
2.3 Accrual of Distributions. Notwithstanding the foregoing, distributions on the Series A Preferred Units shall accrue whether or not the terms and provisions set forth in Section 2.2 hereof at any time prohibit the current payment of distributions, whether or not the Company has earnings, whether or not there are funds legally available for the payment of such distributions and whether or not such distributions are authorized or declared. Furthermore, distributions will be declared and paid when due in all events to the fullest extent permitted by law and except as provided in Section 2.2 above. Accrued but unpaid distributions on the Series A Preferred Units will accumulate as of the Distribution Payment Date on which they first become payable.
2.4 No Distributions. Unless full cumulative distributions on all outstanding Preferred Units, including Series A Preferred Units, have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past distribution periods, no distributions (other than in Common Units) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon any Common Unit, nor shall any Common Units be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Company (except by conversion into or exchange for other Common Unit), provided, further, that the “asset coverage” (as defined under the 1940 Act) on the Preferred Units, including Series A Preferred Units, must be at least 150 per centum (or such other amount as provided under the 1940 Act), giving effect to any exemptive relief granted to the Company by the U.S. Securities and Exchange Commission, after deducting the amount of such distribution or purchase price.
2.5 Pro Rata Payment. When distributions are not paid in full (or a sum sufficient for such full payment is not set apart) on the Preferred Units, including the Series A Preferred Units, all distributions declared upon the Preferred Units, including the Series A Preferred Units, shall be declared and paid pro rata based on the number of Preferred Units, including Series A Preferred Units, then outstanding.
2.6 Order of Payment. Any distribution payment made on the Series A Preferred Units shall first be credited against the earliest accrued but unpaid distribution due with respect to such units which remains payable. Holders of the Series A Preferred Units shall not be entitled to any distributions, whether payable in cash, property or shares, in excess of full cumulative distributions on the Series A Preferred Units as described above.
2.7 Electronic Payment. Any distribution, redemption or liquidation payment made on the Series A Preferred Units may be made via check or electronic payment. Permissible forms of electronic payment pursuant to this paragraph shall include, without limitation, Automated Clearing House (“ACH”) transfers, direct deposits or wire transfers.
2.8 Appointment of Paying Agent. The holders of Series A Preferred Units hereby authorize REIT Administration, LLC, with an address at 1175 Peachtree Street, NE, Suite 2200, Atlanta, Georgia 30361-6206, to act as paying agent on behalf of the holders of the Series A Preferred Units (the “Paying Agent”). Any distribution payments received by the Paying Agent shall be deemed paid to the holders of Series A Preferred Units on the later of the date received by the Paying Agent or the date declared for payment.
ARTICLE III
LIQUIDATION PREFERENCE
3.1 Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (each a “Liquidation Event”), the holders of Series A Preferred Units then outstanding are entitled to be paid, or have the Company declare and set aside for payment, out of the assets of the Company legally available for distribution to its shareholders, a liquidation preference equal to the sum of the following (collectively, the “Liquidation Preference”): (i) $3,000.00 per share, (ii) all accrued and unpaid dividends thereon through and including the date of payment, and (iii) if the Liquidation Event occurs before the Redemption Premium (as defined below) right expires the per share Redemption Premium in effect on the date of payment of the Liquidation Preference, before any distribution of assets is made to holders of any Common Unit. In the event that the Company elects to set aside the Liquidation Preference for payment, the Series A Preferred Units shall remain outstanding until the holders thereof are paid the full Liquidation Preference, which payment shall be made no later than immediately prior to the Company making its final liquidating distribution on the Common Units. In the event that the Redemption Premium in effect on the payment date is less than the Redemption Premium on the date that the Liquidation Preference was set apart for payment, the Company may make a corresponding reduction to the funds set apart for payment of the Liquidation Preference.
3.2 Pro Rata Distribution. If, upon any Liquidation Event, the available assets of the Company are insufficient to pay the full amount of the Liquidation Preference on all outstanding Preferred Units, including Series A Preferred Unit, then the holders of the Preferred Units, including the Series A Preferred Units, shall share ratably in any such distribution of assets in proportion to the full Liquidation Preference to which they would otherwise be respectively entitled.
3.3 No Right. After payment of the full amount of the Liquidation Preference to which they are entitled, the holders of Series A Preferred Units will have no right or claim to any of the remaining assets of the Company.
3.4 Termination upon Redemption. Upon the Company’s provision of written notice as to the effective date of any such Liquidation Event, accompanied by a check or electronic payment in the amount of the full Liquidation Preference to which each record holder of the Series A Preferred Units is entitled, the Series A Preferred Units shall no longer be deemed outstanding units of the Company and all rights of the holders of such shares will terminate. Such notice shall be given by first class mail, postage pre-paid, or via electronic mail to each record holder of Series A Preferred Units at the respective addresses of such holders as the same shall appear on the records of the Company. Permissible forms of electronic payment pursuant to this paragraph shall include, without limitation, ACH transfers, direct deposits or wire transfers, in each case to be initiated on or before the day on which the related notice is given.
3.5 Consolidation or Merger. The consolidation or merger of the Company with or into any other business enterprise or of any other business enterprise with or into the Company, or the sale, lease or conveyance of all or substantially all of the assets or business of the Company, shall not be deemed to constitute a Liquidation Event; provided, however that any such transaction which results in an amendment, restatement or replacement of the LLC Agreement that has a material adverse effect on the rights and preferences of the Series A Preferred Units, or that increases the issued Series A Preferred Units, shall be deemed a Liquidation Event for purposes of determining whether the Liquidation Preference is payable unless the right to receive payment is waived by holders of a majority of the outstanding Series A Preferred Units voting as a separate class.
ARTICLE IV
REDEMPTION
4.1 Right of Optional Redemption. The Company, at its option, may redeem the Series A Preferred Units, in whole or in part, at any time or from time to time, for cash at a redemption price (the “Redemption Price”) equal to $3,000.00 per share plus all accrued and unpaid distributions thereon to and including the date fixed for redemption (except as provided in Section 4.3 below), plus a redemption premium per unit (each, a “Redemption Premium”) calculated as follows based on the date fixed for redemption: (i) until the date that is date is on or before the second anniversary of the date on which such Series A Preferred Unit is originally issued, $300, and (ii) thereafter, no Redemption Premium. If less than all of the outstanding Series A Preferred Units are to be redeemed, the Series A Preferred Units to be redeemed may be selected by any equitable method determined by the Company provided that such method does not result in the creation of fractional shares.
4.2 Limitations on Redemption. Unless full cumulative distributions on all Preferred Units, including Series A Preferred Units, shall have been, or contemporaneously are, declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past distribution periods, no Preferred Units, including Series A Preferred Units, shall be redeemed or otherwise acquired, directly or indirectly, by the Company unless all outstanding Preferred Units, including Series A Preferred Units, are simultaneously redeemed or acquired, and the Company shall not purchase or otherwise acquire, directly or indirectly, any Common Units (except by exchange for Common Units).
4.3 Rights to Distributions on Shares Called for Redemption. Immediately prior to or upon any redemption of Series A Preferred Units, the Company shall pay, in cash, any accumulated and unpaid distributions to and including the redemption date.
4.4 Procedures for Redemption
(a) Upon the Company’s provision of written notice as to the effective date of the redemption, accompanied by a check or electronic payment in the amount of the full Redemption Price through such effective date to which each record holder of Series A Preferred Units is entitled, the Series A Preferred Units shall be redeemed and shall no longer be deemed outstanding units of the Company and all rights of the holders of such units will terminate. Such notice shall be given by first class mail, postage pre-paid, or via electronic mail to each record holder of the Series A Preferred Units at the respective addresses of such holders as the same shall appear on the records of the Company. No failure to give such notice or any defect therein or in the distribution thereof shall affect the validity of the proceedings for the redemption of any Series A Preferred Units except as to the holder to whom notice was defective or not given. Permissible forms of electronic payment pursuant to this paragraph shall include, without limitation, ACH transfers, direct deposits or wire transfers, in each case to be initiated on or before the day on which the related notice is given.
(b) In addition to any information required by law or by the applicable rules of any exchange upon which Series A Preferred Units may be listed or admitted to trading, such notice shall state: (A) the redemption date; (B) the Redemption Price; (C) the number of Series A Preferred Units to be redeemed; (D) the place or places where the Series A Preferred Units are to be surrendered (if so required in the notice) for payment of the Redemption Price (if not otherwise included with the notice); and (E) that distributions on the units to be redeemed will cease to accrue on such redemption date. If less than all of the Series A Preferred Units held by any holder is to be redeemed, the notice given to such holder shall also specify the number of Series A Preferred Units held by such holder to be redeemed.
(c) If notice of redemption of any Series A Preferred Units has been given and if the funds necessary for such redemption have been set aside by the Company for the benefit of the holders of any Series A Preferred Units so called for redemption, then, from and after the redemption date, distributions will cease to accrue on such Series A Preferred Units, such Series A Preferred Units shall no longer be deemed outstanding and all rights of the holders of such units will terminate, except the right to receive the Redemption Price. If the Company shall so require and the notice shall so state, holders of Series A Preferred Units to be redeemed shall surrender the certificates evidencing such Series A Preferred Unit, to the extent that such shares are certificated, at the place designated in such notice and, upon surrender in accordance with said notice of the certificates for Series A Preferred Units so redeemed (properly endorsed or assigned for transfer, if the Company shall so require and the notice shall so state), such Series A Preferred Units shall be redeemed by the Company at the Redemption Price. In case less than all of the Series A Preferred Units evidenced by any such certificate are redeemed, a new certificate or certificates shall be issued evidencing the unredeemed Series A Preferred Units without cost to the holder thereof. In the event that the Series A Preferred Units to be redeemed are uncertificated, such shares shall be redeemed in accordance with the notice and no further action on the part of the holders of such shares shall be required.
(d) The deposit of funds with a bank or trust corporation for the purpose of redeeming Series A Preferred Units shall be irrevocable except that:
i. the Company shall be entitled to receive from such bank or trust corporation the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any units redeemed shall have no claim to such interest or other earnings; and
ii. any balance of monies so deposited by the Company and unclaimed by the holders of the Series A Preferred Units entitled thereto at the expiration of two years from the applicable redemption dates shall be repaid, together with any interest or other earnings thereon, to the Company, and after any such repayment, the holders of the units entitled to the funds so repaid to the Company shall look only to the Company for payment of the Redemption Price without interest or other earnings.
4.5 Status of Redeemed Units. Any Series A Preferred Units that shall at any time have been redeemed or otherwise acquired by the Company shall, after such redemption or acquisition, have the status of authorized but unissued Series A Preferred Units which may be issued by the Board from time to time at its discretion.
ARTICLE V
VOTING RIGHTS
5.1 Except as otherwise provided in the LLC Agreement or as otherwise required by law, (i) each holder of Series A Preferred Units shall be entitled to one vote for each Series A Preferred Unit held by such holder on each matter submitted to a vote of unitholders of the Company, and (ii) the holders of outstanding Preferred Units, including Series A Preferred Units, and of outstanding Common Units shall vote together as a single class; provided, however, that the holders of outstanding Preferred Units, including Series A Preferred Units, shall be entitled, voting as a separate class, to elect two members of the Board (each, a “Director”) of the Company at all times.
5.2 The holders of Preferred Units, including Series A Preferred Units, shall be entitled, voting as a separate class, to elect a majority of the Board:
(a) if, at the close of business on any Distribution Payment Date, dividends (whether or not declared) on outstanding Preferred Units, including Series A Preferred Units, are unpaid in an amount equal to at least two (2) full years’ dividends on the Preferred Units, including Series A Preferred Units; or
(b) if at any time holders of Preferred Units, including Series A Preferred Units, are otherwise entitled under the 1940 Act to elect a majority of the Board (any period in which one or more of the conditions in clauses (A) or (B) shall exist is referred to herein as the “Voting Period”).
Upon the termination of a Voting Period, the voting rights described in this Section 5.2 shall cease, subject always, however, to the revesting of such voting rights in the holders of Preferred Units, including Series A Preferred Units, upon the further occurrence of any of the events described in this Section 5.2.
5.3 Holders of Preferred Units, including Series A Preferred Units, to Vote on Certain Matters.
(a) The consent of the holders of a majority of the outstanding Series A Preferred Units, voting as a separate class, shall be required for (a) authorization or issuance of any equity security of the Company senior to or on a parity with the Series A Preferred Units, (b) any amendment to the LLC Agreement which has a material adverse effect on the rights and preferences of the Series A Preferred Units or which increases the number of authorized or issued Series A Preferred Units, or (c) any reclassification of the Series A Preferred Units. For purposes of the foregoing, no matter shall be deemed to have a material adverse effect on the rights and preferences of the Series A Preferred Units unless such matter (i) alters or abolishes any preferential right of such Series A Preferred Units, or (ii) creates, alters or abolishes with respect to the Series A Preferred Units any right in respect of distributions or redemption or rights upon liquidation, dissolution, or winding up of the Company. The term “equity securities” shall not include convertible debt securities unless and until such securities are converted into equity securities of the Company.
(b) Unless a higher percentage is provided for in the LLC Agreement, the affirmative vote of the holders of at least a “majority of the outstanding Preferred Units,” including Series A Preferred Units, as determined in accordance with Section 2(a)(42) of the 1940 Act, voting as a separate class, shall be required (1) to approve any plan of reorganization (as defined in Section 2(a)(42) of the 1940 Act) adversely affecting such units or (2) to the extent required under the 1940 Act, to approve any action requiring a vote of security holders as in Section 13(a) of the 1940 Act. For purposes of the foregoing, the vote of a “majority of the outstanding Preferred Units” means the vote at a meeting the members of the Company duly called of (i) sixty-seven percent (67%) or more of such units present at a meeting, if the holders of more than fifty percent (50%) of such units are present or represented by proxy at such meeting, or (ii) more than fifty percent (50%) of such units, whichever is less.
5.4 Unless otherwise required by the 1940 Act or the LLC Agreement, the holders of Series A Preferred Units shall not have any relative voting rights or preferences or other special rights with respect to voting other than those expressly set forth in this ARTICLE V. Subject to the rights of the holders of the Preferred Units, including a Series A Preferred Units described in ARTICLE II, in the event that the Company fails to declare or pay distributions on the Series A Preferred Units on the Distribution Payment Date therefor, the exclusive remedy of the holders of the Series A Preferred Units shall be the right to vote for Directors pursuant to the provisions of Section 5.2.
ARTICLE VI
CONVERSION
6.1 The Series A Preferred Units are not convertible into or exchangeable for any other property or securities of the Company.
ARTICLE VII
TRANSFER RESTRICTIONS
7.1 During the period (the “Restricted Period”) ending on the date of any listing of the Series A Preferred Units on a national securities exchange (a “Listing”), no holder of Series A Preferred Units will, directly or indirectly, transfer, assign, sell or pledge all or any part of any Series A Preferred Units (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of all or any part of such units) except in accordance with (i) the registration provisions of the Securities Act of 1933, as amended (the “Securities Act”) or an exemption from such registration provisions and (ii) any applicable state or non-U.S. securities laws. During the Restricted Period, no transfer of Series A Preferred Units shall be made without (a) registration of the transfer on the Company’s books and (b) the prior written consent of the Company, which may be given or withheld in its sole discretion for any reason or no reason except in the event of a transfer of Series A Preferred Units necessitated by the death or divorce of a holder of Series A Preferred Units, in which case, such consent of the Company shall not be required provided that certain assurances are provided to the Company in advance of such transfer, including, without limitation, that such transfer would not violate the Securities Act or any state (or other jurisdiction) securities or “blue sky” laws applicable to the Company or the transfer of such Series A Preferred Units. Any purported Transfer of any Series A Preferred Units effected in violation of this ARTICLE VII shall be void ab initio and shall have no force or effect, and the Company shall not register or permit registration of (and shall direct its transfer agent, if any, not to register or permit registration of) any such purported Transfer on its books and records.
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IN WITNESS WHEREOF, the Company has caused this Series A Supplement to be duly executed in its name and on its behalf on this 12th day of September, 2024.
| SL INVESTMENT FUND II LLC | ||
| By: | /s/ Orit Mizrachi | |
| Name: | Orit Mizrachi | |
| Title: | Chief Operating Officer and Secretary | |
