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INLAND AMERICAN REAL ESTATE TRUST, INC. FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Change in Directors or Principal Officers, Regulation FD Disclosure, Financial Statements and Exhibits(Edgar Glimpses Via Acquire Media NewsEdge) Item 1.01. Entry into a Material Definitive Agreement. On September 17, 2014, Inland American Real Estate Trust, Inc., a Maryland corporation (the "Company"), IHP I Owner JV, LLC, a Delaware limited liability company ("IHP I"), IHP West Homestead (PA) Owner LLC, a Delaware limited liability company ("IHP West", and together with IHP I, the "Buyers"), and Northstar Realty Finance Corp., a Maryland corporation and affiliate of the Buyers ("Buyer Parent"), entered into an Asset Purchase Agreement (the "Purchase Agreement") pursuant to which the Company has agreed to cause its subsidiaries to sell to the Buyers (the "Sale") the Company's suburban select service hotel portfolio consisting of 52 properties and certain related hotel assets (the "Portfolio") in an all-cash transaction valued at approximately $1.071 billion, with net proceeds to the Company anticipated to be approximately $480.0 million after prepayment of indebtedness and related costs. Buyer Parent, a publicly-traded real estate investment company having shares listed on the New York Stock Exchange, has guaranteed all of the Buyers' obligations under the Purchase Agreement. In connection with entering into the Purchase Agreement, the Buyers have also deposited $50 million in cash in escrow which will be applied to the cash proceeds payable to the Company upon the consummation of the Sale. The board of directors of the Company has unanimously approved the execution, delivery and performance of the Purchase Agreement, the Sale and the other transactions contemplated by the Purchase Agreement. The Sale is expected to be consummated within 60 days after September 17, 2014, subject to acceleration or extension, as applicable, depending on the time at which certain closing conditions are satisfied. The completion of the Sale is subject to customary closing conditions including receipt of consents or waivers from certain third parties consisting primarily of the management companies and franchisors party to the management agreements and franchise agreements applicable to certain of the hotels in the Portfolio (to the extent such agreements are not terminated by the Buyers), or with respect to certain hotels, the entry into new franchise agreements by the Buyers or their affiliates and the applicable franchisor. The purchase price will be adjusted for customary prorations. With respect one of the properties in the Portfolio, if the requisite third party consent is not obtained prior to the time that all other closing conditions have been met, such property will be excluded from the Portfolio and the purchase price will be reduced by approximately $21.16 million. The Purchase Agreement contains representations, warranties, covenants and agreements among the parties that are customary for an arm's length acquisition agreement, including, without limitation, requirements for the ordinary course of operation of the hotels included in the Portfolio by the Company and its subsidiaries prior to the closing, exercise of reasonable efforts by the Company and the Buyers to obtain third party consents required under the Purchase Agreement, reasonable efforts by the Buyers to enter into new franchise agreements, where applicable, adherence by the parties to covenants of confidentiality regarding the transaction, and agreements of limited reciprocal indemnification. In addition, the representations, warranties, covenants and agreements are qualified by and subject to exceptions and other limitations contained in the Purchase Agreement and the schedules thereto. The representations and warranties in the Purchase Agreement are the product of negotiation among the parties to the Purchase Agreement and are for the sole benefit of such parties. Any inaccuracies of such representations and warranties or breaches of covenants are subject to waiver by the parties in accordance with the Purchase Agreement. The Purchase Agreement contains limited termination rights for both the Company and the Buyers, including, among other bases for termination if the closing is not consummated on or before June 17, 2015 (so long as the party electing to terminate the Purchase Agreement at such time is not in breach of the Purchase Agreement). The Purchase Agreement contains customary indemnification obligations of each party with respect to breaches of their respective representations, warranties, covenants and agreements, and certain other designated matters. The Company's indemnification obligations are subject to a minimum claim threshold of $50,000, a deductible representing 0.75% of the purchase price (approximately $8.03 million) and a cap representing 3% of the purchase price (approximately $32.13 million), which deductible and cap do not apply to breaches of certain fundamental representations and warranties by the Company. A copy of the Purchase Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference. The foregoing description of the Purchase Agreement and the Sale does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement. The Purchase Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company or the Buyers. In particular, the assertions embodied in the representations and warranties in the Purchase Agreement were made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders, or may have been used for the purpose of allocating risk between the parties. Information concerning the subject matter of the representations, warranties and -------------------------------------------------------------------------------- covenants may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures by the Company. Accordingly, investors should not rely on the representations and warranties in the Purchase Agreement as they are not necessarily characterizations of the actual state of facts or condition of the Company, the Buyers or any of their respective subsidiaries and affiliates. The representations and warranties should only be read in conjunction with the other information that the Company makes publicly available in reports, statements and other documents filed with the Securities and Exchange Commission. Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. Share Unit Plans On September 17, 2014, the board of directors of the Company adopted the following three incentive compensation plans (the "Share Unit Plans"): (1) the Inland American Real Estate Trust, Inc. 2014 Share Unit Plan (the "Retail Plan"), with respect to the Company's retail business; (2) the Xenia Hotels & Resorts, Inc. 2014 Share Unit Plan (the "Lodging Plan"), with respect to the Company's lodging business; and (3) the Inland American Communities Group, Inc. 2014 Share Unit Plan (the "Student Housing Plan"), with respect to the Company's student housing business. Each Share Unit Plan provides for the grant of notional "share unit" awards to eligible participants. Share Units. Subject to applicable vesting conditions, each share unit represents the right to receive a cash payment, or, to the extent provided in the applicable award agreement, shares of common stock of the Company, Xenia Hotels & Resorts, Inc. ("Xenia") or Inland American Communities Group, Inc. ("IA Communities"), as applicable, in an amount equal to the fair market value of the share unit on a specified date. Share unit awards will vest and become payable on terms and conditions determined by the plan administrator and set forth in the applicable award agreement, including by reference to certain change in control transactions or specified events resulting in a listing of the applicable entity's shares on a national securities exchange (including an initial public offering) ("Listing Events"). A "change in control" under the Lodging Plan and the Student Housing Plan includes a change in control of the Company, in addition to a change in control of Xenia or IA Communities, as applicable. A "change in control" under the Retail Plan includes only a change in control of the Company. For purposes of each Share Unit Plan, the "fair market value" of a share unit will be determined by the board of directors in good faith, and prior to a Listing Event, will be determined by reference to the valuation performed as of December 31, 2013, or such other subsequent similar third party valuation performed to estimate the value of a share unit on a fully diluted basis, using methodologies and assumptions substantially similar to those used in prior valuations. Share Unit Pool. Each Share Unit Plan provides that a pool of share units will be available for awards issued thereunder. The initial share unit pools for each plan are as follows: 342,255,525 Company share units for the Retail Plan, 241,298,214 Xenia share units for the Lodging Plan, and 46,042,546 IA Communities share units for the Student Housing Plan. The pool of share units available for each Share Unit Plan may be increased at the discretion of the board of directors of the Company at any time. Eligibility. Employees, directors and consultants of the Company and its subsidiaries and affiliates are eligible to receive awards under the Retail Plan. Employees, directors and consultants of Xenia and its subsidiaries and affiliates are eligible to receive awards under the Lodging Plan. Employees, directors and consultants of IA Communities and its subsidiaries and affiliates are eligible to receive awards under the Student Housing Plan. Each of Xenia and IA Communities is currently a wholly-owned subsidiary of the Company. Administration. Each Share Unit Plan provides that it will initially be administered by the board of directors of the Company or a committee of the board. The Lodging Plan and the Student Housing Plan further provide that following a change in control or Listing Event, the plan will be administered by the board of directors of Xenia or IA Communities, respectively, or a committee thereof. The compensation committee of the board of directors of the Company has been delegated the authority to administer each of the Share Unit Plans. -------------------------------------------------------------------------------- Certain Transactions. The number of share units subject to each award under the Share Unit Plans may be adjusted as determined necessary by the board of directors to prevent dilution or enlargement of value as a result of intercompany transfers of cash, assets or debt between the Company, Xenia and IA Communities and their affiliates for no consideration or other similar transactions. In addition, in the event of certain transactions and events affecting the share units, such as equity dividends or splits, reorganizations, recapitalizations, mergers and other corporate transactions, the plan administrator, in its discretion, will make such adjustments as it deems equitable to the applicable Share Unit Plan and the awards thereunder. Dividend Equivalents. Participants will be entitled to accrue dividend equivalents with respect to share unit awards solely to the extent provided under the terms of an applicable award agreement. Parachute Payment Limitations. Each Share Unit Plan provides that, to the extent that any payment or benefit paid or distributed to a participant under a Share Unit Plan or an applicable award agreement would be subject to an excise tax under Section 4999 of the Internal Revenue Code, such payments and/or benefits will be subject to a "best pay cap" reduction if such reduction would result in a greater net after-tax benefit to the participant than receiving the full amount of such payments. Transferability. Awards under the Share Unit Plans are generally non-transferable and non-assignable, other than by will or the laws of descent and distribution. Amendment and Termination. The Share Unit Plans and share unit awards may be amended, altered, cancelled or terminated by the plan administrator at any time, provided that no change to the Share Unit Plans or any outstanding award may be made that would reasonably be expected to have an adverse effect on the rights of a holder of an existing award without the consent of the affected holder. Share Unit Awards On September 17, 2014, the board of directors of the Company approved awards under the Share Unit Plans to the Company's executive officers, including Thomas McGuinness, Jack Potts, Michael Podboy, Marcel Verbaas and Barry Bloom, in the form of "annual share unit" awards, "contingency share unit" awards, and "transaction share unit" awards. The terms of each type of award will be set forth in an award agreement on the form approved by the board of directors of the Company on September 17, 2014 (the "Share Unit Award Agreements"). The following is a brief description of the material terms and conditions of the share unit awards. Annual Share Unit Award Vesting and Settlement. Each "annual share unit" award (an "Annual Share Unit Award") will vest and be settled on the later to occur of (i) the date of a change in control of the Company, Xenia or IA Communities, as applicable, or a Listing Event with respect to the shares of common stock of the Company, Xenia, or IA Communities, as applicable, and (ii) the third anniversary of the vesting commencement date of the award, subject to the participant's continued employment through the applicable settlement date, provided that in no event will the Annual Share Unit Awards vest or be settled unless such a change in control or Listing Event occurs on or before the fifth anniversary of the vesting commencement date of the award. In the case of a Listing Event, the Annual Share Unit Award will be settled in shares of common stock of the . . . Item 7.01. Regulation FD Disclosure. On September 18, 2014, the Company issued a press release announcing its entry into the Purchase Agreement. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. The information in this Item 7.01 disclosure, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed incorporated by reference into any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Forward-Looking Statements This Current Report on Form 8-K contains "forward-looking statements," which are not historical facts, within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements about the number of properties that will be sold in the transaction, the anticipated cash proceeds from the transaction and the anticipated timing of the closing. Our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," "continue," "likely," "will," "would" and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, among other things, our ability to obtain third party consents and the timing of such consents; purchase price adjustments in accordance with the terms of the Purchase Agreement; indemnification obligations; and the risks discussed in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"), including our Annual Report on Form 10-K, which filings are available from the SEC. We caution you not to place undue reliance on any forward-looking statements, which are made as of the date of this Current Report on Form 8-K. We undertake no obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. -------------------------------------------------------------------------------- Item 9.01. Financial Statements and Exhibits. (d) Exhibits Exhibit No. Description 10.1 Asset Purchase Agreement, dated as of September 17, 2014, by and among Inland American Real Estate Trust, Inc., IHP I Owner JV, LLC, IHP West Homestead (PA) Owner LLC and Northstar Realty Finance Corp. 10.2 The Xenia Hotels & Resorts, Inc. 2014 Share Unit Plan 10.3 The Inland American Real Estate Trust, Inc. 2014 Share Unit Plan 10.4 The Inland American Communities Group, Inc. 2014 Share Unit Plan 10.5 Form of Xenia Hotels & Resorts, Inc. Share Unit Award Agreement (Annual Award) 10.6 Form of Inland American Real Estate Trust, Inc. Share Unit Award Agreement (Annual Award) 10.7 Form of Inland American Communities Group, Inc. Share Unit Award Agreement (Annual Award) 10.8 Form of Xenia Hotels & Resorts, Inc. Share Unit Award Agreement (Contingency) 10.9 Form of Inland American Real Estate Trust, Inc. Share Unit Award Agreement (Contingency) 10.10 Form of Inland American Communities Group, Inc. Share Unit Award Agreement (Contingency) 10.11 Form of Xenia Hotels & Resorts, Inc. Share Unit Award Agreement (Transaction) 10.12 Form of Inland American Communities Group, Inc. Share Unit Award Agreement (Transaction) 99.1 Press Release of Inland American Real Estate Trust, Inc., dated September 18, 2014 (furnished pursuant to Item 7.01) -------------------------------------------------------------------------------- |