PHILLIPS EDISON GROCERY CENTER REIT I, INC. (OTCMKTS:PDRG) Files An 8-K Entry into a Material Definitive Agreement

PHILLIPS EDISON GROCERY CENTER REIT I, INC. (OTCMKTS:PDRG) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01. Entry into a Material Definitive Agreement.

On May 18, 2017, Phillips Edison Grocery Center REIT I, Inc., a
Maryland corporation (the Company),
entered into a Contribution Agreement (the
Contribution Agreement) by and among
the entities named on Exhibit A set forth therein (each, a
Contributor and collectively, the
Contributors), Phillips Edison Grocery
Center Operating Partnership I, L.P., a Delaware limited
partnership (PECO I OP), Jeffrey S.
Edison, as the representative of the Contributors (the
Contributors Representative), and the
Company. A copy of the Contribution Agreement is filed as Exhibit
2.1 to this Current Report on Form 8-K and incorporated herein by
reference.

Transaction. The Contribution Agreement generally
provides for the contribution to PECO I OP of all of the issued
and outstanding equity interests of certain of the Contributors
subsidiaries identified on Exhibit B set forth therein (each, a
Contributed Company, and collectively,
the Contributed Companies), which
collectively own approximately 76 shopping centers and a
third-party asset management business held by Phillips Edison
Limited Partnership, a Delaware limited partnership
(PELP), on the terms and subject to the
conditions set forth in the Contribution Agreement (the
Transaction). Prior to the closing of
the Transaction (the Closing) and in
connection with the Transaction, the Contributors (including
PELP) have agreed to consummate a series of transfers and
reorganization transactions that are intended to facilitate the
Transaction, and PECO I OP has agreed to form a taxable REIT
subsidiary to which the Contributors will transfer certain of
their employees and third party investment management agreements.

Transaction Consideration. to the Contribution
Agreement, in exchange for the Contributors equity interests in
the Contributed Companies: (i) at the Closing, PECO I OP will
issue to the Contributors 40,360,504 common operating partnership
units (OP Units) of PECO I OP (the
Base OP Unit Consideration), subject to
certain adjustments set forth in the Contribution Agreement; (ii)
at the Closing, PECO I OP will pay the Contributors approximately
$50,000,000 in cash (collectively with the Base OP Unit
Consideration, the Total Base
Consideration
), subject to certain adjustments set
forth in the Contribution Agreement; and (iii) after the Closing,
the Contributors will have the right to receive up to 12,490,196
OP Units if a liquidity event is achieved by the Company by
December 31, 2019 at a share value of $10.20 or greater, or
certain fundraising targets for Phillips Edison Grocery Center
REIT III, Inc. are achieved as set forth in the Contribution
Agreement. The Contribution Agreement provides that OP Units
comprising 7.5% of the Total Base Consideration (the
Escrowed Consideration) will be placed
into escrow to satisfy the indemnification obligations of the
Contributors under the Contribution Agreement. At the Closing,
the parties anticipate that approximately 4.8 million Class B
Units in PECO I OP held by PELP and other persons will convert to
OP Units in accordance with the terms and conditions of the PECO
I OP Second Amended and Restated Agreement of Limited
Partnership, dated December 1, 2014, as amended.

In accordance with Section 8.7 of the Advisory Agreement, dated
December 3, 2014, as amended, by and among the Company, PECO I OP
and Phillips Edison NTR LLC, the parties to the Contribution
Agreement have agreed that no internalization fees will be paid
in connection with this Transaction (i.e., no consideration is
being paid for the ongoing management advisory services that PELP
provides to PECO I OP).

Treatment of PELP Outstanding Equity Awards. The
Contribution Agreement provides that with respect to each
restricted unit granted under the PELP Restricted Unit Award Plan
which a holder agrees to cancel and forfeit upon the Closing (the
Cancelled RMUs and each, a
Cancelled RMU), PECO I OP will grant
the right to receive, in cash, the value of one OP Unit (each a
Phantom Unit) to each holder of
Cancelled RMUs immediately prior to Closing, equal to the number
of each Cancelled RMU held by such holder multiplied by three.
Each Phantom Unit will vest and be subject to the same vesting
schedule and terms as the corresponding Cancelled RMU.

Closing Conditions. The consummation of the Transaction
is subject to the satisfaction or waiver of specified closing
conditions, including (i) the approval of the Transaction by the
stockholders of the Company at a meeting of its stockholders (the
Stockholder Meeting), (ii) the
expiration or termination of the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, (iii) the absence of the occurrence of a Contributed
Company Material Adverse Effect or PECO I OP Material Adverse
Effect (in each case, as defined in the Contribution Agreement)
after the date of the Contribution Agreement, (iv) the completion
and delivery of all required debt consents and amendments
associated with certain loan agreements and (v) other customary
closing conditions.

Representations, Warranties and Covenants. The
Contribution Agreement contains representations, warranties and
covenants of the Company, Contributors, the Contributors
Representative Contributed Companies and their subsidiaries.
These covenants include obligations of Contributors to cause the
Contributed Companies and their subsidiaries, subject to certain
exceptions, to conduct their respective businesses in the
ordinary course of business from the date of the Contribution
Agreement through the Closing.

Indemnification. The Contribution Agreement contains
provisions providing for the indemnification for breaches of
representations, warranties and covenants and certain other
matters.

Non-Solicitation. The Contribution Agreement generally
prohibits the Contributors solicitation of third-party proposals
relating to a merger, sale of securities, sale of substantial
assets or similar transaction involving any Contributed Company
or their subsidiaries (Other Bid) and
restricts the Contributors ability to furnish non-public
information to, or participate in any discussions or negotiations
with, any third party with respect to any Other Bid, subject to
certain limited exceptions.

Stockholder Approval. The Contribution Agreement also
contains covenants that require, subject to certain limited
exceptions, the Company to file a proxy statement with the United
States Securities and Exchange Commission (the
SEC) and call and hold the Stockholder
Meeting. The Company shall, subject to the fiduciary duties of
the Companys Board of Directors under applicable law, use its
reasonable best efforts to obtain the Companys stockholder
approval.

Termination. The Contribution Agreement also provides
for certain termination rights for the Company and PECO I OP, on
the one hand, and the Contributors, on the other hand.

Ancillary Agreements. The Contribution Agreement
contemplates that at the Closing the parties will enter into an
Escrow Agreement, a Tax Protection Agreement, an Equityholder
Agreement, a Services Agreement, the PECO I OP Third Amended and
Restated Agreement of Limited Partnership, the Third Amended and
Restated Bylaws of the Company and a Trademark and Trade Name
License Agreement. Forms of each of these agreements and
documents are exhibits to the Contribution Agreement filed as
Exhibit 2.1 hereto. At Closing, the Company or one of its
affiliates will enter into employment and severance agreements
with certain executive officers of the Company. A term sheet of
such employment and severance agreements is an exhibit to the
Contribution Agreement.

A.Escrow Agreement. The form of Escrow Agreement
contemplates that PECO I OP will deliver the Escrowed
Consideration to Wilmington Trust, National Association (the
Escrow Agent) at the Closing. The
Escrow Agent will hold the Escrowed Consideration in its
possession until: (a) jointly authorized by PECO I OP and the
Contributors Representative to release some or all of the
Escrowed Consideration; (b) it receives a final court order
instructing the Contributors to pay an indemnification claim to
PECO I OP; or (c) the Escrow Agreement is terminated. The
Contributors Representative is entitled to exercise all voting
rights with respect to the Escrowed Consideration.

B.Tax Protection Agreement. The form of Tax Protection
Agreement contemplates that, for a period of ten years following
the Closing, PECO I OP will, among other things, indemnify each
Contributor for certain tax liabilities resulting from a
transaction involving a direct or indirect taxable disposition of
all or portion of the property such Contributor contributed to
PECO I OP. The Tax Protection Agreement further contemplates that
PECO I OP will maintain and allocate to each Contributor for
taxation purposes minimum levels of liabilities and, under
certain circumstances, permit the Contributors to guarantee
certain debt of PECO I OP. The Tax Protection Agreement also
imposes restrictions on PECO I OPs ability to engage in certain
transactions.

C.Equityholder Agreement. The form Equityholder
Agreement contemplates that each of Messrs. Jeffrey S. Edison,
Devin I. Murphy and Robert M. Addy (collectively, the
Lock-up Equityholders) will not
transfer their OP Units for the following periods of time,
subject to certain exceptions set forth therein: (i) with respect
to Mr. Jeffrey S. Edison, three years from the Closing; and (ii)
with respect to Messrs. Devin I. Murphy and Robert M. Addy, two
years from the Closing. If the shares of common stock of the
Company (Company Stock) are listed on a
national securities exchange and a Form S-3 is filed, the Company
shall provide each Lock-up Equityholder the opportunity to be
named as a selling securityholder and to register such Lock-up
Equityholders Company Stock (received upon the exchange of OP
Units), subject to certain exceptions. The form of Equityholder
Agreement further contemplates that Mr. Jeffrey S. Edison (the
Chairman of the Board and Chief Executive Officer of the
Company), or his designee will be nominated to the Board of
Directors of the Company for each of the ten succeeding annual
meetings following the Closing, subject to certain terminating
events including the sale or transfer of more than 35% of the OP
Units that he beneficially owns immediately following the
Closing.

D.Services Agreement. The form of Services
Agreement contemplates, among other things, that an affiliate of
PECO I OP will provide certain management services to certain
entities which PELP is not contributing to PECO I OP at the
Closing (such entities, the Excluded PELP
Entities
) with respect to the operation of the
businesses of the Excluded PELP Entities and their eventual
wind-down, liquidation and termination
(Liquidation). The form of Services
Agreement further contemplates that PECO I OP will license the
use of the name Phillips Edison or PECO, as applicable, to the
Excluded PELP Entities in connection with the continued operation
of their respective businesses for the earlier of fifteen years
and the time they effect their Liquidation.

E.PECO I OP Third Amended and Restated Agreement of Limited
Partnership
. The PECO I OP Third Amended and Restated
Agreement of Limited Partnership contemplates certain changes to
the PECO I OP Second Amended and Restated Agreement of Limited
Partnership, dated December 1, 2014, designed to, among other
things, grant customary rights and protections to the general
partner and the limited partners. These changes include
clarifying how the exchange ratio of OP units to Company shares
will change as a result of certain transactions, clarifying
limited partners redemption rights, providing for procedural
limited partner protections in connection with certain
fundamental transactions, including change of control
transactions involving the Company, and imposing transfer
restrictions on limited partners.

F.Third Amended and Restated Bylaws of the Company. The
Third Amended and Restated Bylaws of the Company contemplates
adding a provision to the Companys current bylaws providing that
Mr. Jeffrey S. Edison shall continue to serve as Chairman of the
Board of the Company until the third anniversary of the Closing,
subject to certain terminating events including the listing of
Company Stock on a national securities exchange. The amendment to
the bylaws is expected to occur in connection with the Closing.

G.Trademark and Trade Name License Agreement.
The form of Trademark and Trade Name License Agreement
contemplates that PECO I OP grants a perpetual license to use the
name PECO to PECO Real Estate Partners
(PREP) in connection with the operation
of PREPs business and in a manner that is materially consistent
with how PREP used the name PECO immediately prior to May 18,
2017.

H.Executive Employment and Severance Agreements. The
term sheet of the employment and severance agreements
contemplates that each of the Lock-up Equity Holders and Mr.
Robert F. Myers (collectively, the
Executives) will enter into an
employment and severance agreements with PECO I OP to which,
among other things, each such Executive be entitled to certain
severance payments upon a termination of such Executives
employment (i) without cause by PECO I OP or with good reason by
such Executive and (ii) with the amount of such severance
payments varying based on whether the termination is prior to or
during the 24 months following a change in control of PECO I OP.
Such term sheet further contemplates that each of the Executives
will be subject to customary non-competition and non-solicitation
covenants.

The foregoing descriptions of the Contribution Agreement and
ancillary agreements thereto do not purport to be complete and
are qualified in its entirety by reference to the full text of
the Contribution Agreement and exhibits thereto.

The Contribution Agreement and the above description of the
Contribution Agreement have been included to provide investors
and securityholders with information regarding the terms of the
Contribution Agreement and are not intended to provide any other
factual information about the Company, Contributors, Contributed
Companies, PELP or their respective subsidiaries or affiliates.
The representations and warranties contained in the Contribution
Agreement were made only for purposes of that agreement and as of
specific dates, were solely for the benefit of the parties to the
Contribution Agreement, may be subject to a contractual standard
of materiality different from what might be viewed as material to
stockholders and may be subject to limitations agreed upon by the
parties, including being qualified by confidential disclosures
made by the parties to each other. Investors should not rely on
the representations and warranties contained in the Contribution
Agreement as characterizations of the actual state of facts or
condition of the Company, the Contributors, the Contributed
Companies, or any of their respective subsidiaries, affiliates or
businesses.

Item 3.02. Unregistered Sale of Equity
Securities.

Please refer to Item 1.01 for a description of the terms of the
Contribution Agreement, which is incorporated by reference into
this Item 3.02. The operating partnership units of PECO I OP to
be issued to the Contribution Agreement will be issued in
reliance upon Section 4(2) of the Securities Act of 1933, as
amended.

Additional Information and Where to Find It:

This communication does not constitute a solicitation of any vote
or approval in respect of the proposed Transaction involving the
Company or otherwise. In connection with the proposed
Transaction, a Stockholder Meeting will be announced soon to
obtain stockholder approval. In connection with the proposed
Transaction, the Company intends to file relevant materials,
including a proxy statement, with the SEC. The Companys
stockholders are urged to read the definitive proxy statement and
other relevant materials when they become available because they
will contain important information about the Company and the
proposed Transaction. The proxy statement and other relevant
materials (when they become available), and any other documents
filed by the Company with the SEC, may be obtained free of charge
at the SECs website at www.sec.gov, at the Companys
website at www.grocerycenterREIT1.com or by sending a
written request to the Company at 11501 Northlake Drive,
Cincinnati, OH 45249, Attention: Investor Relations.

Participants in the Solicitation

The Company and its directors, executive officers and certain
other members of management may be deemed to be participants in
soliciting proxies from the Companys stockholders in favor of the
proposed Transaction. Information regarding the persons who may,
under the rules of the SEC, be considered to be participants in
the solicitation of the Companys stockholders in connection with
the proposed Transaction and their ownership of Company Stock
will be set forth in the proxy statement for its annual meeting
of stockholders. Investors can find more information about the
Companys executive officers and directors in its Annual Report on
Form 10-K for the fiscal year ended December 31, 2016.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No. Description
2.1 Contribution Agreement, dated as of May 18, 2017, by and
among the Contributors listed on Exhibit A hereto, Phillips
Edison Grocery Center REIT I, Inc., Phillips Edison Grocery
Center Operating Partnership I, L.P., and Jeffrey S. Edison
(including forms of an Escrow Agreement, a Tax Protection
Agreement, an Equityholder Agreement, a Services Agreement,
the PECO I OP Third Amended and Restated Agreement of Limited
Partnership, the Third Amended and Restated Bylaws of the
Company and a Trademark and Trade Name License Agreement, and
a term sheet relating to severance and employment agreements
to be entered into with certain executive officers).

Schedules have been omitted to Item 601(b)(2) of Regulation
S-K. The Company hereby undertakes to furnish
supplementally copies of any of the omitted schedules upon
request by the SEC.

to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.

PHILLIPS EDISON GROCERY CENTER REIT I, INC.
Dated: May 23, 2017 By: /s/ R. Mark Addy
R. Mark Addy
President and Chief Operating Officer

EXHIBIT INDEX

Exhibit No. Description
2.1 Contribution Agreement, dated as of May 18, 2017, by and
among the Contributors listed on Exhibit A hereto, Phillips
Edison Grocery Center REIT I, Inc., Phillips Edison Grocery
Center Operating Partnership I, L.P., and Jeffrey S. Edison
(including forms of an Escrow Agreement, a Tax Protection
Agreement, an Equityholder Agreement, a Services Agreement,
the PECO I OP Third Amended and Restated Agreement of Limited
Partnership, the Third Amended and Restated Bylaws of the
Company and a Trademark and Trade Name License Agreement, and
a term sheet relating to severance and employment agreements
to be entered into with certain executive officers).
Schedules have been omitted


PHILLIPS EDISON GROCERY CENTER REIT I, INC. (OTCMKTS:PDRG) Recent Trading Information

PHILLIPS EDISON GROCERY CENTER REIT I, INC. (OTCMKTS:PDRG) closed its last trading session 00.0000 at 0.0100 with shares trading hands.

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