Principal Effects of the Reverse Share Split on the Common Shares; No Fractional Shares
The principal effect of the Trust Agreement Amendment would be to reduce the number of issued and outstanding Common Shares, in accordance with the Reverse Share Split Ratio. Further, pursuant to the Reverse Share Split, the total number of Common Shares each shareholder holds would be reclassified automatically into the number of Common Shares equal to the number of Common Shares each shareholder held immediately prior to the Effective Date multiplied by the Reverse Share Split Ratio (with such total being rounded down, to the extent the Reverse Share Split would result in the shareholder owning a fractional Common Share). Effecting the Reverse Share Split would also change the total authorized number of Common Shares from 200,000,000 to 13,333,333.
The Reverse Share Split would affect all of the Company’s shareholders uniformly and would not affect any shareholder’s percentage ownership interests, except to the extent that the Reverse Share Split results in such shareholder owning a fractional Common Share as no fractional shares will be issued pursuant to the Reverse Share Split. In lieu of any fractional shares to which a holder would otherwise be entitled, the Company will pay cash equal to such fraction multiplied by the closing price of a Common Share on the NYSE on the day immediately preceding the Effective Date. The payment amount would be paid to the shareholder in the form of a check.
After the Reverse Share Split, a shareholder would have no further interest in the Company with respect to such shareholder’s cashed-out fractional Common Shares. A person otherwise entitled to a fractional interest would not have any voting, dividend or other rights except to receive payment as described above.
Upon the consummation of the Reverse Share Split, the Common Shares new CUSIP identifier will be 709102800.
Principal Effects of the Reverse Share Split on Outstanding Equity Grants and the 2018 Equity Incentive Plan, Employee Share Purchase Plan and Distribution Reinvestment and Share Purchase Plan
The Company grants performance-based restricted share units (“PSUs”) and time-based restricted share units (“RSUs”) to certain of its employees and executive officers. The PSU and RSU grants are made pursuant to the Company’s Amended and Restated 2018 Equity Incentive Plan (as amended, the “2018 Equity Incentive Plan”). Under the terms of the PSUs and RSUs, when the Reverse Share Split would become effective, the number of Common Shares that each PSU and RSU entitles the holder to receive would be multiplied by the Reverse Share Split Ratio.
The Reverse Share Split would also result in the reduction of the number of Common Shares reserved under each of the 2018 Incentive Plan, the Company’s amended and restated Employee Share Purchase Plan and its Distribution Reinvestment and Share Purchase Plan by multiplying the total number of Common Shares reserved under the respective plan immediately prior to the Reverse Share Split by the Reverse Share Split Ratio.
Under the terms of the PREIT Associates, L.P. (“Operating Partnership”) amended and restated limited partnership agreement, as amended (the “Partnership Agreement”), the limited purchasers have the right to redeem their units of limited partnership interest in the Operating Partnership for cash, or at the Company’s election, Common Shares of the Company on a one for one basis. Pursuant to the terms of the Partnership Agreement, when the Reverse Share Split would become effective, such conversion rate would be automatically adjusted.