AGREEMENT AND PLAN OF MERGER DATED AS OF SEPTEMBER 13, 2010 BY AND AMONG AMERICAN ASSETS TRUST, L.P., a Maryland limited partnership AND THE FORWARD OP MERGER ENTITIES as set forth on Schedule I hereto
Exhibit 10.9
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 13, 2010
BY AND AMONG
AMERICAN ASSETS TRUST, L.P.,
a Maryland limited partnership
AND
THE FORWARD OP MERGER ENTITIES
as set forth on Schedule I hereto
TABLE OF CONTENTS
PAGE | ||||
ARTICLE I THE MERGERS |
3 | |||
Section 1.01 |
THE MERGERS | 3 | ||
Section 1.02 |
EFFECTIVE TIME | 3 | ||
Section 1.03 |
EFFECT OF THE MERGERS | 3 | ||
Section 1.04 |
ORGANIZATIONAL DOCUMENTS | 3 | ||
Section 1.05 |
CONVERSION OF FORWARD OP MERGER ENTITY INTERESTS | 4 | ||
Section 1.06 |
CANCELLATION AND RETIREMENT OF FORWARD OP MERGER ENTITY INTERESTS | 5 | ||
Section 1.07 |
FRACTIONAL INTERESTS | 5 | ||
Section 1.08 |
CALCULATION OF MERGER CONSIDERATION | 5 | ||
Section 1.09 |
TRANSACTION COSTS | 5 | ||
ARTICLE II CLOSING; TERM OF AGREEMENT |
6 | |||
Section 2.01 |
CLOSING | 6 | ||
Section 2.02 |
PAYMENT OF MERGER CONSIDERATION | 6 | ||
Section 2.03 |
TAX WITHHOLDING | 8 | ||
Section 2.04 |
FURTHER ACTION | 8 | ||
Section 2.05 |
TERM OF THE AGREEMENT | 9 | ||
Section 2.06 |
EFFECT OF TERMINATION | 9 | ||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE OPERATING PARTNERSHIP |
9 | |||
Section 3.01 |
ORGANIZATION; AUTHORITY | 9 | ||
Section 3.02 |
DUE AUTHORIZATION | 10 | ||
Section 3.03 |
CONSENTS AND APPROVALS | 10 | ||
Section 3.04 |
NO VIOLATION | 10 | ||
Section 3.05 |
VALIDITY OF OP UNITS | 11 | ||
Section 3.06 |
OPERATING PARTNERSHIP AGREEMENT | 11 | ||
Section 3.07 |
LIMITED ACTIVITIES | 11 | ||
Section 3.08 |
LITIGATION | 11 | ||
Section 3.09 |
NO BROKER | 11 | ||
Section 3.10 |
NO IMPLIED REPRESENTATIONS OR WARRANTIES | 11 | ||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE FORWARD OP MERGER ENTITIES |
12 | |||
Section 4.01 |
ORGANIZATION; AUTHORITY | 12 | ||
Section 4.02 |
DUE AUTHORIZATION | 12 | ||
Section 4.03 |
CAPITALIZATION | 13 | ||
Section 4.04 |
CONSENTS AND APPROVALS | 13 |
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Section 4.05 |
NO VIOLATION | 13 | ||
Section 4.06 |
LICENSES AND PERMITS | 14 | ||
Section 4.07 |
COMPLIANCE WITH LAWS | 14 | ||
Section 4.08 |
PROPERTIES | 14 | ||
Section 4.09 |
INSURANCE | 15 | ||
Section 4.10 |
ENVIRONMENTAL MATTERS | 16 | ||
Section 4.11 |
EMINENT DOMAIN | 16 | ||
Section 4.12 |
EXISTING LOANS | 16 | ||
Section 4.13 |
FRANCHISE AGREEMENTS | 16 | ||
Section 4.14 |
FINANCIAL STATEMENTS | 16 | ||
Section 4.15 |
TAXES | 17 | ||
Section 4.16 |
LITIGATION | 17 | ||
Section 4.17 |
NO INSOLVENCY PROCEEDINGS | 17 | ||
Section 4.18 |
SECURITIES LAW MATTERS | 17 | ||
Section 4.19 |
NO BROKER | 18 | ||
Section 4.20 |
NO IMPLIED REPRESENTATIONS OR WARRANTIES | 18 | ||
Section 4.21 |
OWNERSHIP OF CERTAIN ASSETS | 18 | ||
Section 4.22 |
SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE FORWARD OP MERGER ENTITIES | 18 | ||
Section 4.23 |
NON-FOREIGN STATUS | 18 | ||
ARTICLE V COVENANTS AND OTHER AGREEMENTS | 18 | |||
Section 5.01 |
PRE-CLOSING COVENANTS | 18 | ||
Section 5.02 |
CONSENT AND WAIVER OF RIGHTS UNDER ORGANIZATIONAL DOCUMENTS | 20 | ||
Section 5.03 |
EXCLUDED ASSETS | 20 | ||
ARTICLE VI ADDITIONAL AGREEMENTS | 21 | |||
Section 6.01 |
COMMERCIALLY REASONABLE EFFORTS BY THE OPERATING PARTNERSHIP AND THE FORWARD OP MERGER ENTITIES | 21 | ||
Section 6.02 |
TAX MATTERS | 21 | ||
Section 6.03 |
WITHHOLDING CERTIFICATE | 22 | ||
Section 6.04 |
TAX ADVICE | 22 | ||
Section 6.05 |
ALTERNATE TRANSACTION | 22 | ||
Section 6.06 |
EXCLUSION OF ENTITIES | 22 | ||
ARTICLE VII CONDITIONS PRECEDENT |
22 | |||
Section 7.01 |
CONDITION TO EACH PARTY’S OBLIGATIONS | 22 | ||
Section 7.02 |
CONDITIONS TO OBLIGATIONS OF THE FORWARD OP MERGER ENTITIES | 23 | ||
Section 7.03 |
CONDITIONS TO OBLIGATION OF THE OPERATING PARTNERSHIP | 23 |
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ARTICLE VIII GENERAL PROVISIONS | 24 | |||
Section 8.01 |
NOTICES | 24 | ||
Section 8.02 |
DEFINITIONS | 25 | ||
Section 8.03 |
COUNTERPARTS | 30 | ||
Section 8.04 |
ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES | 30 | ||
Section 8.05 |
GOVERNING LAW | 30 | ||
Section 8.06 |
ASSIGNMENT | 31 | ||
Section 8.07 |
JURISDICTION | 31 | ||
Section 8.08 |
DISPUTE RESOLUTION | 31 | ||
Section 8.09 |
SEVERABILITY | 32 | ||
Section 8.10 |
RULES OF CONSTRUCTION | 32 | ||
Section 8.11 |
EQUITABLE REMEDIES | 33 | ||
Section 8.12 |
WAIVER OF SECTION 1542 PROTECTIONS | 33 | ||
Section 8.13 |
TIME OF THE ESSENCE | 33 | ||
Section 8.14 |
DESCRIPTIVE HEADINGS | 33 | ||
Section 8.15 |
NO PERSONAL LIABILITY CONFERRED | 33 | ||
Section 8.16 |
AMENDMENTS | 34 |
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DEFINED TERMS
TERM |
SECTION | |
Accredited Investor |
Section 8.02(a) | |
Affiliate |
Section 8.02(b) | |
Agreement |
Introduction | |
Allocated Share |
Section 8.02(c) | |
Alternate Transaction |
Section 8.02(d) | |
American Assets Entity |
Section 8.02(e) | |
Business Day |
Section 8.02(f) | |
Certificates of Merger |
Section 1.02 | |
Closing |
Section 2.01 | |
Closing Date |
Section 2.01 | |
Code |
Section 8.02(g) | |
Consent Form |
Section 8.02(h) | |
Consenting Holders |
Recitals | |
Contributed Entities |
Recitals | |
Contributed Interest |
Recitals | |
Contributors |
Recitals | |
Decrease |
Section 8.02(c) | |
Disclosed Loans |
Section 4.12 | |
Dispute |
Section 8.08(a) | |
Effective Time |
Section 1.02 | |
Elected OP Unit Percentage |
Section 8.02(i) | |
Elected REIT Shares Percentage |
Section 8.02(j) | |
Environmental Laws |
Section 8.02(k) | |
Equity Value |
Section 8.02(l) | |
Escrow Agreement |
Section 8.02(m) | |
Excluded Assets |
Section 5.03 | |
Formation Transaction Documentation |
Section 8.02(n) | |
Formation Transactions |
Section 8.02(o) | |
Forward OP Merger Entities |
Introduction | |
Forward OP Merger Entity Interests |
Recitals | |
Forward OP Merger Entity Material Adverse Effect |
Section 8.02(p) | |
Forward OP Merger Entity Subsidiary |
Section 4.01 | |
Forward REIT Merger Entities |
Introduction | |
Forward REIT Sub Merger Entities |
Recitals | |
Franchise Agreement |
Section 4.13 | |
Governmental Authority |
Section 8.02(q) | |
Intercompany Debt |
Section 8.02(r) | |
Intercompany Debt Adjustments |
Section 8.02(c) | |
IPO |
Recitals | |
IPO Closing Date |
Section 8.02(s) | |
IPO Price |
Section 8.02(t) | |
JAMS |
Section 8.08(b) |
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Laws |
Section 8.02(u) | |
Leases |
Section 4.08(d) | |
Liens |
Section 8.02(v) | |
Lock-up Agreement |
Section 8.02(w) | |
Merger Consideration |
Section 1.05(a) | |
Mergers |
Recitals | |
MLPA |
Recitals | |
OP Units |
Recitals | |
OP Material Adverse Effect |
Section 8.02(x) | |
OP Sub Reverse Merger Entities |
Recitals | |
Operating Partnership |
Introduction | |
Operating Partnership Agreement |
Section 1.04 | |
Operating Partnership Subsidiary |
Section 3.01 | |
Organizational Documents |
Section 8.02(z) | |
Outside Date |
Section 2.05 | |
Ownership Limits |
Section 1.05(a)(iii) | |
Permitted Liens |
Section 8.02(aa) | |
Person |
Section 8.02(bb) | |
Pre-Formation Interests |
Section 8.02(cc) | |
Pre-Formation Participants |
Section 8.02(dd) | |
Property |
Section 4.01(b) | |
Prospectus |
Section 8.02(ee) | |
Rady Trust |
Section 7.03(a) | |
Registration Statement |
Section 2.05 | |
REIT |
Introduction | |
REIT Shares |
Recitals | |
REIT Sub Forward Merger Entities |
Recitals | |
Representation, Warranty and Indemnity Agreement |
Section 8.02(ff) | |
Sale Consent |
Section 2.02(c) | |
SDAT |
Section 1.02 | |
SEC |
Section 2.05 | |
Securities Act |
Section 8.02(gg) | |
Subsidiary |
Section 8.02(hh) | |
Surviving Entity |
Section 1.01 | |
Target Asset |
Section 8.02(ii) | |
Tax |
Section 8.02(jj) | |
Tax Protection Agreement |
Section 8.02(kk) | |
Underwriting Agreement |
Section 8.02(ll) | |
Valid Election |
Section 8.02(mm) |
v
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of September 13, 2010, by and among American Assets Trust, L.P., a Maryland limited partnership (the “Operating Partnership”) and a subsidiary of American Assets Trust, Inc., a Maryland corporation (the “REIT”), and the entities identified on Schedule I hereto as “Forward OP Merger Entities” (each a “Forward OP Merger Entity” and, collectively the “Forward OP Merger Entities”).
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ARTICLE I
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Section 1.05 CONVERSION OF FORWARD OP MERGER ENTITY INTERESTS.
(a) Under and subject to the terms and conditions of the respective Formation Transaction Documentation, as the result of an irrevocable election indicated on a Consent Form submitted by a Pre-Formation Participant or as a result of the failure of a Pre-Formation Participant to submit a Consent Form, each Pre-Formation Participant is irrevocably bound to accept and entitled to receive, as a result of and upon consummation of the Mergers or other Formation Transactions, a specified share of the sponsors’ value of the American Assets Entities as a whole in the form of the right to receive cash, REIT Shares and/or OP Units as calculated in this Section 1.05.
At the Effective Time, by virtue of the Mergers and without any action on the part of the parties hereto, except as set forth in Section 1.05(b), each Forward OP Merger Entity Interest shall be converted automatically into the right to receive cash, OP Units and/or REIT Shares with an aggregate value equal to the portion of Equity Value represented by such Forward OP Merger Entity Interest (collectively referred to as the “Merger Consideration”) and each holder that receives OP Units in the Mergers shall, upon receipt of such OP Units and the delivery of a Consent Form or a counterpart signature page to the Operating Partnership Agreement and such other documents and instruments as may be required in the sole discretion of the REIT to effect such holder’s admission as a limited partner of the Operating Partnership, be admitted as a limited partner of the Operating Partnership in accordance with the MLPA and the Operating Partnership Agreement.
Subject to Section 1.07 and Section 2.02(c), the amount of cash, number of OP Units and/or REIT Shares comprising the Merger Consideration for each Forward OP Merger Entity Interest so converted shall be as follows:
(i) Cash: One hundred percent (100%) of the Allocated Share for each Forward OP Merger Entity Interest held by a Pre-Formation Participant who is not an Accredited Investor shall be paid in cash.
(ii) OP Units. The Elected OP Unit Percentage of the Allocated Share for each Forward OP Merger Entity Interest or portion thereof held by a Pre-Formation Participant who is an Accredited Investor shall be distributed in the form of a number of OP Units equal to the applicable portion of such Allocated Share divided by the IPO Price.
(iii) REIT Shares. The Elected REIT Shares Percentage of the Allocated Share for each Forward OP Merger Entity Interest or portion thereof held by a Pre-Formation Participant who is an Accredited Investor shall be distributed in the form of a number of REIT Shares equal to the applicable portion of such Allocated Share divided by the IPO Price; provided that, to the extent such distribution of REIT Shares to the holder of the Forward OP Merger Entity Interests would result in a violation of the restrictions on ownership and transfer set forth in Section 6.3 of the REIT’s charter (the “Ownership Limits”), such holder shall receive (x) the maximum number of whole REIT Shares that would not result in such a violation of the Ownership Limits, and (y) that number of OP Units equal to the remaining number of REIT Shares not distributed as a result of the application of the foregoing clause (x).
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(b) Each Forward OP Merger Entity Interest issued and outstanding immediately prior to the Effective Time that is owned by the REIT, the Operating Partnership or any of their direct or indirect wholly-owned Subsidiaries (having been previously acquired by the REIT, the Operating Partnership or any such Subsidiary thereof pursuant to the other Formation Transactions) shall remain issued and outstanding, and no consideration shall be delivered hereunder in exchange therefor.
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ARTICLE II
Section 2.02 PAYMENT OF MERGER CONSIDERATION.
(a) As soon as reasonably practicable after the Effective Time, the Surviving Entity (or its successor in interest) shall deliver to each holder of Forward OP Merger Entity Interests, whose Forward OP Merger Entity Interests have been converted into the right to receive the Merger Consideration pursuant to Section 1.05(a) hereof, the Merger Consideration payable to such holder in the amounts and form provided in Section 1.05(a) hereof. The issuance of the OP Units and admission of the recipients thereof as limited partners of the Operating Partnership pursuant to Section 1.05(a) shall be evidenced by an amendment to Exhibit A to the Operating Partnership Agreement, and the Operating Partnership shall deliver, or cause to be delivered, an executed copy of such amendment to each Pre-Formation Participant receiving OP Units hereunder. Any certificate representing REIT Shares issuable as Merger Consideration shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE CORPORATION AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.
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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE CORPORATION’S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE CORPORATION’S CHARTER, (I) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION’S COMMON STOCK IN EXCESS OF [ ]% (IN VALUE OR NUMBER OF SHARES) OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE CORPORATION UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (II) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK OF THE CORPORATION IN EXCESS OF [ ]% OF THE VALUE OF THE TOTAL OUTSTANDING SHARES OF CAPITAL STOCK OF THE CORPORATION, UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (III) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN CAPITAL STOCK THAT WOULD RESULT IN THE CORPORATION BEING “CLOSELY HELD” UNDER SECTION 856(h) OF THE CODE OR OTHERWISE CAUSE THE CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (IV) NO PERSON MAY TRANSFER SHARES OF CAPITAL STOCK IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN EXCESS OR IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP SET FORTH IN (I) THROUGH (III) ABOVE ARE VIOLATED, THE SHARES OF CAPITAL STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION, THE CORPORATION MAY TAKE OTHER ACTIONS, INCLUDING REDEEMING SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE AND ABSOLUTE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL UNDERLINED TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN THE CHARTER OF THE CORPORATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF CAPITAL STOCK OF THE CORPORATION ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE.
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(b) The Surviving Entity (or its successor in interest) shall not be liable to any holder of a Forward OP Merger Entity Interest for any portion of the Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.
(c) So long as some portion of the Merger Consideration with respect to an American Assets Entity is in the form of OP Units, the parties hereto intend and agree that, for United States federal income tax purposes, the Merger of each such entity shall constitute an “assets-over” partnership merger within the meaning of Treasury Regulations Section 1.708-1(c)(3)(i), and, as a result, that (i) any payment of cash or REIT Shares for the Forward OP Merger Entity Interests of such holder in such entity shall be treated as a sale of such Forward OP Merger Entity Interests by the holder and a purchase of such Forward OP Merger Entity Interests by the Operating Partnership for the cash and/or REIT Shares so paid under the terms of this Agreement in accordance with Treasury Regulations Section 1.708-1(c)(4), and (ii) each such holder of the Forward OP Merger Entity Interests who accepts cash and/or REIT Shares shall explicitly agree and consent (the “Sale Consent”) to such treatment in their Consent Form as a condition to electing such consideration. To the extent the Operating Partnership acquires any Forward OP Merger Entity Interests as described above, or previously acquired such interest, for United States federal income tax purposes the receipt by the Operating Partnership of the portion of property attributable to such Forward OP Merger Entity Interests shall be treated as a distribution by a Forward OP Merger Entity in redemption of such Forward OP Merger Entity Interests. Notwithstanding Section 1.05(a) and any holder’s election as to the form of their Merger Consideration, if any holder (other than a non-accredited investor), fails to execute a Sale Consent prior to the Closing, such holder’s Merger Consideration shall consist solely of OP Units. Any cash paid as the Merger Consideration to a non-accredited investor for a Forward OP Merger Entity Interest shall be paid only after the receipt of a Sale Consent from such holder.
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Agreement, the Surviving Entity shall be authorized to execute and deliver, in the name and on behalf of any Forward OP Merger Entity or otherwise, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of any Forward OP Merger Entity or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Entity or otherwise to carry out this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OPERATING PARTNERSHIP
The Operating Partnership hereby represents and warrants to each Forward OP Merger Entity as follows:
Section 3.01 ORGANIZATION; AUTHORITY.
(a) The Operating Partnership has been duly formed and is validly existing and in good standing under the Laws of its jurisdiction of formation, and, upon the effectiveness of the Operating Partnership Agreement, will have all requisite power and authority to enter into this Agreement and the other Formation Transaction Documentation and to carry out the transactions contemplated hereby and thereby, and to own, lease and/or operate its property and to carry on its business as presently conducted and, to the extent required under applicable Laws, is qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the character of its property make such qualification necessary, other than such failures to be so qualified as would not, individually or in the aggregate, reasonably be expected to have an OP Material Adverse Effect.
(b) Schedule 3.01(b) sets forth as of the date hereof, (i) each Subsidiary of the Operating Partnership (each an “Operating Partnership Subsidiary”), (ii) the ownership interest therein of the Operating Partnership, and (iii) if not wholly owned by the Operating Partnership,
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the identity and ownership interest of each of the other owners of such Operating Partnership Subsidiary. Each Operating Partnership Subsidiary has been duly organized or formed and is validly existing and is in good standing under the Laws of its jurisdiction of organization or formation, as applicable, has all requisite power and authority to own, lease and/or operate its property and to carry on its business as presently conducted and, to the extent required under applicable Laws, is qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the character of its property make such qualification necessary, other than such failures to be so qualified as would not, individually or in the aggregate, reasonably be expected to have an OP Material Adverse Effect.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE FORWARD OP MERGER ENTITIES
Except as disclosed in the Prospectus or the schedules attached hereto, each Forward OP Merger Entity represents and warrants to the Operating Partnership that the following statements are true and correct solely with respect to such Forward OP Merger Entity as of the Closing Date:
Section 4.01 ORGANIZATION; AUTHORITY.
(a) Each Forward OP Merger Entity has been duly organized and is validly existing and in good standing under the Laws of its jurisdiction of formation and has all requisite power and authority to enter into this Agreement, each agreement contemplated hereby and the other Formation Transaction Documentation to which it is a party (including any agreement, document and instrument executed and delivered by or on behalf of such Forward OP Merger Entity pursuant to this Agreement or the other Formation Transaction Documentation) and to carry out the transactions contemplated hereby and thereby, and to own, lease and/or operate any Property owned, leased and/or operated by it and to carry on its business as presently conducted. Each Forward OP Merger Entity, to the extent required under applicable Laws, is qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the character of a Property make such qualification necessary, other than such failures to be so qualified as would not, individually or in the aggregate, reasonably be expected to have a Forward OP Merger Entity Material Adverse Effect.
(b) Schedule 4.01(b) sets forth as of the date hereof with respect to such Forward OP Merger Entity (i) each Subsidiary of such Forward OP Merger Entity (each a “Forward OP Merger Entity Subsidiary”), (ii) the ownership interest therein of such Forward OP Merger Entity, (iii) if not wholly owned by such Forward OP Merger Entity, the identity and ownership interest of each of the other owners of such Subsidiary, and (iv) each property owned or leased pursuant to a ground lease by such Forward OP Merger Entity or such Subsidiary (each a “Property”). Such Forward OP Merger Entity Subsidiary has been duly organized and is validly existing and is in good standing under the Laws of its jurisdiction of organization, and has all requisite power and authority to own, lease and/or operate its Property and to carry on its business as presently conducted. Such Forward OP Merger Entity Subsidiary, to the extent required under applicable Laws, is qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the character of its Property make such qualification necessary, other than such failures to be so qualified as would not, individually or in the aggregate, reasonably be expected to have a Forward OP Merger Entity Material Adverse Effect.
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authorized by all necessary actions required of such Forward OP Merger Entity. This Agreement, the other Formation Transaction Documentation and each agreement, document and instrument executed and delivered by or on behalf of such Forward OP Merger Entity pursuant to this Agreement or the other Formation Transaction Documentation constitutes, or when executed and delivered will constitute, the legal, valid and binding obligation of such Forward OP Merger Entity, each enforceable against such Forward OP Merger Entity in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity.
Section 4.03 CAPITALIZATION. Schedule 4.03 sets forth as of the date hereof the ownership of such Forward OP Merger Entity. All of the issued and outstanding equity interests of such Forward OP Merger Entity and each Forward OP Merger Entity Subsidiary are duly authorized, validly issued and fully paid; and, to the knowledge of such Forward OP Merger Entity, are not subject to preemptive rights, transfer restrictions, or appraisal, dissenters’ or other similar rights under the Organizational Documents of or any contract to which such Forward OP Merger Entity is a party or otherwise bound, except for such preemptive rights, transfer restrictions, or appraisal, dissenters’ or other similar rights as would not prevent the Merger. There are no outstanding rights to purchase, subscriptions, warrants, options or any other security convertible into or exchangeable for equity interests in such Forward OP Merger Entity or its Forward OP Merger Entity Subsidiaries.
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(a) Except as set forth in Schedule 4.08(a), such Forward OP Merger Entity or its Forward OP Merger Entity Subsidiary is the insured under a policy of title insurance as the owner of, and, to the knowledge of such Forward OP Merger Entity, such Forward OP Merger Entity or its Forward OP Merger Entity Subsidiary is the owner of, the fee simple estate (or, in the case of certain Properties, the leasehold estate or the tenancy-in-common estate) to the Property owned by such Forward OP Merger Entity or its Forward OP Merger Entity Subsidiary, in each case free and clear of all Liens except for Permitted Liens. Prior to the effective time of the merger contemplated hereby, neither such Forward OP Merger Entity nor any of its Forward OP Merger Entity Subsidiaries shall take or omit to take any action to cause any Lien to attach to any Property, except for Permitted Liens and Liens, if any, given to secure mortgage indebtedness encumbering such Property.
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(b) Except for matters that would not, individually or in the aggregate, reasonably be expected to have a Forward OP Merger Entity Material Adverse Effect, to the knowledge of such Forward OP Merger Entity, (1) neither such Forward OP Merger Entity nor its Forward OP Merger Entity Subsidiaries, nor any other party to any material agreement affecting any Property (other than a Lease (as such term is hereinafter defined) for space within such Property), is in breach or default of any such agreement, (2) no event has occurred or has been threatened in writing, which with or without the passage of time or the giving of notice, or both, would, individually or together with all such other events, constitute a default under any such agreement, or would, individually or together with all such other events, reasonably be expected to cause the acceleration of any material obligation of any party thereto or the creation of a Lien upon any asset of such Forward OP Merger Entity or its Forward OP Merger Entity Subsidiaries, except for Permitted Liens, and (3) all agreements affecting any Property required for the continued use, occupancy, management, leasing and operation of such Property (exclusive of space Leases) are valid and binding and in full force and effect, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity.
(c) To the knowledge of such Forward OP Merger Entity, as presently conducted, none of the operation of the buildings, fixtures and other improvements comprising a part of the Properties is in violation of any applicable building code, zoning ordinance or other “land use” Law, except for such violations that would not, individually or in the aggregate, reasonably be expected to have a Forward OP Merger Entity Material Adverse Effect.
(d) Except for matters that would not, individually or in the aggregate, reasonably be expected to have a Forward OP Merger Entity Material Adverse Effect, (1) to the knowledge of such Forward OP Merger Entity, neither such Forward OP Merger Entity, nor its Forward OP Merger Entity Subsidiaries, nor any other party to any Lease, is in breach or default of any such Lease, (2) to the knowledge of such Forward OP Merger Entity, no event has occurred or has been threatened in writing, which with or without the passage of time or the giving of notice, or both, would, individually or together with all such other events, constitute a default under any Lease or would permit termination, modification or acceleration under such Lease, and (3) to the knowledge of such Forward OP Merger Entity, each of the leases (and all amendments thereto or modifications thereof) to which such Forward OP Merger Entity or its Forward OP Merger Entity Subsidiaries is a party or by which such Forward OP Merger Entity or its Forward OP Merger Entity Subsidiaries or any Property is bound or subject (collectively, the “Leases”) is valid and binding and in full force and effect, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity.
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16
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registration pursuant to Rule 506 of Regulation D under the Securities Act, and (ii) in issuing any REIT Shares or OP Units pursuant to the terms of this Agreement, the REIT and Operating Partnership are relying on the representations made by each partner or member electing to receive REIT Shares or OP Units as consideration in the Merger, which representations were set forth in Appendix D to the Request for Consent – Accredited Investor Representations Letter.
ARTICLE V
COVENANTS AND OTHER AGREEMENTS
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others having business dealings with it, in each case consistent with past practice. In addition, and without limiting the generality of the foregoing, during the period from the date hereof to the Closing Date and except in connection with the Formation Transactions, each Forward OP Merger Entity shall not (and shall not permit any of its Forward OP Merger Entity Subsidiaries to) without the prior written consent of the Operating Partnership, which consent may be withheld by the Operating Partnership in its sole discretion:
(a)(i) other than distributions to the equity holders of such Forward OP Merger Entity in connection with such holders’ payment of any Taxes related to their ownership of the equity of the Forward OP Merger Entity or as otherwise contemplated by this Agreement, declare, set aside or pay any distributions in respect of any Forward OP Merger Entity Interests, except in the ordinary course of business consistent with past practice and in accordance with the applicable governing document of such Forward OP Merger Entity, (ii) issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any Forward OP Merger Entity Interests or make any other changes to the equity capital structure of such Forward OP Merger Entity or its Forward OP Merger Entity Subsidiaries, or (iii) purchase, redeem or otherwise acquire any Forward OP Merger Entity Interests or interests of its Forward OP Merger Entity Subsidiaries or any other securities thereof;
(b) issue, deliver, sell, transfer, dispose, mortgage, pledge, assign or otherwise encumber, or cause the issuance, delivery, sale, transfer, disposition, mortgage, pledge, assignment or otherwise encumbrance of, any limited liability company, partnership interests or other equity interests of such Forward OP Merger Entity or of its Forward OP Merger Entity Subsidiaries or any other assets of such Forward OP Merger Entity or its Forward OP Merger Entity Subsidiaries;
(c) amend, modify or terminate any lease, contract or other instruments relating to the Property, except in the ordinary course of business consistent with past practice;
(d) amend its certificate of formation, certificate of organization, limited partnership agreement, limited liability company agreement or operating agreement, as applicable;
(e) adopt a plan of liquidation, dissolution, merger, consolidation, restructuring, recapitalization or reorganization;
(f) materially alter the manner of keeping such Forward OP Merger Entity’s or its Forward OP Merger Entity Subsidiaries’ books, accounts or records or the accounting practices therein reflected;
(g) file an entity classification election pursuant to Treasury Regulation Section 301.7701-3(c) on Internal Revenue Service Form 8832 (Entity Classification Election) to treat such Forward OP Merger Entity or its Forward OP Merger Entity Subsidiaries as an association taxable as a corporation for United States federal income tax purposes; make or change any other Tax elections; settle or compromise any claim, notice, audit report or assessment in respect of Taxes; change any annual Tax accounting period; adopt or change any method of Tax accounting; file any amended Tax return; enter into any tax allocation agreement, tax sharing agreement, tax indemnity agreement or closing agreement relating to any Tax; surrender of any right to claim a Tax refund; or consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment;
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(h) terminate or amend any existing insurance policies affecting any Property that results in a material reduction in insurance coverage for the Property;
(i) knowingly cause or permit such Forward OP Merger Entity to violate, or fail to use commercially reasonable efforts to cure any violation of, any applicable Laws; or
(j) authorize, commit or agree to take any of the foregoing actions.
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ARTICLE VI
(a) Each Forward OP Merger Entity and its Subsidiaries shall timely file or cause to be timely filed when due all Tax returns required to be filed by or with respect to such Person on or prior to the Closing Date and shall pay or cause to be paid all Taxes shown due thereon. All such Tax returns (including, for the avoidance of doubt, any amended Tax returns) shall be prepared in a manner consistent with past practice, except as otherwise required by applicable Law.
(b) The Operating Partnership shall prepare or cause to be prepared and file or cause to be filed all income Tax returns of each Forward OP Merger Entity and each of their Subsidiaries which are due after the Closing Date. All such income Tax returns (including, for the avoidance of doubt, any amended Tax returns) shall be prepared in a manner consistent with past practice, except as otherwise required by applicable Law. No later than ten (10) days prior to the due date (including extensions) for filing such income Tax returns, the Operating Partnership shall deliver such income Tax returns to American Assets, Inc. for its review and approval, which shall not be unreasonably withheld.
(c) The Operating Partnership shall prepare or cause to be prepared all other Tax returns of each Forward OP Merger Entity and each of their respective Subsidiaries.
(d) In accordance with Section 704(c) of the Code, the Operating Partnership shall adopt and use only the so-called “traditional method” described in Treasury Regulation Section 1.704-3(b) with respect to any properties transferred directly or indirectly by a Forward OP Merger Entity to the Operating Partnership as a result of the Formation Transactions, and therefore shall not make any curative or remedial allocations with respect to such properties.
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ARTICLE VII
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case which is in effect and which prevents or prohibits consummation of any of the transactions contemplated in this Agreement nor shall any of the same brought by a Governmental Authority of competent jurisdiction be pending or threatened that seeks the foregoing.
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Rady Trust U/D/T March 10, 1983, as amended (the “Rady Trust”), under the Representation, Warranty and Indemnity Agreement, shall be true and correct in all respects at the Closing as if made again at that time (except to the extent that any representation or warranty speaks as of an earlier date, in which case it must be true and correct only as of that earlier date).
(c) IPO CLOSING. The closing of the IPO shall occur substantially concurrently with the Closing.
(g) ESCROW AGREEMENT. The parties thereto shall have entered into the Escrow Agreement.
ARTICLE VIII
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or (iv) transmitted by facsimile if confirmed within twenty-four (24) hours thereafter by a signed original sent in the manner provided in clause (i), (ii) or (iii) to the parties at the following addresses (or at such other address for a party as shall be specified by notice from such party):
if to the Operating Partnership to:
American Assets Trust, L.P.
00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
if to a Forward OP Merger Entity to:
00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
(a) “Accredited Investor” has the meaning set forth under Regulation D of the Securities Act.
(b) “Affiliate” means, with respect to any Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the specified Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.
(c) “Allocated Share” means the amount that would be allocated to a Pre-Formation Participant that is the holder of an interest in an American Assets Entity in accordance with the provisions of the existing Organizational Documents of such entity relating to distributions of distributable net proceeds from sales of directly or indirectly owned properties or assets, and assuming the sale of the relevant Target Asset or Target Assets that are directly or indirectly owned by such entity for a value equal to such Target Asset’s or Target Assets’ respective Equity Value(s).
Notwithstanding the foregoing, the Allocated Share of any Pre-Formation Participant shall reflect the following adjustments:
1. | Intercompany Debt Adjustment. In calculating Allocated Share, all Intercompany Debt shall be taken into account so that the Allocated Shares of the holders of direct or indirect Pre-Formation Interests in the obligor of Intercompany Debt collectively are reduced, and the Allocated Shares of the holders of direct or indirect Pre-Formation Interests in the obligee of such Intercompany Debt collectively are increased, in each case by the amount of such Intercompany Debt (such adjustments being referred to as “Intercompany Debt Adjustments”). |
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2. | Entity Specific Debt Adjustment. To the extent that Entity Specific Debt is allocated to a Target Asset, in calculating Allocated Shares of holders of direct or indirect Pre-Formation Interests in the American Assets Entity or Entities owning such Target Asset, the amount of the decrease in Equity Value of such Target Asset attributable to the allocation of such Entity Specific Debt to such Target Asset (through the operation of the formula set forth on Schedule III) (in each case, such decrease being the “Decrease”) shall be taken into account so that: |
a. | the Allocated Shares of the holders of direct or indirect Pre-Formation Interests in any obligor(s) under such Entity Specific Debt collectively shall be (i) reduced by the amount equal to the excess of (w) the amount of the Entity Specific Debt owed by such obligor over (x) the amount of the Decrease allocated pro rata to such obligor as a direct or indirect owner of the Target Asset; or (ii) increased by the amount equal to the excess of (y) the amount of the Decrease allocated pro rata to such obligor as a direct or indirect owner of the Target Asset over (z) the amount of the Entity Specific Debt owed by such obligor; and |
b. | the Allocated Shares of the holders of direct or indirect Pre-Formation Interests in American Assets Entities owning such Target Asset that are not obligors under such Entity Specific Debt collectively shall be increased by the amount equal to the amount of the Decrease allocated pro rata to such holders as direct or indirect owner of the Target Asset; |
with the net effect under the foregoing clauses (a)(i), (a)(ii) and (b) being that the adverse economic impact of the Decrease shall be borne equitably by the holders of direct or indirect Pre-Formation Interests in the actual obligor(s) under such Entity Specific Debt and not by any other holder of direct or indirect Pre-Formation Interests in the American Assets Entities owning such Target Asset.
Illustrative examples of the application of the foregoing Allocated Share adjustments using hypothetical numbers are included as Example 3 and Example 4 in Appendix A to Schedule III.
(d) “Alternate Transaction” means (i) a contribution of the assets held by a Forward OP Merger Entity to the Operating Partnership in exchange for the amount of cash and the number of OP Units and/or REIT Shares that were to be issued pursuant to this Agreement, (ii) a contribution by each holder of direct or indirect equity interests in a Forward OP Merger Entity to the Operating Partnership in exchange for the amount of cash and the number of OP Units and/or REIT Shares that would have otherwise been received by such holder of direct or indirect equity interests pursuant to this Agreement, (iii) the restructuring of the Merger as either (x) a merger of the Forward OP Merger Entity with and into either the REIT or a wholly owned subsidiary of the REIT or the Operating Partnership or (y) a merger of a wholly owned subsidiary of either the REIT or the Operating Partnership with and into the Forward OP Merger Entity, in each case in exchange for the amount of cash and the number of OP Units and/or REIT Shares that were to be issued pursuant to this Agreement, or (iv) any other transaction pursuant to which the REIT, the Operating Partnership or any of their Subsidiaries acquire the assets held by a Forward OP Merger Entity or each holder of direct or indirect equity interests in such Forward OP Merger Entity in a transaction pursuant to which each holder of direct or indirect interests in such Forward OP Merger Entity receives the amount of cash, the number of OP Units and/or the number of REIT Shares that were to be received by such holder pursuant to this Agreement (or a portion thereof equal in value to the value of the portion of such assets acquired by the REIT, the Operating Partnership or any of their Subsidiaries pursuant to such Alternate Transaction).
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(e) “American Assets Entity” means a Forward OP Merger Entity, Forward REIT Merger Entity, OP Sub Reverse Merger Entity, OP Sub Forward Merger Entity, REIT Sub Forward Merger Entity, Contributed Entity or OP Sub Contributed Entity, as applicable. As used herein, “American Assets Entities” refer to each American Assets Entity, collectively.
(f) “Business Day” means any day that is not a Saturday, Sunday or legal holiday in the State of California.
(g) “Code” means the Internal Revenue Code of 1986, as amended, together with the rules and regulations promulgated or issued thereunder.
(h) “Consent Form” means the forms provided to each holder of Pre-Formation Interests to consent to the Formation Transactions and to make such holder’s irrevocable elections with respect to consideration to be received in the Formation Transactions.
(i) “Elected OP Unit Percentage” means, for the Merger Consideration to be received with respect to any Forward OP Merger Entity Interest, the percentage of the Allocated Share represented by such Forward OP Merger Entity Interest that the holder thereof has made a Valid Election to receive in the form of OP Units.
(j) “Elected REIT Shares Percentage” means, for the Merger Consideration to be received with respect to any Forward OP Merger Entity Interest, the percentage of the Allocated Share represented by such Forward OP Merger Entity Interest that the holder thereof has made a Valid Election to receive in the form of REIT Shares.
(k) “Environmental Laws” means all federal, state and local Laws governing pollution or the protection of human health or the environment.
(l) “Equity Value” has the meaning set forth in Schedule III hereto.
(m) “Escrow Agreement” means the Indemnity Escrow Agreement, dated as of the date hereof, by and among the REIT, the Operating Partnership and the Rady Trust.
(n) “Formation Transaction Documentation” means all of the agreements and plans of merger (including this Agreement) relating to all target entities and all contribution agreements and related documents and agreements, substantially in the forms accompanying the Request for Consent dated July 31, 2010 and identified in Exhibit A hereto, pursuant to which all of the American Assets Entities and/or the equity interests in the American Assets Entities held by the Pre-Formation Participants are to be acquired by the REIT or the Operating Partnership, directly or indirectly, as part of the Formation Transactions.
(o) “Formation Transactions” means the transactions contemplated by this Agreement and the other Formation Transaction Documentation.
(p) “Forward OP Merger Entity Material Adverse Effect” means any material adverse change in any of the assets, business, condition (financial or otherwise), results of operation or prospects of the applicable Forward OP Merger Entity and each subsidiary of such Forward OP Merger Entity, taken as a whole.
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(q) “Governmental Authority” means any government or agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.
(r) “Intercompany Debt” means loans or advances among American Assets Entities and/or their Subsidiaries or among holders of Pre-Formation Interests on the one hand and American Assets Entities and/or their Subsidiaries on the other hand, other than those promissory notes set forth on Appendix D to Schedule III for which Del Monte Center is listed as the associated Target Asset, each of which loans or advances are set forth on Schedule IV hereto. Intercompany Debt shall not be discharged pursuant to the Formation Transactions except to the extent any such Intercompany Debt merges out of existence by operation of law as a result of such transactions (e.g., if the Operating Partnership acquires both the obligor and obligee interest in a loan which reflects an Intercompany Debt). After the closing of the Formation Transactions, and except as provided below, to the extent any such loans are acquired by the REIT, Operating Partnership or their Subsidiaries (e.g., an obligor or obligee with respect to such loans is merged with or into, or acquired by, one of such entities), the REIT, Operating Partnership or their Subsidiaries (as applicable) shall be permitted to take any actions (including repayment) with respect to such Intercompany Debt as they deem appropriate. Intercompany Debt with respect to which either the obligor or the obligee (but not both such parties) under such Intercompany Debt is acquired, directly or indirectly, by the REIT, Operating Partnership or their Subsidiaries, shall be deemed to be discharged immediately after the Formation Transactions by (i) the REIT, Operating Partnership or their Subsidiaries (as applicable) as obligor, or (ii) the obligor to the REIT, Operating Partnership or their Subsidiaries (as applicable) as obligee, in each case in exchange for the consideration payable as set forth in the applicable Formation Transaction Documentation. The amounts payable and receivable with respect to each item of Intercompany Debt shall be determined by the REIT, for purposes of determining the Intercompany Debt Adjustments, within forty five (45) days prior to the date of the preliminary prospectus used in the IPO roadshow based on its good faith estimate of what such amounts will be as of the IPO Closing Date.
(s) “IPO Closing Date” means the closing date of the IPO.
(t) “IPO Price” means the initial public offering price of a REIT Share in the IPO.
(u) “Laws” means laws, statutes, rules, regulations, codes, orders, ordinances, judgments, injunctions, decrees and policies of any Governmental Authority, including, without limitation, zoning, land use or other similar rules or ordinances.
(v) “Liens” means all pledges, claims, liens, charges, restrictions, controls, easements, rights of way, exceptions, reservations, leases, licenses, grants, covenants and conditions, encumbrances and security interests of any kind or nature whatsoever.
(w) “Lock-Up Agreement” means that certain Lock-Up Agreement, by and between the underwriters and each investor of the REIT and/or the Operating Partnership.
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(x) “OP Material Adverse Effect” means any material adverse change in any of the assets, business, condition (financial or otherwise), results of operation or prospects of the Operating Partnership and each Operating Partnership Subsidiary, taken as a whole.
(y) “Operating Partnership Agreement” means the agreement of limited partnership of the Operating Partnership, as amended and restated and in effect immediately prior to the Effective Time.
(z) “Organizational Documents” means the certificate of formation, certificate of incorporation and bylaws, certificate of limited partnership and limited partnership agreement, limited liability company agreement or operating agreement, of each Forward OP Merger Entity or Forward OP Merger Entity Subsidiary, as applicable.
(aa) “Permitted Liens” means (i) Liens, or deposits made to secure the release of such Liens, securing Taxes, the payment of which is not delinquent or the payment of which (including, without limitation, the amount or validity thereof) is being contested in good faith by appropriate proceedings for which adequate reserves have been made in accordance with GAAP; (ii) zoning, entitlement, building and other land use Laws imposed by governmental agencies having jurisdiction over the Properties; (iii) covenants, conditions, restrictions, easements for public utilities, encroachments, rights of access or other non-monetary matters that do not materially impair the use of the Properties for the purposes for which they are currently being used or proposed to be used in connection with the relevant Person’s business; (iv) Liens securing financing or credit arrangements existing as of the Closing Date; (v) Liens arising under leases in effect as of the Closing Date; (vi) any exceptions contained in any title policy (including any policy issued to a secured lender) relating to the Properties as of the Closing Date; (vii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the ordinary course of business that are not yet due and payable and which are not, in the aggregate, material to the business, operations and financial condition of the Properties so encumbered; and (viii) any matters that would not have a Forward OP Merger Entity Material Adverse Effect.
(bb) “Person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity.
(cc) “Pre-Formation Interests” means the interests held by the Pre-Formation Participants in the American Assets Entities.
(dd) “Pre-Formation Participants” means the holders of the direct and indirect equity interests in the relevant American Assets Entities immediately prior to the Formation Transactions.
(ee) “Prospectus” means the REIT’s final prospectus as filed with the SEC.
(ff) “Representation, Warranty and Indemnity Agreement” means the Representation, Warranty and Indemnity Agreement, dated as of the date hereof, by and among the REIT, the Operating Partnership and the Rady Trust.
(gg) “Securities Act” means the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder.
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(hh) “Subsidiary” of any Person means any corporation, partnership, limited liability company, joint venture, trust or other legal entity of which such Person owns (either directly or through or together with another Subsidiary of such Person) either (i) a general partner, managing member or other similar interest, or (ii)(A) ten percent (10%) or more of the voting power of the voting capital stock or other equity interests, or (B) ten percent (10%) or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other legal entity.
(ii) “Target Asset” has the meaning set forth in Schedule III hereto.
(jj) “Tax” means all federal, state, local and foreign income, gross receipts, license, property, withholding, sales, franchise, employment, payroll, goods and services, stamp, environmental, customs duties, capital stock, social security, transfer, alternative minimum, excise and other taxes, tariffs or governmental charges of any nature whatsoever, including estimated taxes, together with penalties, interest or additions to Tax with respect thereto, whether or not disputed.
(kk) “Tax Protection Agreement” means that certain Tax Protection Agreement by and among the REIT, the Operating Partnership and the parties identified as a signatory on Schedule A thereto.
(ll) “Underwriting Agreement” means that certain underwriting agreement, by and between the REIT, the Operating Partnership and certain underwriters set forth therein, pursuant to which the REIT will issue and sell shares in the IPO.
(mm) “Valid Election” means, with respect to any Forward OP Merger Entity Interest, an irrevocable election to receive all or a portion of its Allocated Share in the form of OP Units and/or REIT Shares as indicated on the properly completed and timely received Consent Form of the holder of such Forward OP Merger Entity Interest or a Consent Form as to which any deficiencies have been waived by the REIT.
Section 8.05 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of California, regardless of any Laws that might otherwise govern under applicable principles of conflicts of laws thereof.
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(a) Upon any dispute, controversy or claim arising out of or relating to this Agreement or the enforcement, breach, termination or validity thereof (“Dispute”), the party raising the Dispute will give written notice to the other parties to the Dispute describing the nature of the Dispute following which the parties to such Dispute shall attempt for a period of ten (10) Business Days from receipt by the parties of notice of such Dispute to resolve such Dispute by negotiation between representatives of the parties hereto who have authority to settle such Dispute. All such negotiations shall be confidential and any statements or offers made therein shall be treated as compromise and settlement negotiations for purposes of any applicable rules of evidence and shall not be admissible as evidence in any subsequent proceeding for any purpose. The statute of limitations applicable to the commencement of a lawsuit shall apply to the commencement of an arbitration hereunder, except that no defense based on the running of the statute of limitations will be available based upon the passage of time during any such negotiation. Regardless of the foregoing, a party shall have the right to seek immediate injunctive relief pursuant to Section 8.08(c) below without regard to any such ten (10) Business Day negotiation period.
(b) Any Dispute (including the determination of the scope or applicability of this agreement to arbitrate) that is not resolved pursuant to Section 8.08(a) above shall be submitted to final and binding arbitration in California before one neutral and impartial arbitrator, in accordance with the Laws of the State of California for agreements made in and to be performed in that State. The arbitration shall be administered by JAMS, Inc. (“JAMS”) pursuant to its Comprehensive Arbitration Rules and Procedures, as in effect on the date hereof. Each of the Operating Partnership, on the one hand, and any Forward OP Merger Entity, on the other hand, shall appoint one arbitrator within fifteen (15) days of a demand for arbitration. If the Operating Partnership and any Forward OP Merger Entity cannot mutually agree upon an arbitrator within such 15-day period, the arbitrator shall be appointed by JAMS in accordance
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with its Comprehensive Arbitration Rules and Procedures, as in effect on the date hereof. The arbitrator shall designate the place and time of the hearing. The hearing shall be scheduled to begin as soon as practicable and no later than sixty (60) days after the appointment of the arbitrator (unless such period is extended by the arbitrator for good cause shown) and shall be conducted as expeditiously as possible. The award, which shall set forth the arbitrator’s findings of fact and conclusions of law, shall be filed with JAMS and mailed to the parties no later than thirty (30) days after the close of the arbitration hearing. The arbitration award shall be final and binding on the parties and not subject to collateral attack. Judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof.
(c) Notwithstanding the parties’ agreement to submit all Disputes to final and binding arbitration before JAMS, the parties shall have the right to seek and obtain temporary or preliminary injunctive relief in any court having jurisdiction thereof. Such courts shall have authority to, among other things, grant temporary or provisional injunctive relief in order to protect any party’s rights under this Agreement. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any party to respect the arbitral tribunal’s orders to that effect.
(d) The prevailing party shall be entitled to recover its costs and reasonable attorneys’ fees, and the non-prevailing party shall pay all expenses and fees of JAMS, all costs of the stenographic record, all expenses of witnesses or proofs that may have been produced at the direction of the arbitrator, and the fees, costs, and expenses of the arbitrator. The arbitrator shall allocate such costs and designate the prevailing party or parties for these purposes.
Section 8.10 RULES OF CONSTRUCTION.
(a) The parties hereto agree that they have had the opportunity to be represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.
(b) The words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement unless otherwise specified. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” All
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terms defined in this Agreement shall have the defined meanings contained herein when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Unless explicitly stated otherwise herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time, amended, qualified or supplemented, including (in the case of agreements and instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns.
Section 8.11 EQUITABLE REMEDIES. The parties agree that irreparable damage would occur to the Operating Partnership in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Operating Partnership shall be entitled to an injunction or injunctions to prevent breaches of this Agreement by any Forward OP Merger Entity and to enforce specifically the terms and provisions hereof in any federal or state court located in California, this being in addition to any other remedy to which the Operating Partnership is entitled under this Agreement or otherwise at law or in equity.
Section 8.12 WAIVER OF SECTION 1542 PROTECTIONS. As of the Closing, each Forward OP Merger Entity expressly acknowledges that it has had, or has had and waived, the opportunity to be advised by independent legal counsel and hereby waives and relinquishes all rights and benefits afforded by Section 1542 of the California Civil Code and does so understanding and acknowledging the significance and consequence of such specific waiver of Section 1542 which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
Section 8.13 TIME OF THE ESSENCE. Time is of the essence with respect to all obligations under this Agreement.
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Section 8.16 AMENDMENTS. This Agreement may be amended by appropriate instrument, without the consent of any Forward OP Merger Entity, at any time prior to the Effective Time; provided, that no such amendment, modification or supplement shall be made that alters the amount or changes the form of the consideration to be delivered to a Forward OP Merger Agreement Entity, without the prior written consent of the Forward OP Merger Agreement Entity adversely affected by such proposed amendment, modification or supplement.
[SIGNATURE PAGE FOLLOWS]
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AMERICAN ASSETS TRUST, L.P., a Maryland limited partnership | ||
By: |
a Maryland corporation | |
Its: | General Partner | |
By: | /s/ Xxxx X. Xxxxxxxxxxx | |
Name: Xxxx X. Xxxxxxxxxxx | ||
Title: President |
[Signature Page to OP Forward Merger Agreement]
SOLANA BEACH TOWNE CENTRES INVESTMENTS, L.P., a California limited partnership | ||
By: | PACIFIC TOWNE CENTRE ASSETS, INC., a California corporation | |
Its: | General Partner | |
By: | /s/ Xxxx X. Xxxxxxxxxxx | |
Name: Xxxx X. Xxxxxxxxxxx | ||
Title: President |
[Signature Page to OP Forward Merger Agreement]
PACIFIC SAN XXXX HOLDINGS, L.P., a California limited partnership | ||
By: | PACIFIC SAN XXXX ASSETS, INC., a California corporation | |
Its: | General Partner | |
By: | /s/ Xxxx X. Xxxxxxxxxxx | |
Name: Xxxx X. Xxxxxxxxxxx | ||
Title: President |
[Signature Page to OP Forward Merger Agreement]
PACIFIC SORRENTO MESA HOLDINGS, L.P., a California limited partnership | ||
By: | PACIFIC SORRENTO MESA ASSETS, INC., a California corporation | |
Its: | General Partner | |
By: | /s/ Xxxx X. Xxxxxxxxxxx | |
Name: Xxxx X. Xxxxxxxxxxx | ||
Title: President |
[Signature Page to OP Forward Merger Agreement]
HILLSIDE 104, a California limited partnership | ||
By: | AMERICAN ASSETS, INC., a California corporation | |
Its: | General Partner | |
By: | /s/ Xxxx X. Xxxxxxxxxxx | |
Name: Xxxx X. Xxxxxxxxxxx | ||
Title: Chief Executive Officer |
[Signature Page to OP Forward Merger Agreement]
HILLSIDE 276, a California limited partnership | ||
By: | AMERICAN ASSETS, INC., a California corporation | |
Its: | General Partner | |
By: | /s/ Xxxx X. Xxxxxxxxxxx | |
Name: Xxxx X. Xxxxxxxxxxx | ||
Title: Chief Executive Officer |
[Signature Page to OP Forward Merger Agreement]
DESERT HILLSIDE HOLDINGS, LLC, a Delaware limited partnership | ||
By: | HILLSIDE 380, a California general partnership | |
Its: | General Partner | |
By: |
a Maryland corporation | |
Its: | Attorney-in-Fact | |
By: | /s/ Xxxx X. Xxxxxxxxxxx | |
Name: Xxxx X. Xxxxxxxxxxx | ||
Title: President |
[Signature Page to OP Forward Merger Agreement]
BWH HOLDINGS, LLC, a Delaware limited liability company | ||
By: | PACIFIC SORRENTO MESA HOLDINGS, L.P., a California limited partnership | |
Its: | Member | |
By: | PACIFIC SORRENTO MESA ASSETS, INC., a California corporation | |
Its: | General Partner | |
By: | /s/ Xxxx X. Xxxxxxxxxxx | |
Name: Xxxx X. Xxxxxxxxxxx | ||
Title: President | ||
BWH HOLDINGS, LLC, a Delaware limited liability company | ||
By: | PACIFIC STONECREST HOLDINGS, L.P., a California limited partnership | |
Its: | Member | |
By: | PACIFIC STONECREST ASSETS, INC., a California corporation | |
Its: | General Partner | |
By: | /s/ Xxxx X. Xxxxxxxxxxx | |
Name: Xxxx X. Xxxxxxxxxxx | ||
Title: President |
[Signature Page to OP Forward Merger Agreement]
WAIKELE CENTER HOLDINGS, LP, a California limited partnership | ||
By: | WAIKELE CENTER ASSETS, INC., a California corporation | |
Its: | General Partner | |
By: | /s/ Xxxx X. Xxxxxxxxxxx | |
Name: Xxxx X. Xxxxxxxxxxx | ||
Title: President |
[Signature Page to OP Forward Merger Agreement]
Schedule I
List of Forward OP Merger Entities:
1. | Solana Beach Towne Centres Investments, L.P. |
2. | Pacific San Xxxx Holdings, L.P. |
3. | Pacific Sorrento Mesa Holdings, L.P. |
4. | Hillside 104, a California limited partnership |
5. | Hillside 276, a California limited partnership |
6. | Desert Hillside Holdings, LLC |
7. | BWH Holdings, LLC |
8. | Waikele Center Holdings, LP |
List of Forward REIT Merger Entities:
1. | Pacific Stonecrest Assets, Inc. |
2. | Pacific National City Assets, Inc. |
3. | Western Assets, Inc. |
4. | Pacific Towne Centre Assets, Inc. |
5. | Pacific Oceanside Assets, Inc. |
6. | Pacific San Xxxx Assets, Inc. |
7. | KMBC Assets, Inc. |
8. | Hero Retail, Inc. |
9. | Pacific Sorrento Valley Assets I, Inc. |
10. | Pacific Sorrento Mesa Assets, Inc. |
11. | Beach Walk Assets, Inc. |
12. | ICW Plaza, Inc. [d/b/a Delaware ICW Plaza, Inc.] |
13. | ICW Valencia, Inc. |
14. | Pacific Torrey Reserve Assets, Inc. |
15. | Landmark Assets, Inc. |
16. | Landmark One Market, Inc. |
17. | Pacific Novato Assets, Inc. |
18. | Waikele Center Assets, Inc. |
List of OP Sub Forward Merger Entities:
1. | Pacific Stonecrest Holdings, L.P. |
2. | Rancho Carmel Plaza, a California limited partnership |
3. | Pacific Oceanside Holdings, L.P. |
4. | Kearny Mesa Business Center, a California limited partnership |
5. | Del Monte Center Holdings, LP |
6. | Beach Walk Holdings, LP |
7. | ICW Plaza, L.P., a California limited partnership |
8. | ICW Valencia, L.P. |
9. | Desert Oceanside Holdings, LLC |
10. | San Diego Loma Palisades, L.P. |
List of OP Sub Reverse Merger Entities:
1. | Pacific Waikiki Holdings, L.P. |
2. | ABW Xxxxxx LLC |
3. | King Street Holdings, LP |
4. | Loma Palisades, a California general partnership |
List of REIT Sub Forward Merger Entities:
1. | Pacific Del Mar Assets, Inc. |
2. | Pacific Carmel Mountain Assets, Inc. |
3. | Pacific Solana Beach Assets, Inc. |
4. | Pacific Waikiki Assets, Inc. |
5. | King Street Assets, Inc. |
6. | Pacific Sorrento Valley Assets II, Inc. |
7. | Pacific Santa Fe Assets, Inc. |
List of Contributed Entities:
1. | American Assets Trust Management, LLC |
2. | Winrad Vista Hacienda, a California general partnership |
3. | Vista Hacienda, a California limited partnership |
4. | Pacific American Assets Holdings, L.P., a California limited partnership |
5. | Carmel Country Plaza, L.P. |
6. | Pacific Carmel Mountain Holdings, L.P. |
7. | Pacific National City Holdings, L.P. |
8. | Pacific Solana Beach Holdings, L.P. |
9. | Pacific San Xxxx Holdings, L.P. |
10. | Winrad Kearny Mesa Business Center, a California general partnership |
11. | Pacific Sorrento Valley Holdings I, L.P. |
12. | Pacific Sorrento Mesa Holdings, L.P. |
13. | Beach Walk Holdings, LP |
14. | ICW Plaza, L.P., a California limited partnership |
15. | ICW Valencia, L.P. |
16. | Pacific Sorrento Valley Holdings II, L.P. |
17. | EBW Hotel LLC |
18. | Imperial Strand, a California limited partnership |
19. | Winrad Imperial Strand, a California general partnership |
20. | San Diego Loma Palisades, L.P. |
21. | Mariner’s Point, LLC |
22. | Pacific Santa Fe Holdings, L.P. |
Schedule II
Reimbursement Agreements
1. | Letter Agreement by and among American Assets, Inc. and the Property Entities (as defined therein) dated May 17, 2010 |
Schedule III
Calculation of Equity Value
For purposes of all Formation Transaction Documentation, “Equity Value” of any Target Asset directly or indirectly owned by the American Assets Entity subject to such agreement shall be calculated pursuant to the formula set forth below. Capitalized terms used in this Schedule III shall have the meanings set forth below and capitalized terms used herein without definition shall have the meanings assigned to such terms in the Agreement.
EV = EP × [TFTV-TPA]+AA;
where:
EV = Equity Value;
EP = Equity Percentage;
TFTV= Total Formation Transaction Value;
TPA = Total Portfolio Adjustment; and
AA = Asset Adjustment;
provided, however, that if the resulting Equity Value for a Target Asset is a negative amount (a “Net Deficit”), then the REIT shall exercise one of the following options, as determined by the REIT in its sole and absolute discretion: (i) select the Target Asset as an Eliminated Asset or (ii) if one or more entities that are subject to the Formation Transaction Documentation that are the direct or indirect owners of such Target Asset would otherwise possess Excluded Assets the value of which in the aggregate would equal or exceed the amount of such Net Deficit, increase the Target Net Working Capital with respect to such entity or entities by the absolute value of such Net Deficit; and provided further that if the REIT shall have exercised option (ii) with respect to any Target Asset, the Equity Value with respect to such Target Asset shall be deemed to be equal to zero;
provided further, that if the Equity Value for ICW Valencia/Valencia Corporate Center as calculated above would result in the holders of direct or indirect Pre-Formation Interests in ICW Valencia, L.P. having an amount of Allocated Shares, prior to the application of the Intercompany Debt Adjustments, that is less than the value of the Intercompany Debt owed by ICW Valencia, L.P. to ICW Plaza, L.P. (such shortfall being referred to as the “Intercompany Debt Shortfall”), then (i) Western Insurance Holdings, Inc. shall issue a promissory note with a term of three years to ICW Valencia, L.P. which shall be treated as an Asset Adjustment with respect to ICW Valencia/Valencia Corporate Center and such promissory note (the “WIH Note”) shall have such face amount as shall be necessary to increase the Equity Value of ICW Valencia/Valencia Corporate Center such that the Allocated Shares of holders of direct or indirect Pre-Formation Interests in ICW Valencia, L.P. shall increase by an amount, prior to the application of the Intercompany Debt Adjustments, equal to the Intercompany Debt Shortfall and (ii) the Equity Value for ICW Valencia/Valencia Corporate Center shall be recalculated to give effect to the Asset Adjustment attributable to the issuance of the WIH Note.
Attached as Appendix A to this Schedule III are illustrative calculations of Equity Value for a hypothetical portfolio of Target Assets.
“Actual Balance” shall mean: (i) with respect to each Existing Loan to be assumed in connection with the IPO, the unpaid principal amount of and past due unpaid interest on such Existing Loan as of the IPO Closing Date and immediately prior to any such assumption and all assumption fees and any related expenses with respect to such Existing Loan; and (ii) with respect to each Existing Loan to be prepaid, repaid or refinanced in connection with the IPO, the unpaid principal amount of and past due unpaid interest on such Existing Loan as of the IPO Closing Date and immediately prior to any such prepayment, repayment or refinancing and any related prepayment penalties and any related expenses; provided, however, that in the event a Target Asset is not included in the Formation Transactions pursuant to a merger (or contribution of all direct or indirect Pre-Formation Interests in such Target Asset) but a portion of the direct or indirect Pre-Formation Interests in such Target Asset is otherwise contributed to the Operating Partnership or a subsidiary of the Operating Partnership, then the Actual Balance for such Target Asset shall be proportionately adjusted to take into account the portion of the direct or indirect Pre-Formation Interests in such Target Asset that will not be so contributed. With respect to each Existing Loan to be assumed, prepaid, repaid or refinanced in connection with the Formation Transactions, the Actual Balance as of the Closing Date shall be determined by the REIT within forty five (45) days prior to the date of the preliminary prospectus used in the IPO roadshow based on its good faith estimate of what such amounts will be as of the IPO Closing Date.
“Asset Adjustment” shall mean with respect to each Target Asset and any Existing Loan relating to such Target Asset, an amount equal to the Base Balance minus the Actual Balance (expressed as a positive or negative number, as applicable) with respect to all Existing Loans relating to such Target Asset, and in the case of ICW Valencia/Valencia Corporate Center, the face value of the WIH Note shall be deemed to reduce the Actual Balance of the Existing Loan relating to ICW Valencia/Valencia Corporate Center.
“Base Balance” shall mean with respect to each Existing Loan, the principal amount of such Existing Loan set forth on Appendix C to this Schedule III; provided, however, that in the event a Target Asset is not included in the Formation Transactions pursuant to a merger (or contribution of all direct or indirect Pre-Formation Interests in such Target Asset) but a portion of the direct or indirect Pre-Formation Interests in such Target Asset is otherwise contributed to the Operating Partnership or a subsidiary of the Operating Partnership, then the Base Balance for such Target Asset shall be proportionately adjusted to take into account the portion of the direct or indirect Pre-Formation Interests in such Target Asset that will not be so contributed.
“Eliminated Asset” shall mean any Target Asset subject to the Formation Transaction Documentation that is excluded pursuant to the terms of the Formation Transaction Documentation from the Formation Transactions.
“Equity Percentage” shall mean with respect to each Target Asset, the percentage (expressed as a decimal) set forth opposite the name of such Target Asset on Appendix B to this Schedule III (which percentage is based on the Fairness Opinion of Duff & Xxxxxx, LLC and represents such
Target Asset’s percentage of the net asset values of the Target Assets (other than the Management Company) and the net equity value of the Management Company, taken as a whole); provided, however, that in the event a Target Asset is selected as or otherwise becomes for any reason an Eliminated Asset, then: (i) the Equity Percentage for each remaining Target Asset shall be recalculated as a fraction, the numerator of which is the original Equity Percentage for such remaining Target Asset and the denominator of which is (A) 100 minus (B) the original Equity Percentage of the Eliminated Asset; and (ii) the Equity Percentage of the Eliminated Asset shall be zero; and provided, further, that in the event a Target Asset is not included in the Formation Transactions pursuant to a merger (or contribution of all direct or indirect Pre-Formation Interests in such Target Asset) but a portion of the direct or indirect Pre-Formation Interests in such Target Asset is otherwise contributed to the Operating Partnership or a subsidiary of the Operating Partnership, then, after giving effect to any Eliminated Assets pursuant to the preceding proviso, the Equity Percentage for such Target Asset and for each other remaining Target Asset subject directly or indirectly to the Formation Transaction Documentation shall be proportionately adjusted to take into account the portion of the direct or indirect Pre-Formation Interests in such Target Asset that will not be so contributed.
“Excluded Assets” has the meaning set forth in Section 5.03 to the Agreement.
“Existing Loan” shall mean (i) each mortgage or mezzanine loan secured by a Target Asset listed on Appendix C to this Schedule III and (ii) all unsecured indebtedness of an American Assets Entity or of an entity in which an American Assets Entity has a direct or indirect interest that will be assumed, prepaid, repaid or refinanced in connection with the IPO and that is set forth on Appendix D to this Schedule III (all indebtedness falling within the scope of this clause (ii) shall be referred to as “Entity Specific Debt”); for the avoidance of doubt, no Intercompany Debt shall constitute an Existing Loan (in order to avoid double counting, as Intercompany Debt is adjusted for through the definition of “Allocated Share”). Existing Entity Specific Debt will be deemed to relate to the Target Asset(s) and, if to multiple Target Assets, in the proportions set forth opposite the name of such Entity Specific Debt on Appendix D to this Schedule III, and all such Entity Specific Debt will be deemed to have a Base Balance of zero (because “Equity Percentage” as determined by Duff & Xxxxxx, LLC was determined at the property level and did not take into account Entity Specific Debt, Entity Specific Debt is deemed to be zero in order to cause a readjustment of “Equity Value” of all Target Assets after taking into account such Entity Specific Debt).
“Target Asset” shall mean each property set forth on Appendix B to this Schedule III and the property management business of American Assets, Inc. (the “Management Company”).
“Target Net Working Capital” has the meaning set forth in Schedule 5.03 to the Agreement.
“Total Portfolio Adjustment” shall mean the sum (which may be a positive or negative number) of all Asset Adjustments for every Target Asset, excluding Eliminated Assets.
“Total Formation Transaction Value” shall mean the aggregate dollar value of (i) the cash, (ii) the REIT Shares and (iii) the OP Units that are issued or issuable to all Pre-Formation Participants in the Formation Transactions as set forth in the Prospectus. Total Formation Transaction Value will be determined valuing REIT Shares and OP Units at a value per REIT Share or OP Unit equal to the IPO Price.
EXHIBITS
Exhibit A: | Formation Transaction Documentation | |
Exhibit B: | Operating Partnership Agreement | |
Exhibit C: | Form of Registration Rights Agreement | |
Exhibit D: | Order of Mergers | |
Exhibit E: | Form of Tax Protection Agreement | |
Exhibit F: | Lock-Up Agreement |
Exhibit A
Formation Transaction Documentation
Form of Forward REIT Merger Agreement
Form of REIT Sub Forward Merger Agreement
Form of Forward OP Merger Agreement
Form of OP Sub Forward Merger Agreement
Form of OP Sub Reverse Merger Agreement
Form of OP Contribution Agreement
Form of OP Sub Contribution Agreement
Form of Alternate Contribution Agreement
Form of Tax Protection Agreement
Amended and Restated Agreement of Limited Partnership of American Assets Trust, L.P.
Registration Rights Agreement
Representation, Warranty and Indemnity Agreement
Indemnity Escrow Agreement
Lock-Up Agreement
Articles of Amendment and Restatement of American Assets Trust, Inc.
Bylaws of American Assets Trust, Inc.
Management Business Contribution Agreement
Exhibit B
Operating Partnership Agreement
See Attached.
Exhibit C
Form of Registration Rights Agreement
See Attached.
Exhibit D
Order of Mergers
Each step within each “Transaction Step” below must be completed before the transactions in the following “Transaction Step” may be completed. All transactions within each “Transaction Step” may be completed simultaneously or in any order.
Transaction Step 1
All Forward REIT Mergers
All REIT Sub Forward Mergers
Transaction Step 2
All Contributions to the OP (including the REIT’s contribution to the OP of the assets acquired in Step 1)
Transaction Step 3
All Contributions to subsidiaries of the OP (including, where applicable, the OP’s contribution to the applicable subsidiary of assets acquired in Step 2)
Transaction Step 4
All OP Forward Mergers except the OP Forward Merger set forth in Transaction Step 5 and Transaction Step 7 below
Transaction Step 5
Forward Merger of Desert Hillside Holdings LLC with and into the Operating Partnership
Transaction Step 6
All OP Sub Forward Mergers except the OP Sub Forward Merger set forth in Transaction Step 7 below
Transaction Step 7
Forward Merger of BWH Holdings LLC with and into the Operating Partnership
Forward Merger of Desert Oceanside Holdings LLC with and into Pacific Oceanside Holdings LLC.
Transaction Step 8
All OP Sub Reverse Mergers
Exhibit E
Form of Tax Protection Agreement
See Attached.
Exhibit E
Lock-Up Agreement
See Attached.