| Entry into a Material Definitive Agreement. |
On June 15, 2021, Life Storage, Inc. (the “Company”), Life Storage LP (the “Operating Partnership”), and Life Storage Holdings, Inc. (the “General Partner”) entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Wells Fargo Securities, LLC, Truist Securities, Inc., Jefferies LLC, HSBC Securities (USA) Inc., Citigroup Global Markets Inc. and BTIG, LLC, as sales agents (the “Sales Agents”), and Wells Fargo Securities, LLC, Truist Securities, Inc., Jefferies LLC, HSBC Securities (USA) Inc.
a
nd Citigroup Global Markets Inc.,
as agent for Citibank, N.A.
as forward sellers (collectively, the “Forward Sellers”) and Wells Fargo Bank, National Association, Truist Bank, Jefferies LLC, HSBC Bank USA, N.A., and Citibank, N.A., as forward purchasers (collectively, the “Forward Purchasers”).
Under the terms of the Equity Distribution Agreement, the Company may sell from time to time, in a continuous equity offering program under its Registration Statement on Form
S-3
(File
No. 333-257031),
up to $500,000,000 in aggregate offering price of shares of the Company’s common stock, par value $0.01 per share (the “Shares”), through the Sales Agents, or the Forward Sellers, acting as agents for the applicable Forward Purchaser, over a period of time and from time to time in in negotiated transactions or transactions that are deemed to be “at the market” offerings, including sales made directly on the New York Stock Exchange or sales made to or through a market maker other than on an exchange.
The Company or any Sales Agent may at any time suspend the offering of the Shares pursuant to the terms of the Equity Distribution Agreement. The offering of the Shares pursuant to the Equity Distribution Agreement will terminate upon the earlier of (i) the sale of the Shares subject to the Equity Distribution Agreement (including shares sold by the Company to or through the Sales Agents and borrowed shares sold by the Forward Sellers) and any terms agreement having an aggregate gross sales price of $500,000,000 and (ii) with respect to the Equity Distribution Agreement or terms agreement, the termination of the Equity Distribution Agreement by the Company, the Sales Agents, the Forward Sellers or the Forward Purchasers as permitted therein.
The Equity Distribution Agreement provides that, in addition to the issuance and sale of Shares through the Sales Agents (or to the Sales Agents acting as principals), the Company also may enter into one or more letter agreements (each, a “Forward Contract”) with each of the Forward Purchasers in a form attached as Exhibit G to the Equity Distribution Agreement. Under the terms of any Forward Contract, the relevant Forward Purchaser will, at the Company’s request from time to time pursuant to mutually agreed instructions and a supplemental confirmation (together with the applicable Forward Contract, a “Forward Sale Agreement”), borrow from third parties and, through the relevant Forward Seller, sell a number of Shares equal to the number of shares underlying the particular Forward Sale Agreement. The Company will not initially receive any proceeds from any sale of Shares borrowed by a Forward Purchaser and sold through a Forward Seller. The Company expects to fully physically settle each Forward Sale Agreement with the relevant Forward Purchaser on one or more dates specified by the Company on or prior to the maturity date of such Forward Sale Agreement, in which case the Company expects to receive aggregate cash proceeds at settlement equal to the number of Shares underlying such Forward Sale Agreement multiplied by the then-applicable forward sale price per share. Although the Company expects to settle any Forward Sale Agreements by the physical delivery of Shares in exchange for cash proceeds, the Forward Sale Agreements will allow the Company to cash or
net-share
settle all or a portion of its obligations. If the Company elects to cash settle any Forward Sale Agreement, the Company may not receive any proceeds and the Company may owe cash to the relevant Forward Purchaser. If the Company elects to net share settle any Forward Sale Agreement, the Company will not receive any cash proceeds, and the Company may owe Shares to the relevant Forward Purchaser.
Each Sales Agent will receive from the Company a commission of up to 2% of the gross sales price of all shares sold through it under the Equity Distribution Agreement. Each Forward Seller will receive a commission at a mutually agreed rate in the form of a reduction to the initial forward sale price under the related forward sale agreement that will not exceed, but may be lower than, 2% of the gross sales price of the borrowed shares sold by such Forward Seller during the applicable forward hedge selling period for such shares.
The Company, the Operating Partnership and the General Partner made certain customary representations, warranties and covenants in the Equity Distribution Agreement and also agreed to indemnify each of the Sales Agents, the Forward Purchasers and the Forward Sellers against certain liabilities, including liabilities under the Securities Act of 1933, as amended.
