Item 1.01. Entry Into a Material Definitive Agreement.
Underwriting Agreement
On July 19, 2021, Phillips Edison & Company, Inc. (the "Company") closed its
registered underwritten public offering (the "Offering") of 17,000,000 shares of
common stock, $0.01 par value per share (the "Common Stock"), pursuant to the
Company's registration statement on Form S-11 (File No. 333-255846) (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). In connection with the Offering, the Company entered into the
Underwriting Agreement, dated July 14, 2021, by and among the Company, Phillips
Edison Grocery Center Operating Partnership I, L.P. (the "Partnership"), and
Morgan Stanley & Co. LLC, BofA Securities, Inc. and J.P. Morgan Securities LLC,
as representatives of the several underwriters named therein (the "Underwriting
Agreement").
The Underwriting Agreement contains customary representations, warranties,
covenants and agreements by the Company and the Partnership, customary
conditions to closing, indemnification obligations of the Company, the
Partnership and the underwriters, including for liabilities under the Securities
Act, certain other obligations of the parties and termination provisions. The
underwriters have a 30-day option to purchase 2,550,000 additional shares of
Common Stock.
Tax Protection Agreement
As disclosed in the Registration Statement, we and the Partnership entered into
a tax protection agreement on October 4, 2017 (the "2017 TPA"), with, among
others, Jeffrey S. Edison, our Chairman and Chief Executive Officer, and certain
entities controlled by him, pursuant to which if the Partnership: (i) sells,
exchanges, transfers or otherwise disposes of certain shopping centers in a
taxable transaction, or undertakes any taxable merger, combination,
consolidation or similar transaction (including a transfer of all or
substantially all assets), for a period of ten years commencing on October 4,
2017; or (ii) fails, prior to the expiration of such period, to maintain certain
minimum levels of indebtedness that would be allocable to each protected partner
for tax purposes or, under certain circumstances, fails to offer such protected
partners the opportunity to guarantee certain types of the Partnership's
indebtedness, then the Partnership will indemnify each affected protected
partner, including Mr. Edison, against certain resulting tax liabilities. Our
tax indemnification obligations include a tax gross-up.
As disclosed in the Registration Statement, we and the Partnership entered into
an additional tax protection agreement (the "2021 TPA"), on July 19, 2021 with
Mr. Edison, Mr. Devin I. Murphy, our President; and Mr. Robert F. Myers, our
Chief Operating Officer, which will become effective upon the expiration of the
2017 TPA. The 2021 TPA generally has the following terms: (i) the 2021 TPA will
severally provide to Mr. Edison, Mr. Murphy and Mr. Myers the same protection
provided under the 2017 TPA until 2031, so long as (a) Mr. Edison, Mr. Murphy or
Mr. Myers (or their permitted transferees), as applicable, individually owns at
least 65% of the OP units owned by him as of the date of the execution of the
2021 TPA and (b) in the case of Mr. Murphy or Mr. Myers, Mr. Edison individually
owns at least 65% of the OP units owned by him as of the date of the execution
of the 2021 TPA; and (ii) the 2021 TPA will provide that following the
expiration of the four-year tax protection period under the 2021 TPA, for so
long as Mr. Edison holds at least $5 million in value of OP units, (a) Mr.
Edison will have the opportunity to guarantee debt of the Partnership or enter
into a "deficit restoration" obligation, and (b) the Partnership will provide
reasonable notice to Mr. Edison before effecting a significant transaction
reasonably likely to result in the recognition of more than one-third of the
built-in gain allocated to Mr. Edison that is protected under the 2017 TPA as of
the date that the 2021 TPA is executed, and will consider in good faith any
proposal made by Mr. Edison relating to structuring such transaction in a manner
to avoid or mitigate adverse tax consequences to him.
The summaries above are qualified in their entirety by reference to the full
text of the Underwriting Agreement and the 2021 TPA, which are filed as Exhibits
1.1 and 10.1, respectively, to this Current Report on Form 8-K and are
incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As disclosed in the Registration Statement, in connection with the Offering, the
Company's board of directors (the "Board") authorized the Company to grant LTIP
units and/or restricted stock units ("RSUs"), to certain of our associates,
including our named executive officers, and restricted stock awards to certain
of our directors, subject to and effective upon the listing of our Common Stock.
The awards granted to our associates, including our named executive officers,
include, in the aggregate, 484,061 RSUs and LTIP units, and will vest as to 50%
of the award on the eighteen month anniversary of the date of grant and 50% of
the award on the thirty-six month anniversary of the date of grant (or, in the
case of Mr. Murphy, 50% of the award on the eighteen month anniversary of the
date of grant and 50% of the award on December 31, 2023), subject to the
grantee's continued employment through the applicable vesting date. Of these
awards, the awards granted to Messrs. Edison, Murphy, Myers and John P.
Caulfield and Ms. Tanya E. Brady represent 99,153, 73,729, 53,390, 33,898 and
33,898 RSUs and/or LTIP units, respectively.
The Board authorized the Company to grant 3,390 shares of restricted stock to
each of our directors, other than Mr. Edison. The restricted stock awards
granted to our directors will vest as to 50% of the award on the eighteen month
anniversary of the date of grant and 50% of the award on the thirty-six month
anniversary of the date of grant, subject to the grantee's continued service
through the applicable vesting date.
The summary above is qualified in its entirety by reference to the full text of
the award agreements, which are filed as Exhibits 10.2, 10.3, 10.4 and 10.5 to
this Current Report on Form 8-K, and incorporated by reference herein.
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Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
Fifth Amended and Restated Bylaws
As disclosed in the Registration Statement, on June 18, 2021, subject to the
closing of the Offering, the Board authorized and approved the Fifth Amended and
Restated Bylaws (the "Amended and Restated Bylaws"), which became effective on
July 19, 2021. Among other things, the Amended and Restated Bylaws were amended
to provide that (i) our stockholders that meet certain ownership and eligibility
requirements under the Securities Exchange Act of 1934, as amended, may alter or
repeal any provision of our bylaws and adopt new bylaws if any such alteration,
repeal, or adoption is approved by the affirmative vote of a majority of the
votes entitled to be cast on the matter and (ii) unless we consent in writing to
the selection of an alternative forum, the Circuit Court for Baltimore City,
Maryland, or, if that court does not have jurisdiction, the United States
District Court for the District of Maryland, Baltimore Division, will be the
sole and exclusive forum for certain actions.
The summary above is qualified in its entirety by reference to the full text of
the Amended and Restated Bylaws, which is filed as Exhibit 3.1 to this Current
Report on Form 8-K, and is incorporated herein by reference.
MUTA Opt-Out
As disclosed in the Registration Statement, on July 16, 2021, the Company filed
Articles Supplementary with the State Department of Assessments and Taxation of
Maryland ("MD SDAT"), which prohibit the Company from unilaterally electing to
be subject to Section 3-803 of Title 3, Subtitle 8 of the Maryland General
Corporation Law (the "MGCL"), commonly referred to as the Maryland Unsolicited
Takeovers Act ("MUTA"). As a result of the Articles Supplementary and the
Board's previously adopted resolutions, the Company is prohibited from electing
to be subject to Section 3-803 of the MGCL, which would permit us to classify
our Board without stockholder approval, and such prohibition may not be repealed
unless a proposal to repeal such prohibition is approved by the affirmative vote
of at least a majority of the votes cast on the matter by the Company's
stockholders.
The summary above is qualified in its entirety by reference to the full text of
the Articles Supplementary, which is filed as Exhibit 3.2 to this Current Report
on Form 8-K, and is incorporated herein by reference.
Item 8.01. Other Events
As disclosed in the Registration Statement, on June 8, 2021, the Company's
Compensation Committee approved certain revisions to its director compensation
program, conditioned upon the initial listing of our Common Stock on a national
securities exchange. Under the revised director compensation program, effective
as of July 15, 2021, each non-employee director is entitled to receive an annual
cash retainer equal to $60,000. In addition, committee members and chairpersons
and the Company's Lead Independent Director are entitled to receive the
following additional annual cash retainers (as applicable):
•Chair of Audit Committee: $25,000
•Chair of Compensation Committee: $15,000
•Chair of Nominating and Governance Committee: $15,000
•Non-Chair Audit Committee Member: $15,000
•Non-Chair Compensation Committee Member: $10,000
•Non-Chair Nominating and Governance Committee Member: $10,000
•Lead Independent Director: $40,000
In addition to cash retainers, commencing with the Company's 2022 annual meeting
of stockholders, each non-employee director elected at such annual meeting will,
on the date of such annual meeting, receive a grant of restricted stock covering
a number of shares equal to $110,000 divided by the closing price of a share of
Common Stock on the grant date. Each annual grant will vest in full on the
earlier of (i) the date of the next annual meeting of the Company's stockholders
following the grant date or (ii) the first anniversary of the grant date,
subject to the director's continued service through the vesting date.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description of Exhibit
1.1 Underwriting Agreement, dated June 14, 2021 by and among the
Phillips Edison & Company, Inc., Phillips Edison Grocery Center
Operating Partnership I, L.P., and Morgan Stanley & Co. LLC, BofA
Securities, Inc. and J.P. Morgan Securities LLC, as representatives
of the several underwriters named therein
3.1 Fifth Amended and Restated Bylaws of Phillips Edison & Company,
Inc.
3.2 Articles Supplementary of Phillips Edison & Company, Inc. dated
July 16, 2021
10.1 Tax Protection Agreement, dated July 19, 2021, by and among
Phillips Edison & Company, Inc., Phillips Edison Grocery Center
Operating Partnership I, L.P., and each Protected Partner identified
as a signatory on Schedule I
10.2 Form of LTIP Listing Equity Grant (incorporated by reference to
Exhibit 10.3 2 to the Pre-Effective Amendment No. 2 to
the Company's Registration Statement on Form S-11 (No. 333-255846)
filed on July 7, 2021)
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10.3 Form of LTIP Listing Equity Grant (Murphy) (incorporated by reference to
Exhibit 10.3 3 to the Pre-Effective Amendment No. 2 to the
Company's Registration Statement on Form S-11 (No. 333-255846) filed on July
7, 2021)
10.4 Form of RSU Listing Equity Grant (incorporated by reference to Exhibit
10.34 to the Pre-Effective Amendment No. 2 to the Company's Registration
Statement on Form S-11 (No. 333-255846) filed on July 7, 2021)
10.5 Form of Restricted Stock Listing Equity Grant (incorporated by reference to
Exhibit 10.35 to the Pre-Effective Amendment No. 2 to the Company's
Registration Statement on Form S-11 (No. 333-255846) filed on July 7, 2021)
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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