Life Storage 8-KExtra Space Storage & Life Storage Announce Closing of Merger

 

 

Check the appropriate box below if the Formfiling is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Ruleof the Securities Exchange Act of 1934of this chapter).

Life Storage, Inc.:

Emerging Growth Company  ☐

Life Storage LP:

Emerging Growth Company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Life Storage, Inc.  ☐

Life Storage LP   ☐

 

 

Pursuant to the Merger Agreement, on July 20, 2023: (a) Extra Space Merger Sub merged with and into the Company (the “Company Merger”), with the Company surviving the Company Merger and becoming a wholly owned subsidiary of Extra Space (the “Surviving Entity”), (b) immediately after the effective time of the Company Merger (the “Company Merger Effective Time”), (i) the Surviving Entity was converted into a Maryland limited liability company and (ii) Life Storage Holdings, Inc., a Delaware corporation and the general partner of Life Storage OP (“Life Storage OP GP”), was converted into a Delaware limited liability company (such conversions, collectively, the “LLC Conversions”), (c) immediately after the LLC Conversions, Extra Space contributed to Extra Space OP all of the outstanding equity interests of the Surviving Entity in exchange for the issuance by Extra Space OP to Extra Space or its applicable subsidiaries of a number of newly issued partnership units in Extra Space OP equal to the number of shares of Extra Space Common Stock (as defined below) issued in the Company Merger and (d) thereafter, Extra Space OP Merger Sub merged with and into Life Storage OP (the “Partnership Merger” and, together with the Company Merger, the “Mergers”), with Life Storage OP surviving the Partnership Merger and becoming a wholly owned indirect subsidiary of Extra Space OP.

Pursuant to the terms of the Merger Agreement, on July 20, 2023, at the Company Merger Effective Time, each share of common stock, par value $0.01 per share, of the Company (“Company Common Stock”) issued and outstanding as of immediately prior to the Company Merger Effective Time (other than shares of Company Common Stock owned by any of the Life Storage Parties, the Extra Space Parties or any of their respective wholly

As of immediately prior to the Company Merger Effective Time, each share of restricted Company Common Stock (“Life Storage Restricted Shares”) that was issued and outstanding as of immediately prior to the Company Merger Effective Time became fully vested and, as of the Company Merger Effective Time, was canceled and converted into the right to receive the Merger Consideration plus cash in lieu of fractional shares without interest, subject to any withholding required under applicable law. Separately, each holder of Life Storage Restricted Shares issued pursuant to the Life Storage 2015 Award and Option Plan that was issued and outstanding as of immediately prior to the Company Merger Effective Time received an additional award entitling them to a number of shares of Company Common Stock equal to (a) (i) the excess of the Change in Control Price (as defined in the Life Storage 2015 Award and Option Plan) over the product of the Merger Consideration and the volume weighted average price of Extra Space Common Stock for the ten (10) trading days immediately prior to the second business day prior to the date of the Company Merger Effective Time, divided by (ii) the average of the high and low sales prices per share of Company Common Stock on July 19, 2023, multiplied by (b) the number of Life Storage Restricted Shares held by such holder of Life Storage Restricted Shares as of immediately prior to the Company Merger Effective Time (each such performance stock unit, aPSU”).

As of immediately prior to the Company Merger Effective Time, each performance stock unit with respect to shares of Company Common Stock, including eachPSU (the “Life Storage PSUs”) that was outstanding as of immediately prior to the Company Merger Effective Time was accelerated and vested with respect to the number of Life Storage PSUs that vested based on the actual achievement of the applicable performance conditions over the truncated performance period ending on the Closing Date, determined in accordance with the terms of the applicable award agreement. At the Company Merger Effective Time, such vested Life Storage PSUs were canceled and converted into the right to receive the Merger Consideration plus cash in lieu of fractional shares, without interest, subject to any withholding required under applicable law.

As of immediately prior to the Company Merger Effective Time, each deferred stock unit with respect to shares of Company Common Stock (the “Life Storage DSUs”) that was issued and outstanding as of immediately prior to the Company Merger Effective Time became fully vested and all restrictions lapsed. At the Company Merger Effective Time, the Life Storage DSUs were canceled and converted into the right to receive the Merger Consideration plus cash in lieu of fractional shares, without interest, subject to any withholding required under applicable law.

As of immediately prior to the Company Merger Effective Time, there were no outstanding and unexercised Company stock options.

At the effective time of the Partnership Merger (the “Partnership Merger Effective Time”), (a) the general partner interests in Life Storage OP owned by Life Storage OP GP as of immediately prior to the Partnership Merger Effective Time were converted into one Common Unit (as defined in the Amended and Restated Agreement of Limited Partnership of Life Storage OP, dated June 4, 2021), and Life Storage OP GP continued to be the sole general partner of Life Storage OP following the Partnership Merger Effective Time, (b) the Common Units owned by the Surviving Entity as of immediately prior to the Partnership Merger Effective Time were converted into 99 Common Units, and (c) each Common Unit held by a limited partner of Life Storage OP, other than the Company or any wholly owned subsidiary of the Company, were converted into validly issued common units of Extra Space OP in an amount equal to the Exchange Ratio. Following the Partnership Merger Effective Time, the Surviving Entity was the sole limited partner of Life Storage OP.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by the full text of the Merger Agreement including that certain Amendment to Agreement and Plan of Merger, which are attached hereto as Exhibits 2.1 and 2.2, respectively, and are incorporated herein by reference.

On the Closing Date, the Company notified the New York Stock Exchange (the “NYSE”) of the consummation of the Company Merger and requested that the NYSE file with the Securities and Exchange Commission (“SEC”) a notification of removal from listing on Form 25 in order to delist the Company Common Stock from the NYSE and deregister the Company Common Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Surviving Entity intends to file with the SEC a certification on Form 15 to cause the Company’s reporting obligations under Sections 13 and 15(d) of the Exchange Act to be suspended.

The information provided in the Introductory Note and Items 2.01, 3.01 and 5.01 of this Current Report onis incorporated herein by reference.

On July 15, 2023, the Compensation and Human Capital Committee of the Board of Directors (the “Board”) of the Company adopted the Life Storage, Inc. Transaction Bonus Plan (the “Plan”) and designated participants under the Plan. Pursuant to the Plan, certain executives, including the Company’s named executive officers, will be eligible to receive, subject to the executive’s executing and not revoking a release of claims, a transaction bonus payment intended to provide apayment in respect of the excise tax imposed under Section 4999 of the Code in relation to the executive’s change in control payments and benefits relating to the Mergers, which would put the executive in the sameposition that the executive would have been in had the excise tax not been applied. The maximum aggregate amount of the payments that may be payable under the Plan to all participants thereunder will be $15 million (the “Aggregate Cap”). To the extent that the aggregate amount of payments submitted concurrently and otherwise due under the Plan would exceed such Aggregate Cap, each executive’s transaction bonus payment will be reduced on a pro rata basis so that the aggregate amount of all Plan payments does not exceed the Aggregate Cap.

The foregoing description of the Plan does not purport to be complete and is qualified in its entirety by the full text of the Plan, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

The information contained in Item 7.01 of this report, including Exhibit 99.1, shall not be incorporated by reference into any filing of the registrants, whether made before, on or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information contained in Item 7.01 of this report, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

Dated: July 20, 2023