DEF 14A 1 mpg20137172013def14a.htm DEF 14A MPG 2013 7.17.2013 DEF 14A


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
 
 
o  
Preliminary Proxy Statement
 
 
o  
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x  
Definitive Proxy Statement
 
 
o  
Definitive Additional Materials
 
 
o  
Soliciting Material Pursuant to §240.14a-12
 
 
MPG OFFICE TRUST, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
o  
No fee required.
o  
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
(1) 
Title of each class of securities to which transaction applies:
 
 
 
 
(2) 
Aggregate number of securities to which transaction applies:
 
 
 
 
(3) 
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0‑11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
 
 
 
(4) 
Proposed maximum aggregate value of transaction:
 
 
 
 
(5) 
Total fee paid:
 
 
 
x  
Fee paid previously with preliminary materials.
 
o  
Check box if any part of the fee is offset as provided by Exchange Act Rule 0‑11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
(1) 
Amount Previously Paid:
 
 
 
 
(2) 
Form, Schedule or Registration Statement No.:
 
 
 
 
(3) 
Filing Party:
 
 
 
 
(4) 
Date Filed:
 






June 7, 2013


Dear Stockholder:

You are cordially invited to attend a special meeting of stockholders of MPG Office Trust, Inc., a Maryland corporation (“the Company”), to be held at 8:00 A.M., local time, on Wednesday, July 17, 2013, at the Omni Los Angeles Hotel, 251 South Olive Street, Los Angeles, California 90012.

On April 24, 2013, the Company and MPG Office, L.P. entered into a merger agreement with Brookfield DTLA Holdings LLC, a Delaware limited liability company (which was converted from a Delaware limited partnership on May 10, 2013), Brookfield DTLA Fund Office Trust Investor Inc., Brookfield DTLA Fund Office Trust Inc. and Brookfield DTLA Fund Properties LLC, pursuant to which, among other things, the Company agreed to merge with and into Brookfield DTLA Fund Office Trust Inc. (the “merger”). At the special meeting of stockholders, we will ask you to consider and vote on the approval of the merger and the other transactions contemplated by the merger agreement. We will also solicit for approval to adjourn the special meeting to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger and the other transactions contemplated by the merger agreement. In addition, we will solicit stockholder approval, on an advisory (non-binding) basis, of certain compensation that may be paid or become payable to the Company’s named executive officers in connection with the consummation of the merger (which we refer to as the “merger-related compensation”).

Upon completion of the merger, our common stockholders will receive consideration of $3.15 for each share of common stock held at the effective time of the merger, in cash, without interest and less any required withholding tax. On June 7, 2013, the last trading day prior to the printing of the proxy statement that accompanies this letter, the closing price of our common stock on the New York Stock Exchange was $3.11 per share. Upon completion of the merger, our minority operating partnership unit holders will receive consideration of $3.15 for each operating partnership unit held at the effective time of the merger, in cash, without interest and less any required withholding tax. Upon completion of the merger, each share of 7.625% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share, of the Company (which we refer to as “Company preferred shares”) outstanding immediately prior to the effective time of the merger will automatically, and without a vote by Company preferred stockholders, be converted into, and canceled in exchange for one share of 7.625% Series A Cumulative Redeemable Preferred Stock of Brookfield DTLA Fund Office Trust Investor Inc. (the “Sub REIT preferred shares”), without interest and less any required withholding tax. The merger agreement also contemplates that an entity affiliated with Brookfield Office Properties Inc. (“BPO”) will commence a tender offer to acquire up to all of the Company preferred shares outstanding immediately prior to the effective time of the merger at a price per share equal to $25.00, payable net to the seller in cash, without interest and less any withholding tax required by applicable law. For the sake of clarity, Company preferred shares that are not tendered pursuant to this tender offer will not be cashed out in the merger,




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June 7, 2013



but will instead be converted into Sub REIT preferred shares. The Sub REIT preferred shares will be issued by Brookfield DTLA Fund Office Trust Investor Inc., an entity affiliated with BPO. However, BPO is not an obligor of, and is not required to provide credit support for, the Sub REIT preferred shares.

After careful consideration, including the fact that the merger agreement resulted from a third‑party solicitation and negotiation process lasting more than eight months, during which more than 90 potential investors and sponsors were contacted, of which 26 executed confidentiality agreements, 12 participated in property tours of the Company’s assets and four submitted preliminary bids, the board of directors unanimously approved the merger agreement and the merger and the other transactions contemplated by the merger agreement and determined that the merger is advisable and in the best interests of our company. The board of directors unanimously recommends that you vote FOR the proposal to approve the merger and the other transactions contemplated by the merger agreement. The board of directors also recommends that you vote FOR any proposed adjournments of the special meeting for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the merger and the other transactions contemplated by the merger agreement and FOR approval, on an advisory (non-binding) basis, of the merger-related compensation.

We cannot complete the merger unless the holders of at least two-thirds of our issued and outstanding shares of common stock entitled to vote at the special meeting vote to approve the merger and the other transactions contemplated by the merger agreement. The accompanying notice of special meeting of stockholders provides specific information concerning the special meeting. The enclosed proxy statement provides you with a summary of the merger, the merger agreement and the other transactions contemplated by the merger agreement and additional information about the parties to the merger agreement. We encourage you to read carefully the enclosed proxy statement and the merger agreement, a copy of which is included in the proxy statement as Annex A.

Some of our directors and executive officers and certain other persons have interests and arrangements that may be different from, or in addition to, and may conflict with, your interests as a stockholder of the Company. These interests are summarized in the section entitled “The Merger—Proposal 1—Interests of Our Directors and Executive Officers in the Merger” on page 68 of the enclosed proxy statement.

Your vote is very important. Whether or not you plan to attend the special meeting, please authorize a proxy to vote your shares as promptly as possible. To authorize a proxy, (i) complete, sign, date and mail your proxy card in the pre-addressed postage-paid envelope provided, (ii) call the toll free telephone number listed on your proxy card or (iii) use the Internet as described in the instructions on your proxy card. Authorizing a proxy will ensure that your vote is counted at the special meeting if you do not attend in person. If your shares of common stock are held in “street name” by your bank, brokerage firm or other nominee, only your bank, brokerage firm or other nominee can vote your shares of common stock and the vote cannot be cast unless you provide instructions to your bank, brokerage firm or other nominee on how to vote or obtain a legal proxy from your bank, brokerage firm or other nominee. You should follow the directions provided by your bank, brokerage firm or other nominee




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June 7, 2013



regarding how to instruct your bank, brokerage firm or other nominee to vote your shares of common stock. You may revoke your proxy at any time before it is voted by delivery of a properly executed, later-dated proxy or by attending the special meeting in person and notifying the chairman of the meeting that you would like your proxy revoked.


Sincerely,
Paul M. Watson
Chairman of the Board





NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JULY 17, 2013
June 7, 2013

To Our Stockholders:

NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of MPG Office Trust, Inc., a Maryland corporation (the “Company”), will be held at 8:00 A.M., local time, on Wednesday, July 17, 2013, at the Omni Los Angeles Hotel, 251 South Olive Street, Los Angeles, California 90012, for the following purposes:

1.    to consider and vote upon a proposal to approve the merger of the Company with and into Brookfield DTLA Fund Office Trust Inc. (“REIT Merger Sub”), with REIT Merger Sub as the surviving corporation (the “merger”), pursuant to the Agreement and Plan of Merger (as it may be amended from time to time, the “merger agreement”), dated as of April 24, 2013, by and among Brookfield DTLA Holdings LLC, a Delaware limited liability company (which was converted from a Delaware limited partnership on May 10, 2013) (“Brookfield DTLA”), Brookfield DTLA Fund Office Trust Investor Inc. (“Sub REIT”), REIT Merger Sub, Brookfield DTLA Fund Properties LLC (“Partnership Merger Sub”) (Brookfield DTLA, Sub REIT, REIT Merger Sub, Partnership Merger Sub, Brookfield Office Properties Inc. (“BPO”) and the tender offer purchaser (as defined below), collectively, the “Brookfield parties”), the Company, and MPG Office, L.P. (the “Partnership”, and together with the Company, the “MPG parties”), and the other transactions contemplated by the merger agreement, as more fully described in the enclosed proxy statement;

2.    to consider and vote upon any proposal to adjourn the special meeting to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger and the other transactions contemplated by the merger agreement;

3.    to consider and cast an advisory (non-binding) vote on a proposal to approve the merger-related compensation that may be paid or become payable to the Company’s named executive officers in connection with the merger (which we refer to as the “merger-related compensation”); and

4.    to transact such other business as may properly come before the special meeting or any adjournment or postponement thereof by or at the direction of our board of directors (the “Board”).

The Board has determined that the merger and the other transactions contemplated by the merger agreement are advisable and in the best interests of the Company on the terms set forth in the merger agreement and has approved the merger and the other transactions contemplated by the merger agreement. Accordingly, the Board recommends that you vote FOR approval of the merger and the other transactions contemplated by the merger agreement, FOR any proposal to adjourn the special meeting to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger and FOR approval, on an advisory (non-binding) basis, of the merger-related compensation.



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June 7, 2013


All common stockholders of record as of the close of business on May 24, 2013 are entitled to receive notice of, and to attend and vote at, the special meeting and any postponements or adjournments of the special meeting. Each stockholder is entitled to one vote for each share of common stock, par value $0.01 per share, of the Company (each a “Company common share”) owned as of the close of business on the record date. Approval of the merger and the other transactions contemplated by the merger agreement requires the affirmative vote of holders of at least two-thirds of the Company common shares that are issued and outstanding and entitled to vote at the special meeting. Accordingly, regardless of the number of Company common shares you own, your vote is important.

Whether or not you plan to attend the special meeting, please authorize a proxy to vote your shares as promptly as possible. To authorize a proxy, (i) complete, sign, date and mail your proxy card in the pre-addressed postage-paid envelope provided, (ii) call the toll free telephone number listed on your proxy card or (iii) use the Internet as described in the instructions on your proxy card. Authorizing a proxy will ensure that your vote is counted at the special meeting if you do not attend in person. If your Company common shares are held in “street name” by your bank, brokerage firm or other nominee, only your bank, brokerage firm or other nominee can vote your Company common shares and the vote cannot be cast unless you provide instructions to your bank, brokerage firm or other nominee on how to vote or obtain a legal proxy from your bank, brokerage firm or other nominee. You should follow the directions provided by your bank, brokerage firm or other nominee regarding how to instruct your bank, brokerage firm or other nominee to vote your Company common shares. You may revoke your proxy at any time before it is voted by delivery of a properly executed, later-dated proxy or by attending the special meeting in person and voting or notifying the chairman of the meeting that you would like your proxy revoked. By authorizing your proxy promptly, you can help us avoid the expense of further proxy solicitations.

Your attention is directed to the proxy statement accompanying this notice (including the exhibits thereto) for a more complete description of the matters proposed to be acted on at the special meeting. We encourage you to read this proxy statement carefully. If you have any questions or need assistance voting your shares, please call our proxy solicitor, MacKenzie Partners, Inc. (“MacKenzie Partners”) at (800) 322-2885.

The attached proxy statement is dated June 7, 2013 and is expected to be first mailed to common stockholders on or about June 10, 2013.


By Order of the Board of Directors,
Christopher M. Norton
Secretary






TABLE OF CONTENTS

 
Page
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

SUMMARY

Parties to the Merger
1

The Special Meeting
2

Record Date, Notice, Quorum and Mailing
3

Proxies; Revocation of Proxies
3

The Merger
4

Recommendation of the Board
5

Voting Requirements for the Proposals
6

Opinions of the Company’s Financial Advisors
7

Directors and Officers of the Surviving Corporation
8

Interests of Our Directors and Executive Officers in the Merger
8

Stock Ownership of Directors and Executive Officers
8

Delisting and Deregistration
8

No Dissenters’ or Appraisal Rights
8

Conditions to the Merger
9

Regulatory Approvals
9

Solicitation of Other Offers
10

Termination of the Merger Agreement; Payment of Termination Fees and Merger Expenses
11

Material U.S. Federal Income Tax Consequences of the Merger
12

Fees and Expenses
12

Litigation Relating to the Merger
13

Who Can Answer Other Questions
13

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

THE SPECIAL MEETING

Record Date, Notice and Quorum Requirement

Voting Required for Approval

Other Voting Matters

Abstentions and Broker Non-Votes

Manner of Authorizing a Proxy

Shares Held in “Street Name”

Revocation of Proxies or Voting Instructions

Tabulation of Votes

Solicitation of Proxies

THE MERGER – PROPOSAL 1

The Parties

General Description of the Merger


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TABLE OF CONTENTS (continued)

 
Page
Background of the Merger
Recommendation of the Board and Its Reasons for the Merger
Opinions of the Company’s Financial Advisors
Certain Prospective Financial Information Reviewed by the Company
Interests of Our Directors and Executive Officers in the Merger
Security Ownership of Our Directors and Executive Officers and Current Beneficial Owners
Regulatory Approvals
Delisting and Deregistration
Litigation Relating to the Merger
THE MERGER AGREEMENT
Form, Effective Time and Closing of the Merger
Organizational Documents of the Surviving Corporation and the Surviving Partnership
Directors and Officers of the Surviving Corporation
Merger Consideration; Effects of the Merger and the Partnership Merger
Representations and Warranties
Definition of Material Adverse Effect
Conditions to Completion of the Merger
Covenants
Solicitation of Other Offers; Recommendation Withdrawal; Termination in Connection with a Superior Proposal
Termination
Termination Payments and Expenses
Employee Benefits
Indemnification; Director and Officer Insurance
The Tender Offer
Miscellaneous Provisions
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
ADJOURNMENTS AND POSTPONEMENTS OF THE SPECIAL MEETING – PROPOSAL 2
ADVISORY VOTE ON MERGER-RELATED COMPENSATION – PROPOSAL 3
DISSENTERS’ RIGHTS OF APPRAISAL
STOCKHOLDER PROPOSALS
OTHER MATTERS
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Annex A – Agreement and Plan of Merger
A-1
Annex B – Waiver and First Amendment to Agreement and Plan of Merger
B-1
Annex C – Guarantee
C-1
Annex D – Opinion of Wells Fargo Securities, LLC
D-1
Annex E – Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
E-1


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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to address briefly some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a stockholder of the Company. Please refer to the “Summary” and the more detailed information contained elsewhere in this proxy statement, the exhibits to this proxy statement and the documents referred to in this proxy statement, which you should read carefully and in their entirety. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions under “Where You Can Find Additional Information” on page 118.

What am I being asked to vote on?

Holders of Company common shares are being asked to:

consider and vote upon Proposal 1, to approve the merger and the other transactions contemplated by the merger agreement;
consider and vote upon Proposal 2, to approve any adjournments of the special meeting for the purpose of soliciting additional proxies;
consider and vote upon Proposal 3, to approve on an advisory (non-binding) basis the merger-related compensation; and
transact any other business that may properly come before the special meeting or any adjournments or postponements of the special meeting by or at the direction of the Board.
What is the proposed merger transaction?

The Agreement and Plan of Merger (as it may be amended from time to time, the “merger agreement”), dated as of April 24, 2013, by and among Brookfield DTLA Holdings LLC, a Delaware limited liability company (which was converted from a Delaware limited partnership on May 10, 2013) (“Brookfield DTLA”), Brookfield DTLA Fund Office Trust Investor Inc. (“Sub REIT”), Brookfield DTLA Fund Office Trust Inc., a Maryland corporation (“REIT Merger Sub”), Brookfield DTLA Fund Properties LLC (“Partnership Merger Sub”) (Brookfield DTLA, Sub REIT, REIT Merger Sub, Partnership Merger Sub, Brookfield Office Properties Inc. (“BPO”) and the tender offer purchaser (as defined below), collectively, the “Brookfield parties”), the Company, and MPG Office, L.P. (the “Partnership”, and together with the Company, the “MPG parties”) provides that the Company will merge with and into REIT Merger Sub. REIT Merger Sub will be the surviving corporation in the merger and will continue to do business following the merger. As a result of the merger, the Company common shares will be delisted from the New York Stock Exchange (the “NYSE”) and the Company will cease to be a publicly traded company. If the merger is completed, you will not own any shares of the capital stock of the surviving corporation. For additional information about the merger, please review the merger agreement attached to this proxy statement as Annex A and incorporated by reference into this proxy statement. We encourage you to read the merger agreement carefully and in its entirety, as it is the principal document governing the merger and the other transactions contemplated by the merger agreement.


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What will I receive in the merger?

You will be entitled to receive $3.15 in cash per share (the “merger consideration”), without interest and less any required withholding tax, for each outstanding Company common share that you own as of the effective time of the merger. The merger consideration is fixed and will not be adjusted for changes in the trading price of the Company common shares. For example, if you own 100 Company common shares, you will receive $315.00 in cash in exchange for your Company common shares, less any required withholding taxes. You will not own any shares of capital stock in the surviving corporation.

What is the location, date and time of the special meeting?

The special meeting will be held at 8:00 A.M., local time, on Wednesday, July 17, 2013, at the Omni Los Angeles Hotel, 251 South Olive Street, Los Angeles, California 90012.

Who is entitled to vote at the special meeting?

Only our common stockholders of record at the close of business on May 24, 2013 (the “record date”) are entitled to attend the special meeting and to vote the shares that they held on that date at the special meeting, or any postponements or adjournments of the special meeting. Each stockholder has one vote for each Company common share owned at the close of business on the record date. As of the record date, there were 57,335,249 Company common shares outstanding and entitled to vote at the special meeting.

How many votes must be present to hold the special meeting?

A majority of the outstanding Company common shares entitled to vote at the special meeting, represented in person or by proxy, will constitute a quorum. Company common shares represented in person or by proxy, including abstentions and broker non-votes, will be counted for determining whether a quorum is present. A broker non-vote is a vote that is not cast on a non-routine matter because the shares entitled to cast the vote are held in street name, the broker lacks discretionary authority to vote the shares and the broker has not received voting instructions from the beneficial owner.

What vote is required to approve the merger and the other transactions contemplated by the merger agreement?

Approval of the merger and the other transactions contemplated by the merger agreement requires the affirmative vote of the holders of at least two-thirds of our Company common shares that are issued and outstanding and entitled to vote at the special meeting. We urge you to authorize your proxy by (i) completing, signing, dating and mailing your proxy card in the pre-addressed postage-paid envelope provided, (ii) calling the toll free telephone number listed on your proxy card or (iii) using the Internet as described in the instructions on your proxy card to assure the voting of your shares at the special meeting.

What vote is required to approve an adjournment of the special meeting?

Approval of any adjournment of the special meeting to solicit additional proxies requires the affirmative vote of a majority of the votes cast on such proposal.


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What vote is required to approve, on an advisory (non-binding) basis, the merger-related compensation?

The affirmative vote of a majority of the votes cast on such proposal is required for approval of the advisory (non-binding) proposal on merger-related compensation.

Will any other matters be voted on at the special meeting?

As of the date of this proxy statement, our management knows of no other matters that will be presented for consideration at the special meeting other than those matters discussed in this proxy statement.

What is the premium to the market price of Company common shares offered in the merger?

The $3.15 cash per share merger consideration represents an approximate 21% premium to the closing price of our Company common shares on April 24, 2013, the last full trading day before we announced entry into the merger agreement with certain of the Brookfield parties, and a 15% premium over the volume-weighted average closing price of our Company common shares over the three-month trading period ended April 24, 2013. In addition, the cash per share merger consideration represents an approximate 64% premium to the closing price of our Company common shares on June 22, 2012, the day the Board approved engaging financial advisors to assist the Company in a potential strategic transaction.

If the merger is completed, when can I expect to receive the merger consideration for my Company common shares?

As soon as practicable after the completion of the merger, you will receive (i) a letter of transmittal describing how you may exchange your Company common shares for the merger consideration and (ii) instructions for use in effecting the surrender of any stock certificates held by you. At that time, if you have physical possession of any Company stock certificates, you must send those stock certificates with your completed letter of transmittal to the paying agent. You should not send your stock certificates to us or anyone else until you receive these instructions. You will receive payment of the merger consideration, without interest and less any required withholding tax, after the paying agent receives from you a properly completed letter of transmittal, together with your stock certificates. If you hold your Company common shares in “street name,” your bank, brokerage firm or other nominee must take the actions required to obtain delivery of your portion of the merger consideration to your account on your behalf and you will not be required to take any action yourself to receive the merger consideration.


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What does the Board recommend?

The Board has approved the merger and the other transactions contemplated by the merger agreement and declared the merger and such other transactions, in accordance with the terms and conditions of the merger agreement, advisable and in our best interests. The Board recommends that holders of Company common shares vote FOR approval of the merger and the other transactions contemplated by the merger agreement. For a description of factors considered by the Board, please see the section captioned “The Merger—Proposal 1—Recommendation of the Board and Its Reasons for the Merger” on page 44. The Board also recommends that holders of Company common shares vote FOR any proposed adjournments of the special meeting for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the merger and the other transactions contemplated by the merger agreement and FOR approval, on an advisory (non-binding) basis, of the merger-related compensation. See “Adjournments and Postponements of the Special Meeting—Proposal 2” on page 113 and “Advisory Vote on Merger-Related Compensation—Proposal 3” on page 114.

How do I authorize a proxy to vote my Company common shares?

If you are a stockholder of record (that is, if your Company common shares are registered in your name with American Stock Transfer & Trust Company, LLC, our transfer agent) there are three ways to authorize a proxy to vote your Company common shares:

By Mail: You may authorize your proxy by completing, signing and returning your proxy card in the postage-paid envelope provided with this proxy statement. The proxy holders will vote your Company common shares according to your directions. If you sign and return your proxy card without specifying choices, your Company common shares will be voted by the persons named in the proxy in accordance with the recommendations of the Board as set forth in this proxy statement.
By Telephone: You may authorize your proxy by calling the toll-free telephone number indicated on your proxy card. Please follow the voice prompts that allow you to authorize your proxy and confirm that your voting instructions have been properly recorded.
Via the Internet: You may authorize your proxy by logging on to the website indicated on your proxy card. Please follow the website prompts that allow you to authorize your proxy and confirm that your voting instructions have been properly recorded.
In addition, you may cast your vote in person at the special meeting. Written ballots will be passed out to our common stockholders or legal proxies who want to vote in person at the meeting.
Authorizations of proxies by telephone and via the Internet for common stockholders of record as of the record date will be available 24 hours a day and will close at 11:59 P.M., eastern time, on July 16, 2013. Authorizations of proxies by telephone and via the Internet is convenient, provides postage and mailing cost savings and is recorded immediately, minimizing the risk that postal delays may cause proxies to arrive late and therefore not be counted. Even if you plan to attend the special meeting, you are encouraged to authorize a proxy. You may still vote your Company common shares in person at the meeting even if you have previously authorized a proxy. If you are present at the meeting and desire to vote in person, your previous proxy will not be counted.


vi



If you fail to either return your proxy card or vote in person at the special meeting, or if you mark your proxy card ABSTAIN, the effect will be the same as a vote AGAINST the merger and the other transactions contemplated by the merger agreement. In addition, broker non-votes, if any, will not be counted as votes cast and will have the same effect as a vote AGAINST the merger and the other transactions contemplated by the merger agreement. For the purposes of the vote to adjourn the special meeting to solicit additional proxies, abstentions and broker non-votes, if any, will not be counted as votes cast and will have no effect on the result of the vote. For the purposes of the advisory (non-binding) vote to approve the merger-related compensation, abstentions and broker non-votes, if any, will not be counted as votes cast and will have no effect on the result of the vote. If you sign and return your proxy card and fail to indicate your vote on your proxy, your shares will be voted FOR the merger and the other transactions contemplated by the merger agreement, FOR any adjournment of the special meeting to solicit additional proxies and FOR approval, on an advisory (non-binding) basis, of the merger-related compensation.

If my Company common shares are held for me by my broker, will my broker vote my shares for me?

You should follow the voting directions provided by your bank, brokerage firm or other nominee. You may complete and mail a voting instruction card to your bank, brokerage firm or other nominee or, in most cases, submit voting instructions by telephone or the Internet to your bank, brokerage firm or other nominee. If you provide specific voting instructions by mail, telephone or the Internet, your bank, brokerage firm or other nominee will vote your Company common shares as you have directed. Please note that if you wish to vote in person at the special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the special meeting.

If you do not instruct your bank, brokerage firm or other nominee to vote your Company common shares, your shares will not be voted and (i) the effect will be the same as a vote “AGAINST” the proposal to approve the merger and the other transactions contemplated by the merger agreement, but (ii) there will be no effect on the proposal to adjourn the special meeting and the advisory (non‑binding) vote on merger-related compensation.

How will proxy holders vote my Company common shares?

If you complete and properly sign the proxy card attached to this proxy statement and return it to us prior to the special meeting, your Company common shares will be voted as you direct. Unless you give other instructions on your proxy card, the persons named as proxy holders will vote your shares in accordance with the Board’s recommendation. The Board recommends a vote FOR approval of the merger and the other transactions contemplated by the merger agreement, FOR any adjournment of the special meeting to solicit additional proxies and FOR approval, on an advisory (non-binding) basis, of the merger-related compensation. Please see the sections captioned “The Merger—Proposal 1—Recommendation of the Board and Its Reasons for the Merger” on page 44, “Adjournments and Postponements of the Special Meeting—Proposal 2” on page 113 and “Advisory Vote on Merger-Related Compensation—Proposal 3” on page 114.


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What happens if I sell my Company common shares before the special meeting or before the completion of the merger?

If you held your Company common shares on the close of business on the record date but transfer them prior to the date of the special meeting, you will retain your right to vote at the special meeting, but not the right to receive the merger consideration for the Company common shares. The right to receive such consideration will pass to the person who owns your Company common shares when the merger becomes effective.

How can I change my vote after I have delivered my proxy card?

If you are a stockholder of record, you may revoke your proxy at any time before it is voted at the special meeting by:

submitting notice in writing to the Company at MPG Office Trust, Inc., 355 South Grand Avenue, Suite 3300, Los Angeles, California 90071, Attention: Christopher M. Norton that you are revoking your proxy;
authorizing a new proxy by telephone or via the Internet after the date of the earlier voted proxy;
authorizing another proxy card with a later date and returning it to us prior to the special meeting; or
attending the special meeting and voting in person. Please note that simply attending the meeting without voting will not revoke your proxy or change your vote.

If you hold your Company common shares in street name, you may submit new voting instructions by contacting your bank, brokerage firm or other nominee. You may also vote in person at the special meeting if you obtain a legal proxy from your bank, brokerage firm or other nominee.

Who will count the votes?

A representative of Broadridge Financial Solutions, Inc. will count the votes and will serve as the independent inspector of elections.

What does it mean if I receive more than one proxy card?

It means that you have multiple accounts with brokers or our transfer agent. Please vote all of these shares by signing and returning each proxy card that you receive. We encourage you to register all of your Company common shares in the same name and address. You may do this by contacting your broker or our transfer agent. Our transfer agent may be reached at (800) 937-5449 or at the following address:

American Stock Transfer & Trust Company, LLC
Operations Center
6201 15th Avenue
Brooklyn, New York 11219


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Does the Company expect to pay any dividends on the Company common shares prior to the closing of the merger?

No. The merger agreement contains certain restrictions on the activities of the Company between the signing of the merger agreement and the closing of the merger. One restriction is that the Company may not pay any dividend or other distribution with respect to any Company common share.

What rights do I have if I oppose the merger?

You can vote AGAINST the merger and the other transactions contemplated by the merger agreement by authorizing your proxy to vote your Company common shares AGAINST the proposal. Because our Company common shares are listed on the NYSE, you are not entitled to dissenters’ or appraisal rights under Maryland law in connection with the merger.

Is the merger expected to be taxable to me?

Yes. The receipt of the merger consideration in exchange for each Company common share pursuant to the merger will be a taxable transaction to common stockholders for U.S. federal income tax purposes. Generally, for U.S. federal income tax purposes, you will recognize gain or loss measured by the difference, if any, between the merger consideration received in exchange for a Company common share and your adjusted tax basis in that share. In addition, under certain circumstances, withholding may be required on all or a portion of the merger consideration received in exchange for a Company common share under applicable tax laws, including with respect to the merger consideration payable to non-U.S. common stockholders under the Foreign Investment in Real Property Tax Act. You should read “Material U.S. Federal Income Tax Consequences of the Merger” on page 108 for a more complete discussion of the U.S. federal income tax consequences of the merger to holders of Company common shares. Tax matters can be complicated, and the tax consequences of the merger to you will depend on your particular tax situation. We encourage you to consult your tax advisor regarding the tax consequences of the merger to you.

Do any of the Company’s directors or officers have interests in the merger that may differ from or be in addition to my interests as a stockholder?

Yes. In considering the recommendation of the Board with respect to the proposal to approve the merger and the other transactions contemplated by the merger agreement, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of our common stockholders generally. The Board was aware of and considered these interests, among other matters, in evaluating and negotiating the merger and the other transactions contemplated by the merger agreement, and in recommending that the merger and the other transactions contemplated by the merger agreement be approved by the common stockholders of the Company. See “The Merger—Proposal 1—Interests of Our Directors and Executive Officers in the Merger” on page 68 and “Advisory Vote on Merger-Related Compensation—Proposal 3” on page 114.

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Should I send my Company common share certificates now?

No. After the merger is completed, a paying agent will send you a letter of transmittal describing how you may exchange Company common share certificates for the merger consideration. At that time, you must send in your Company common share certificates or execute an appropriate instrument of transfer of your shares, as applicable, with your completed letter of transmittal to the paying agent to receive the merger consideration. If you hold your shares in “street name,” your bank, brokerage firm or other nominee must surrender your shares following completion of the merger.

What will happen to my Company common shares after completion of the merger?

Following the completion of the merger, your Company common shares will be canceled and will represent only the right to receive the merger consideration. Trading in Company common shares on the NYSE will cease and price quotations for Company common shares will no longer be available.

Upon consummation of the merger, will the Company continue as a public company?

No. If the merger is completed, the Company common shares will be delisted from the NYSE and deregistered under the Exchange Act of 1934, as amended (the “Exchange Act”). As such, we would cease to be publicly traded and would no longer file periodic reports with the Securities and Exchange Commission (the “SEC”).

When do you expect to complete the merger?

A special meeting of our stockholders is scheduled to be held on July 17, 2013, to, among other matters, consider and vote on the merger and the other transactions contemplated by the merger agreement. Because obtaining the requisite approval of the merger by our common stockholders is only one of the conditions to the completion of the merger, we can give you no assurance as to when or whether the merger will occur, but we expect to close the merger in the third quarter of 2013. For more information regarding the other conditions to the merger, please see the section captioned “The Merger Agreement—Conditions to Completion of the Merger” on page 92.

What happens if the merger is not completed?

If the merger and the other transactions contemplated by the merger agreement are not approved by the common stockholders of the Company or if the merger is not completed for any other reason, the common stockholders of the Company will not receive any payment for their Company common shares. Instead, the Company will remain an independent public company, and the Company common shares will continue to be listed and traded on the NYSE. Under specified circumstances, the Company may be required to pay to Brookfield DTLA a fee with respect to the termination of the merger and the merger agreement. See “The Merger Agreement—Termination Payments and Expenses” on page 103.

Why am I being asked to cast an advisory (non-binding) vote to approve the merger-related compensation payable to the Company’s named executive officers in connection with the merger?

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Section 14A of the Exchange Act, the Company is providing its common stockholders with the opportunity to cast an advisory (non-binding) vote with respect to the merger-related compensation.


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What is the merger-related compensation?

The merger-related compensation is compensation arising from any agreement or understanding, whether written or unwritten, between the Company’s named executive officers and the acquiring company or the Company, concerning any type of compensation, whether deferred or contingent, that is based upon or otherwise relates to the merger, and that may be paid or become payable to the named executive officers. See “Advisory Vote on Merger-Related Compensation – Proposal 3” on page 114.

What will happen if common stockholders do not approve the merger-related compensation at the special meeting?

Approval of the merger-related compensation is not a condition to completion of the merger. The vote with respect to the merger-related compensation is an advisory vote and will not be binding on the Company or Brookfield DTLA. Further, the underlying compensatory plans and arrangements are contractual in nature and not, by their terms, subject to stockholder approval. Accordingly, regardless of the outcome of the non-binding advisory vote, if the merger and the other transactions contemplated by the merger agreement are approved by the common stockholders and the merger is completed, the Company’s named executive officers will be eligible to receive the merger-related compensation.

What do I need to do now?

Even if you plan to attend the special meeting, after carefully reading and considering the information contained in this proxy statement, please authorize your proxy promptly to ensure that your shares are represented at the special meeting. If you hold your Company common shares in your own name as the stockholder of record, please authorize a proxy for your Company common shares. To authorize a proxy, (i) complete, sign, date and mail your proxy card in the pre-addressed postage-paid envelope provided, (ii) call the toll free telephone number listed on your proxy card or (iii) use the Internet as described in the instructions on your proxy card. If you decide to attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously authorized. If you are a beneficial owner, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you.

Where can I find more information about MPG Office Trust, Inc.?

We file annual, quarterly and other periodic reports, proxy statements and other information with the SEC. You may read and copy any reports, statements, or other information we file with the SEC at its public reference room in Washington, D.C. (100 F Street, N.E. 20549). Our SEC filing number is 001-31717. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our filings are also available to the public on the Internet, through a website maintained by the SEC at http://www.sec.gov and on our website at http://www.mpgoffice.com. Information contained on our website is not part of, or incorporated into, this proxy statement. Please see the section captioned “Where You Can Find Additional Information” on page 118.


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Whom can I contact with questions?

If you have questions, require assistance voting your Company common shares or need additional copies of proxy materials, you may contact:

MPG Office Trust, Inc.
355 South Grand Avenue, Suite 3300
Los Angeles, California 90071
Attention: Peggy M. Moretti
(213) 626-3300

or

MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
(800) 322-2885

Who will solicit and pay the cost of soliciting proxies?

The Company and Brookfield DTLA will pay the expenses related to printing, filing and mailing this proxy statement. In addition to solicitation by mail and, without additional compensation for such services, proxies may be solicited personally, or by telephone or telecopy, by our officers or employees. The Company will bear the cost of soliciting proxies. Additionally, the Company has engaged MacKenzie Partners to assist in the solicitation of proxies for the special meeting and will pay MacKenzie Partners a fee for its services. We will also request that banking institutions, brokerage firms, custodians, trustees, nominees, fiduciaries and other like parties forward the solicitation materials to the holders of record of Company common shares, and we will, upon request of such record holders, reimburse forwarding charges and out-of-pocket expenses.

If you have further questions, you may contact our proxy solicitor, MacKenzie Partners, at (800) 322-2885.


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SUMMARY
 
 
This summary highlights selected information contained elsewhere in this proxy statement relating to the merger and other matters to be addressed at the special meeting and may not contain all of the information that is important to you. In this proxy statement, we refer to the merger of the Company with and into REIT Merger Sub as the “merger.” For a more complete description of the merger and other transactions contemplated by the merger agreement, you should carefully read this entire proxy statement as well as the additional documents to which it refers, including the merger agreement, a copy of which is attached to this proxy statement as Annex A, and the Waiver and First Amendment to Agreement and Plan of Merger (the “First Amendment”), attached to this proxy statement as Annex B. For instructions on obtaining more information, see “Who Can Answer Other Questions” on page 13. References to “MPG,” “the Company,” “we,” “our” or “us” in this proxy statement refer to MPG Office Trust, Inc. and its subsidiaries unless otherwise indicated or the context otherwise requires.
 
This proxy statement is dated June 7, 2013 and is first being mailed to common stockholders on or about June 10, 2013.
 
Parties to the Merger
 
MPG Office Trust, Inc. 
 
355 South Grand Avenue, Suite 3300
Los Angeles, California 90071
(213) 626-3300
 
The Company is the largest owner and operator of Class A office properties in the Los Angeles central business district. The Company is a full-service real estate company with substantial in-house expertise and resources in property management, leasing, and financing. The Company’s common stock trades on the NYSE under the symbol MPG. For more information on the Company, visit our website at http://www.mpgoffice.com.
 
The Company was formed as a Maryland corporation on June 26, 2002 and elected to be a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2003. On June 27, 2003, the Company completed its initial public offering.
 
The Company’s operations are carried out through its operating partnership, MPG Office, L.P., referred to herein as the Partnership, which is a Maryland limited partnership. The Company is the sole general partner of the Partnership and owns 99.8% of the Partnership.
 
The Brookfield Parties 
 
The Brookfield Parties that are Parties to the Merger Agreement.  Brookfield DTLA was formed as a Delaware limited partnership on February 21, 2013 and converted to a Delaware limited liability company on May 10, 2013. Sub REIT is a Maryland corporation and was incorporated on April 19, 2013 and is an indirect wholly-owned subsidiary of Brookfield DTLA (except at or prior to
 
 
 
 

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the closing of the transactions contemplated by the merger agreement for preferred shares reasonably necessary to satisfy REIT requirements and the Sub REIT preferred shares (as defined below) to be registered with the SEC). REIT Merger Sub is a Maryland corporation and was incorporated on April 19, 2013 and is a direct wholly-owned subsidiary of Sub REIT (except at or prior to the closing of the transactions contemplated by the merger agreement for preferred shares reasonably necessary to satisfy REIT requirements). Partnership Merger Sub is a Maryland limited liability company and a direct wholly-owned subsidiary of REIT Merger Sub formed on April 19, 2013. Each of Brookfield DTLA, Sub REIT, REIT Merger Sub and Partnership Merger Sub has its principal executive offices at Brookfield Place, 181 Bay Street, Suite 330, Toronto, Ontario, Canada M5J 2T3. The telephone number of each of Brookfield DTLA, Sub REIT, REIT Merger Sub and Partnership Merger Sub principal executive offices is (416) 369-2300. Each of Brookfield DTLA, Sub REIT, REIT Merger Sub and Partnership Merger Sub is affiliated with BPO and was formed for the purpose of consummating the transactions contemplated by the merger agreement and has conducted no activities to date other than activities incidental to its formation and in connection with the transactions contemplated by the merger agreement.
 
BPO.  BPO is a corporation formed under the laws of Canada with its principal executive offices at Brookfield Place, 181 Bay Street, Suite 330, Toronto, Ontario, Canada M5J 2T3. The telephone number of BPO’s principal executive offices is (416) 369-2300. BPO operates head offices in New York, Toronto, Sydney and London. BPO owns, develops and manages premier office properties in the United States, Canada, Australia and the United Kingdom. As of the date hereof, BPO’s portfolio is comprised of interests in 109 properties totaling 66 million leasable square feet in the downtown cores of New York, Washington, D.C., Houston, Los Angeles, Denver, Seattle, Toronto, Calgary, Ottawa, London, Sydney, Melbourne and Perth, making it the global leader in the ownership and management of office assets. Landmark properties include the Brookfield Places in New York, Toronto and Perth, Bank of America Plaza in Los Angeles, Bankers Hall in Calgary and Darling Park in Sydney. BPO’s common shares trade on the NYSE and Toronto Stock Exchange under the symbol “BPO”. BPO is a guarantor of certain obligations of certain of the BPO parties in connection with the merger agreement. However, BPO is not an obligor of, and is not required to provide credit support for, the Sub REIT preferred shares.
 
The Special Meeting
 
The special meeting will be held at 8:00 A.M., local time, on Wednesday, July 17, 2013, at the Omni Los Angeles Hotel, 251 South Olive Street, Los Angeles, California 90012. At the special meeting, you will be asked to consider and vote upon (i) approval of the merger and the other transactions contemplated by the merger agreement, (ii) approval of any proposal to adjourn the special meeting to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger and the other transactions contemplated by the merger agreement, (iii) approval on an advisory (non-binding) basis of the merger-related compensation, and (iv) approval of the transaction of any other business that may properly come before the special meeting or any adjournments or postponements of the special meeting by or at the direction of the Board.
 
 
 
 

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Record Date, Notice, Quorum and Mailing
 
We have set May 24, 2013 as the record date for determining those common stockholders who are entitled to notice of, attend and vote at, the special meeting. As of the close of business on the record date, 57,335,249 Company common shares were outstanding.
 
The presence at the special meeting, in person or by proxy, of holders of a majority of the aggregate number of Company common shares outstanding and entitled to vote at the special meeting will constitute a quorum, allowing us to conduct the business of the special meeting.
 
A properly executed proxy marked ABSTAIN and a broker non-vote, if any, will be counted for purposes of determining whether a quorum is present at the special meeting but will not be considered votes cast at the special meeting.
 
This proxy statement is first being mailed to common stockholders on or about June 10, 2013. 
 
Proxies; Revocation of Proxies
 
Holders of record of Company common shares entitled to vote at the special meeting may authorize a proxy to vote their shares by (i) completing, signing, dating and mailing their proxy card in the pre-addressed postage-paid envelope provided, (ii) calling the toll-free telephone number listed on their proxy card, or (iii) using the Internet as described in the instructions on their proxy card. You may also cast your vote in person at the special meeting. If you hold your Company common shares in “street name” (that is, through a bank, brokerage firm or other nominee), your bank, brokerage firm or other nominee will not vote your shares unless you provide instructions to your bank, brokerage firm or other nominee on how to vote your shares. Accordingly, you should instruct your bank, brokerage firm or other nominee how to vote your shares by following the directions provided by your bank, brokerage firm or other nominee. If you wish to vote in person at the special meeting and your Company common shares are held by a bank, brokerage firm or other nominee, you must bring to the special meeting a legal proxy from the bank, brokerage firm or other nominee authorizing you to vote your shares. It can often take several days to obtain a legal proxy from a bank, brokerage firm or other nominee.
 
Even after you have properly authorized your proxy card, you may change your vote at any time before the proxy is voted by delivering to us either a notice of revocation or a duly executed proxy bearing a later date. In addition, the powers of the proxy holders will be suspended with respect to your proxy if you attend the special meeting in person and (i) vote or (ii) notify the chairman of the meeting that you would like your proxy revoked. Attendance at the special meeting will not by itself revoke a previously granted proxy. If you have instructed a bank, brokerage firm or other nominee to vote your shares, you must follow the directions received from your bank, brokerage firm or other nominee in order to change your proxy instructions.
 

 
 
 
 

3



 
 
 
 
The Merger
 
The Merger Agreement
 
The MPG parties and certain of the Brookfield parties have entered into the merger agreement attached as Annex A to this proxy statement, as amended by the First Amendment, attached as Annex B to this proxy statement, which are is incorporated herein by reference. The Company encourages you to read the merger agreement, as amended, in its entirety because it is the principal document governing the merger and the other transactions contemplated by the merger agreement.
 
The REIT Merger
 
Subject to the terms and conditions of the merger agreement, at the closing of the merger, the Company will merge with and into REIT Merger Sub, with REIT Merger Sub surviving the merger as an indirect subsidiary of Brookfield DTLA, pursuant to the terms of the merger agreement. We sometimes use the term “surviving corporation” in this proxy statement to describe REIT Merger Sub as the surviving corporation following the merger.
 
The Partnership Merger
 
The merger agreement also provides for the merger of Partnership Merger Sub with and into the Partnership (the “Partnership merger”), upon the terms and subject to the conditions set forth in the merger agreement. The Partnership will be the surviving partnership in the Partnership merger.
 
The Merger Consideration
 
At the effective time of the merger and by virtue of the merger, each outstanding Company common share will automatically be canceled in exchange for the right to receive $3.15 in cash (the “merger consideration”), without interest and less any required withholding tax. At the effective time of the merger and by virtue of the Partnership merger, each outstanding operating partnership unit owned by a third party will automatically be canceled in exchange for the right to receive $3.15 in cash, without interest and less any required withholding tax. The merger consideration is fixed and will not be adjusted for changes in the trading price of Company common shares.
 
Treatment of Other Equity Interests
 
7.625% Series A Cumulative Redeemable Preferred Stock.  Each share of 7.625% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share, of the Company (which we refer to as “Company preferred shares”) outstanding immediately prior to the effective time of the merger will automatically, and without a vote by Company preferred stockholders, be converted into, and canceled in exchange for one share of 7.625% Series A Cumulative Redeemable Preferred Stock, par value $.01 per share, of Sub REIT (collectively, the “Sub REIT preferred shares”), without interest and less any required withholding tax, with the rights, terms and conditions set forth in the Sub REIT
 
 
 
 

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charter and bylaws. For the sake of clarity, Company preferred shares that are not tendered pursuant to the tender offer will not be converted into cash but will be converted into Sub REIT preferred shares. The Sub REIT preferred shares will be issued by Sub REIT, an entity affiliated with BPO. However, BPO is not an obligor of, and is not required to provide credit support for, the Sub REIT preferred shares.
 
Stock Options. Immediately prior to the effective time of the merger, each outstanding stock option to purchase shares of Company common shares (the “Stock Options”), whether or not then exercisable, will be canceled in exchange for the right to receive a single lump sum cash payment equal to the product of (i) the number of Company common shares subject to such Stock Option immediately prior to the effective time, and (ii) the excess, if any, of the merger consideration over the exercise price per share of such Stock Option (the “Option Merger Consideration”), without interest and less any required withholding tax. If the exercise price per share of any such Stock Option is equal to or greater than the merger consideration, such Stock Option will be canceled without any cash payment being made in respect thereof.
 
Restricted Stock. Immediately prior to the effective time of the merger, each outstanding Company common share of restricted stock (the “Restricted Stock”) will cease to be subject to any forfeiture or vesting conditions and each such share will be automatically canceled in exchange for the right to receive the merger consideration, without interest (the “Restricted Stock Merger Consideration”) in accordance with the terms and conditions of the conversion of the Company common shares.
 
Restricted Stock Units. Immediately prior to the effective time of the merger, each outstanding Company restricted stock unit award (the “RSUs”) will be canceled in exchange for the right to receive a single lump sum cash payment, without interest, equal to the product of (i) the number of Company common shares subject to such RSU immediately prior to the effective time, whether or not vested, and (ii) the merger consideration (the “RSU Merger Consideration”), without interest and less any required withholding tax. 
 
Recommendation of the Board
 
The Board recommends that holders of Company common shares vote FOR approval of the merger and the other transactions contemplated by the merger agreement.  At a meeting held on April 24, 2013, the Board declared unanimously that the merger, in accordance with the terms and conditions of the merger agreement, the merger agreement and the other transactions contemplated by the merger agreement are advisable and in the best interests of the Company and determined to recommend that holders of Company common shares vote to approve the merger and the other transactions contemplated by the merger agreement on the terms and conditions set forth in the merger agreement.
 
 
 
 

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Voting Requirements for the Proposals
 
The Merger
 
The proposal to approve the merger and the other transactions contemplated by the merger agreement requires the affirmative vote of holders of at least two-thirds of our issued and outstanding Company common shares entitled to vote at the special meeting.
 
Adjournments
 
Under our bylaws, any proposal to adjourn the special meeting to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger and the other transactions contemplated by the merger agreement will require the affirmative vote of a majority of the votes cast at the special meeting.
 
Merger-Related Compensation
 
The affirmative vote of a majority of the votes cast at the special meeting is required for approval of the advisory (non-binding) proposal on the merger-related compensation.
 
Other Voting Matters
 
Each Company common share is entitled to one vote. If you hold your shares in “street name” (that is, through a bank, brokerage firm or other nominee), your bank, brokerage firm or other nominee will not vote your shares unless you provide instructions to your bank, brokerage firm or other nominee on how to vote your shares. You should instruct your bank, brokerage firm or other nominee how to vote your shares by following the directions provided by your bank, brokerage firm or other nominee.
 
Because the required vote to approve the merger and the other transactions contemplated by the merger agreement is based on the number of Company common shares outstanding rather than on the number of votes cast, if you fail to authorize a proxy to vote your shares by completing and returning your proxy card or via telephone or the Internet, fail to vote in person or fail to instruct your bank, brokerage firm or other nominee on how to vote or abstain from voting, it will have the same effect as a vote AGAINST this proposal.
 
An abstention or a broker non-vote, if any, as to the proposal to approve the merger and the other transactions contemplated by the merger agreement will have the same effect as a vote AGAINST that proposal. An abstention or a broker non-vote, if any, as to adjournment of the special meeting for the purpose of soliciting additional proxies and the merger-related compensation will have no effect on the result of the vote on such proposals. A broker non-vote occurs when a broker returns a properly executed proxy but does not vote on a proposal on which the broker is prohibited from exercising its discretionary voting authority. If you sign and return your proxy card and fail to indicate your vote on your proxy, your shares will be voted FOR the merger, FOR any adjournment of the special meeting to solicit additional proxies and FOR approval, on an advisory (non-binding) basis, of the merger-related compensation.
 
 
 
 
 

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Opinions of the Company’s Financial Advisors
 
Opinion of Wells Fargo Securities, LLC
 
In connection with the merger, the Board received an opinion, dated April 24, 2013, of Wells Fargo Securities, LLC, which we refer to in this proxy statement as “Wells Fargo Securities,” as to the fairness, from a financial point of view and as of such date, of the merger consideration to be received pursuant to the merger agreement by holders of Company common shares. The full text of Wells Fargo Securities’ written opinion is attached as Annex D to this proxy statement and is incorporated herein by reference. The written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken by Wells Fargo Securities in rendering its opinion. The opinion was addressed to the Board (in its capacity as such) for its information and use in connection with its evaluation of the merger consideration from a financial point of view and did not address any other terms, aspects or implications of the merger or any related transactions. Wells Fargo Securities’ opinion did not address the merits of the underlying decision by the Company to enter into the merger agreement or the relative merits of the merger or any related transactions compared with other business strategies or transactions available or that have been or might be considered by the Company’s management or Board or in which the Company might engage. The opinion should not be construed as creating any fiduciary duty on the part of Wells Fargo Securities to any party and the opinion does not constitute a recommendation to the Board or any other person or entity in respect of the merger or any related transactions, including whether any preferred stockholder should participate in the tender offer for the Company preferred shares or how any stockholder should vote or act in connection with the merger or any related transactions.
 
Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
 
In connection with the merger, the Company’s financial advisor, Merrill Lynch, Pierce, Fenner & Smith Incorporated, which we refer to in this proxy statement as “BofA Merrill Lynch,” delivered a written opinion, dated April 24, 2013, to the Board as to the fairness, from a financial point of view and as of such date, of the merger consideration to be received pursuant to the merger agreement by holders of Company common shares. The full text of BofA Merrill Lynch’s written opinion, dated April 24, 2013, is attached as Annex E to this proxy statement and sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken in rendering its opinion.  BofA Merrill Lynch delivered its opinion to the Board for the benefit and use of the Board (in its capacity as such) in connection with and for purposes of its evaluation of the merger consideration from a financial point of view. BofA Merrill Lynch’s opinion did not address any other aspect of the merger or any related transactions and no opinion or view was expressed as to the relative merits of the merger or any related transactions in comparison to other strategies or transactions that might be available to the Company or in which the Company might engage or as to the underlying business decision of the Company to proceed with or effect the merger or any related transactions. The opinion should not be construed as creating any fiduciary duty on BofA Merrill Lynch’s part to any party and BofA Merrill Lynch expressed no opinion or recommendation as to whether any
 
 
 
 

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preferred stockholder should participate in the tender offer for the Company preferred shares or how any stockholder should vote or act in connection with the merger or any related transactions.
 
Directors and Officers of the Surviving Corporation
 
At the effective time of the merger, the board of directors of REIT Merger Sub immediately prior to the effective time and, if all of the Company preferred shares are not purchased in the tender offer, the two directors of the Company who were elected by the holders of the Company preferred shares, will be the directors of the surviving corporation. The officers of REIT Merger Sub immediately prior to the effective time will be the initial officers of the surviving corporation.
 
Interests of Our Directors and Executive Officers in the Merger
 
In considering the recommendation of the Board to approve the merger and the other transactions contemplated by the merger agreement, the Company’s common stockholders should be aware that the Company’s directors and executive officers may have certain interests in the merger that may be different from, or in addition to, the interests of the Company’s common stockholders generally. See “The Merger—Proposal 1—Interests of Our Directors and Executive Officers in the Merger” beginning on page 68. The Board is aware of these interests and considered them in approving the merger and the other transactions contemplated by the merger agreement.
 
Stock Ownership of Directors and Executive Officers
 
As of the close of business on the record date, our directors and executive officers beneficially owned an aggregate of 473,542 Company common shares, representing, in the aggregate, approximately 0.8% of the voting power of Company common shares entitled to vote at the special meeting. Our directors and executive officers have informed us that they intend to vote the Company common shares that they own in favor of the approval of the merger and the other transactions contemplated by the merger agreement, for the approval of any adjournments of the special meeting for the purpose of soliciting additional proxies and for the approval on an advisory (non-binding) basis of the merger-related compensation.
 
Delisting and Deregistration
 
If the merger is completed, the Company common shares will be delisted from the NYSE and deregistered under the Exchange Act.
 
No Dissenters’ or Appraisal Rights
 
Under Maryland law, because, among other things, our Company common shares are listed on the NYSE, no appraisal or dissenter rights are available to holders of Company common shares in connection with the merger.
 
 
 
 
 

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Conditions to the Merger
 
The merger will be completed only if the conditions specified in the merger agreement are either satisfied or waived (to the extent permissible). Subject to certain exceptions and limitations, conditions specified in the merger agreement include, among other things, the following:
 
Ÿ     obtaining the requisite approval of the holders of Company common shares;
Ÿ     the absence of any law, order, stipulation, or other legal restraint of any court of competent jurisdiction or governmental authority prohibiting the merger;
Ÿ     the accuracy of each party’s representations and warranties;
Ÿ     obtaining certain required debt consents to the merger; and
Ÿ     each party’s compliance with the covenants included in the merger agreement.
 
If the holders of the requisite percentage of Company common shares approve the merger and the other conditions to the merger are satisfied or waived (to the extent permissible), then we intend to consummate the merger as soon as practicable following the special meeting.
 
Regulatory Approvals
 
The completion of the merger is not expected to require any consent, approval, authorization or permit of, or filing with or notification to, any United States federal, state, county or local or any foreign government, governmental, regulatory or administrative authority, agency, instrumentality or commission or any court, tribunal, or judicial or arbitral body, except for (i) applicable requirements, if any, of the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act, state securities or “blue sky” laws and state takeover laws, (ii) the filing with the SEC of this proxy statement, as amended or supplemented from time to time, (iii) any filings required under the rules and regulations of the NYSE, and (iv) the filing of the Articles of Merger and Partnership Articles of Merger with the State Department of Assessments and Taxation of Maryland in accordance with the Maryland General Corporation Law (the “MGCL”) and the Maryland Revised Uniform Limited Partnership Act, as amended (the “MRULPA”), as applicable.
 
Form S-4
 
Sub REIT will prepare and file with the SEC a registration statement on Form S-4 (the “Form S-4”) relating to the issuance of Sub REIT preferred shares to the holders of Company preferred shares pursuant to the merger agreement. Thereafter, Sub REIT will use its commercially reasonable efforts to (a) have the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing, (b) ensure that the Form S-4 complies in all material respects with the Exchange Act or Securities Act, and (c) keep the Form S-4 effective for so long as necessary to complete the contemplated transactions. The parties have agreed, among other things, to furnish to Sub REIT all necessary information and such other assistance as may be reasonably requested to prepare, file and distribute the Form S-4 and to cooperate to file any necessary amendments or supplements to the Form S-4.
 
 
 
 

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In the absence of an SEC stop order that is then in effect, the effectiveness of the Form S-4 is not a condition to the relevant Brookfield parties’ obligations to consummate the merger or the other transactions contemplated by the merger agreement. However, if all the conditions to the obligations of the relevant Brookfield parties to consummate the mergers and the other transactions contemplated by the merger agreement have been satisfied (other than those required to be satisfied or waived at the closing of the merger) but either (i) the Form S-4 has not become effective or (ii) the SEC has issued a stop order suspending the effectiveness of the Form S-4 that remains in effect, then Brookfield DTLA will have the right, by written notice to the Company delivered one or more times, to delay the closing until the earliest to occur of (A) the date specified in the written notice by Brookfield DTLA, (B) one business day after the date of effectiveness of the Form S-4, (C) one business day after any stop order in respect of the Form S-4 has been lifted, reversed or otherwise terminated, and (D) September 25, 2013. If Brookfield DTLA exercises this right, then (x) it will be deemed to have immediately and irrevocably waived all of the conditions to its obligations to close the merger and the other transactions contemplated by the merger agreement, other than the conditions relating to the following: (1) the absence of a legal restraint prohibiting the consummation of the merger and the other transactions contemplated by the merger agreement to the extent not related to a stop order suspending the effectiveness of the Form S-4, (2) performance by the Company and the Partnership of their agreements and covenants under the merger agreement, but only if the failure of such condition to be satisfied arises from an action by the Company or the Partnership that constitutes a willful and material breach of the merger agreement that results in a long-term adverse effect on the business of the Company and the Partnership (a “willful and material breach”), and (3) the absence of a Material Adverse Effect (as defined below); and (y) after August 15, 2013, Brookfield DTLA will be deemed to have irrevocably waived all conditions to its obligations to close the merger and the other transactions contemplated by the merger agreement except for the condition related to the Company and Partnership performance of agreements and covenants under the merger agreement, but only if the failure of such condition to be satisfied arises from an action by the Company or the Partnership that constitutes a willful and material breach of the merger agreement.
 
Solicitation of Other Offers
 
The Company has agreed not to directly or indirectly solicit, initiate, or knowingly encourage or knowingly facilitate any alternative acquisition proposals, and, subject to certain exceptions, not to participate or engage in any negotiations or discussions concerning, or provide confidential information in connection with, any alternative acquisition proposal. Subject to certain exceptions, the Board cannot withhold, withdraw, qualify or modify (or publicly propose to do the same) its recommendation that the holders of Company common shares approve the merger in a manner adverse to Brookfield DTLA or approve, adopt or recommend (or publicly propose to do the same) any acquisition proposal.
 
However, if a third party submits a bona fide unsolicited acquisition proposal after the date of the merger agreement and before the Company common stockholders approve the merger that the Board (or duly authorized committee thereof) determines in good faith is or could reasonably be expected to lead to a superior proposal (as defined below), and with respect to which the Company provides notice to Brookfield DTLA, the Company may provide such party with access to the Company’s properties, material contracts, personnel, books and records and other non-public or
 
 
 
 

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confidential information and participate in discussions or negotiations with such third party, subject to certain conditions. Further, if the acquisition proposal was not improperly solicited and the Board (or duly authorized committee thereof) determines in good faith that the failure to take such action would be inconsistent with the duties of the Board under applicable law, then the Board may grant a limited waiver, amendment or release under any standstill or confidentiality agreement for the sole purpose of allowing the third party to make such a private and confidential unsolicited acquisition proposal.
 
Furthermore, at any point prior to receipt of the approval of Company common stockholders for the merger, the Board may make an adverse recommendation change and/or terminate the merger agreement if an alternative acquisition proposal received in compliance with the procedures noted above (i) is made after the date of the merger agreement and not withdrawn, (ii) the Board determines in good faith that the acquisition proposal constitutes a superior proposal (as defined below) and that a failure to take such action would be inconsistent with the duties of the Board under applicable law, and (iii) (a) the Company provides Brookfield DTLA three business days prior written notice, (b) the Company negotiates in good faith with Brookfield DTLA during such three‑day period to make revisions to the merger agreement that would permit the Board not to effect an adverse recommendation change or terminate the merger agreement, and (c) the Board determines that the acquisition proposal continues to be a superior proposal compared to the merger agreement, as revised by any changes irrevocably committed to by Brookfield DTLA. For more information, see “The Merger Agreement—Solicitation of Other Offers; Recommendation Withdrawal; Termination in Connection with a Superior Proposal” on page 100.
 
Termination of the Merger Agreement; Payment of Termination Fees and Merger Expenses
 
Subject to certain exceptions and limitations, the merger agreement may be terminated as follows:
 
Ÿ     by mutual written consent of Brookfield DTLA and the Company;
Ÿ     by either Brookfield DTLA or the Company, if:
¡     any court or other governmental authority with jurisdiction over such matters issues an order prohibiting the merger, and such order has become final and unappealable;
¡     the merger has not been consummated on or before August 15, 2013, subject to extension by Brookfield DTLA to August 30, 2013 and extension by the Company to September 16, 2013 or October 31, 2013 under certain circumstances;
¡     the requisite holders of Company common shares do not approve the merger; or
¡     a breach of a representation or warranty of the other party occurs, or if a representation or warranty of that other party becomes untrue, which in either case would result in a failure of certain closing conditions and cannot be cured by August 15, 2013 (as extended, as provided above), or if capable of being cured, will not have been cured within 30 calendar days following notice;
 
 
 
 

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Ÿ     by Brookfield DTLA if, prior to obtaining approval by the holders of Company common shares, the Board makes a recommendation against the merger; or
Ÿ     by the Company if, prior to obtaining approval by the holders of the Company common shares, (i) the Company has received a superior proposal, (ii) the Board has determined in good faith that the failure to accept such superior proposal is reasonably likely to be inconsistent with its duties under applicable law, (iii) the Company has complied with its non-solicitation obligations set forth in the merger agreement, and (iv) the Company pays certain termination fees and Brookfield DTLA’s expenses. See “The Merger Agreement—Termination” on page 101.
 
Depending on the circumstances of termination, the Company will be required to reimburse Brookfield DTLA for up to $6.0 million in expenses, pay a no vote termination fee of $4.0 million and/or pay a termination fee of $17.0 million, which would be reduced by the amount of any no vote termination fee paid. Accordingly, the Company could pay up to a maximum of $23.0 million in termination and reimbursement fees. For more information on the fees to be paid by the Company, see “The Merger Agreement—Termination Payments and Expenses” on page 103.
 
Material U.S. Federal Income Tax Consequences of the Merger
 
The receipt of the merger consideration in exchange for each Company common share pursuant to the merger will be a taxable transaction to common stockholders for U.S. federal income tax purposes. Generally, for U.S. federal income tax purposes, you will recognize gain or loss as a result of the merger measured by the difference, if any, between the merger consideration received in exchange for a Company common share and your adjusted tax basis in that share. In addition, under certain circumstances, withholding may be required on all or a portion of the merger consideration received in exchange for a Company common share under applicable tax laws, including with respect to the merger consideration payable to non-U.S. common stockholders under the Foreign Investment in Real Property Tax Act.
 
For further information on the material U.S. federal income tax consequences of the merger, please see the section captioned “Material U.S. Federal Income Tax Consequences of the Merger” on page 108. Tax matters can be complicated, and the tax consequences of the merger to you will depend on your particular tax situation. We encourage you to consult your tax advisor regarding the tax consequences of the merger to you.
 
Fees and Expenses
 
Except for the termination fees and expenses discussed above and in the section “The Merger Agreement—Termination Payments and Expenses” on page 103, all costs and expenses incurred in connection with the merger agreement and the merger are to be paid by the party incurring such expenses, whether or not the merger and its related transactions are consummated; provided, however, that each of Brookfield DTLA and the Company will pay one-half of the expenses related to printing, filing and mailing this proxy statement (and any amendments or supplements thereto) and any other necessary SEC filings.
 
 
 
 

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Litigation Relating to the Merger
 
After the announcement of the execution of the merger agreement, five putative class actions were filed against the Company, the members of the Board, the Partnership, BPO, Sub REIT, REIT Merger Sub, Partnership Merger Sub and Brookfield DTLA Inc. Two of these suits, captioned Coyne v. MPG Office Trust, Inc., et al., No. BC507342 (the “Coyne Action”), and Masih v. MPG Office Trust, Inc., et al., No. BC507962 (the “Masih Action”), were filed in the Superior Court of the State of California in Los Angeles County on April 29, 2013 and May 3, 2013, respectively. The other three suits, captioned Kim v. MPG Office Trust, Inc. et al., No. 24-C-13-002600 (the “Kim Action”), Perkins v. MPG Office Trust, Inc., et al., No. 24-C-13-002778 (the “Perkins Action”) and Dell’Osso v. MPG Office Trust, Inc., et al., No.24-C-13-003283 (the “Dell’Osso Action”) were filed in the Circuit Court of the State of Maryland in Baltimore on May 1, 2013, May 8, 2013 and May 22, 2013, respectively. In each of these lawsuits, the plaintiffs allege, among other things, that the Company’s directors breached their fiduciary duties in connection with the proposed merger by failing to maximize the value of the Company and ignoring or failing to protect against conflicts of interest, and that the relevant Brookfield parties named as defendants aided and abetted those breaches of fiduciary duty. The Kim Action further alleges that the Partnership also aided and abetted the breaches of fiduciary duty by the Company’s directors and the Dell’Osso Action further alleges that the Company and the Partnership aided and abetted the breaches of fiduciary duty by the Company’s directors. The Dell’Osso Action also alleges that the preliminary proxy statement filed by the Company with the SEC on May 21, 2013 is false and/or misleading because it fails to include certain details of the process leading up to the merger and fails to provide adequate information concerning the Company’s financial advisor. The plaintiffs in the five lawsuits seek an injunction against the proposed merger, rescission or rescissory damages in the event the merger has been consummated, an award of fees and costs, including attorneys’ and experts’ fees, and other relief. See “The Merger—Proposal 1—Litigation Relating to the Merger” on page 82.
 
Who Can Answer Other Questions
 
If you have any questions about the merger or any of the other transactions contemplated by the merger agreement or about how to authorize your proxy or would like additional copies of this proxy statement, you should contact our proxy solicitor, MacKenzie Partners, at (800) 322-2885.
 
 
 
 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “project,” “intend,” “anticipate,” “expect,” “believe,” “will,” “may,” “should,” “would” and similar expressions are intended to identify forward-looking statements. These statements are based on the current expectations and beliefs of our management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forwardlooking statements. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed in a forward-looking statement.

In any forward-looking statement in which we express an expectation or belief as to future results, that expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. Risks and uncertainties pertaining to the following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements:

the possibility that the proposed merger will not be consummated on the terms described in this proxy statement, or at all;
the potential adverse effect on our business, properties and operations because of certain covenants we made in the merger agreement;
the decrease in the amount of time and attention that management can devote to our business and properties while also devoting its attention to effectuating the proposed merger;
increases in operating costs resulting from the expenses related to the proposed merger;
the effect of the announcement of the merger on our business relationships, operating results and business generally;
uncertainties as to the timing of the closing of the merger;
our inability to retain and, if necessary, attract key employees, particularly in light of the proposed merger;
risks resulting from any lawsuits that may arise out of or have arisen as a result of the proposed merger;
risks generally incident to the ownership of real property, including the ability to retain tenants and rent space upon lease expirations, the financial condition and solvency of our tenants, the relative illiquidity of real estate and changes in real estate taxes, regulatory compliance costs and other operating expenses;
risks associated with the Downtown Los Angeles market, which is characterized by challenging leasing conditions, including limited numbers of new tenants coming into the market and the downsizing of large tenants in the market such as accounting firms, banks and law firms;

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risks related to increased competition for tenants in the Downtown Los Angeles market, including aggressive attempts by competing landlords to fill large vacancies by providing tenants with lower rental rates, increasing amounts of free rent and providing larger allowances for tenant improvements;
the possibility that, if the proposed merger is not consummated, the Company may be required to relinquish certain properties to the property mortgage lenders in order to avoid additional negative cash burn with respect to such properties, and, in such case, any equity value attributable to such properties would be eliminated;
the possibility that the Company’s significant on-going cash needs could require it to engage in additional asset sales for cash, and any additional asset sales of properties constituting its core Downtown Los Angeles portfolio could diminish any portfolio value currently attributable to its remaining holdings, as well as reduce the attractiveness of any future strategic event;
the risk that the Company’s stock price, which has increased since press reports of the commencement of a strategic transaction process by the Company, could fall substantially if the merger is not consummated; and
risks related to our status as a REIT for U.S. federal income tax purposes, such as the existence of complex regulations relating to our status as a REIT, the effect of future changes in REIT requirements as a result of new legislation and the adverse consequences of the failure to qualify as a REIT.

Many of these and other important factors are detailed in this proxy statement or in various SEC filings made periodically by us. We discussed a number of material risks in our most recent Quarterly Report on Form 10-Q, copies of which are available from us without charge or online at http:// www.mpgoffice.com. Please review this proxy statement and these filings and do not place undue reliance on these forward-looking statements.

You should consider the cautionary statements contained or referred to in this section in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We do not undertake any obligation to release publicly any revisions to any forward-looking statements contained in this proxy statement to reflect events or circumstances that occur after the date of this proxy statement or to reflect the occurrence of unanticipated events.


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THE SPECIAL MEETING

The special meeting will be held at 8:00 A.M., local time, on Wednesday, July 17, 2013 at the Omni Los Angeles Hotel, 251 South Olive Street, Los Angeles, California 90012. At the special meeting, you will be asked to consider and vote upon (i) the merger and the other transactions contemplated by the merger agreement (Proposal 1), (ii) any proposal to adjourn the special meeting to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger and the other transactions contemplated by the merger agreement (Proposal 2), (iii) approval on an advisory (non‑binding) basis of the merger-related compensation (Proposal 3), and (iv) approval of the transaction of any other business that may properly come before the special meeting or any adjournments or postponements of the special meeting by or at the direction of the Board.

Record Date, Notice and Quorum Requirement

The Board has fixed the close of business on May 24, 2013 as the record date for determining which common stockholders of the Company are entitled to notice of, and to vote their shares in person or by proxy at, the special meeting and any postponements or adjournments of the special meeting. As of the close of business on the record date, there were 57,335,249 Company common shares outstanding and entitled to vote at the special meeting.

The holders of a majority of Company common shares that were outstanding as of the close of business on the record date, present in person or represented by proxy, will constitute a quorum for purposes of the special meeting. A quorum is necessary to hold the special meeting. Abstentions and broker non-votes will be counted as shares present for the purposes of determining the existence of a quorum.

Voting Required for Approval

Approval of the proposal to approve the merger and the other transactions contemplated by the merger agreement requires the affirmative vote of the holders of at least two-thirds of all of the outstanding Company common shares entitled to vote on such proposal. Approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of a majority of the votes cast on such proposal. Approval on an advisory (non-binding) basis of the merger-related compensation requires the affirmative vote of a majority of the votes cast on such proposal.

Other Voting Matters

We do not expect that any matters other than the proposals described in this proxy statement will be brought before or at the special meeting. If, however, such a matter is properly presented before or at the special meeting, or any adjournments or postponements of the special meeting, the persons appointed as proxies will have authority to vote the shares represented by duly executed proxies in accordance with their discretion.


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Abstentions and Broker Non-Votes

An abstention or a broker non-vote, if any, as to the merger and the other transactions contemplated by the merger agreement will have the same effect as a vote AGAINST that proposal. An abstention or a broker non-vote, if any, as to adjournment of the special meeting for the purpose of soliciting additional proxies and the merger-related compensation will have no effect on the result of the vote on such proposals. A broker non-vote occurs when a broker returns a properly executed proxy but does not vote on a proposal on which the broker is prohibited from exercising its discretionary voting authority.

Manner of Authorizing a Proxy

Company common stockholders may submit their votes for or against the proposals submitted at the Company’s special meeting in person or by proxy. Company common stockholders may authorize a proxy in the following ways:

Internet. Company common stockholders may authorize a proxy over the Internet by going to the website listed on their proxy card or voting instruction card. Once at the website, they should follow the instructions to authorize a proxy.
Telephone. Company common stockholders may authorize a proxy using the toll-free number listed on their proxy card or voting instruction card.
Mail. Company common stockholders may authorize a proxy by completing, signing, dating and returning their proxy card or voting instruction card in the pre-addressed postage-paid envelope provided.

Company common stockholders should refer to their proxy cards or the information forwarded by their bank, brokerage firm or other nominee to see which options are available to them.

The Internet and telephone proxy authorization procedures are designed to authenticate common stockholders and to allow them to confirm that their instructions have been properly recorded. If you authorize a proxy over the Internet or by telephone, then you need not return a written proxy card or voting instruction card by mail. The Internet and telephone facilities available to record holders will close at 11:59 P.M., eastern time, on July 16, 2013.

The method by which Company common stockholders authorize a proxy will in no way limit their right to vote at the Company’s special meeting if they later decide to attend the meeting and vote in person. If Company common shares are held in the name of a bank, brokerage firm or other nominee, Company common stockholders must obtain a proxy, executed in their favor, from the bank, brokerage firm or other nominee, to be able to vote in person at the Company’s special meeting.


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All Company common shares entitled to vote and represented by properly completed proxies received prior to the Company’s special meeting, and not revoked, will be voted at the Company’s special meeting as instructed on the proxies. If Company common stockholders of record as of the record date return properly executed proxies but do not indicate how their Company common shares should be voted on a proposal, the Company common shares represented by their properly executed proxy will be voted as the Board recommends and therefore, FOR the proposal to approve the merger and the other transactions contemplated by the merger agreement, FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies to approve the merger and the other transactions contemplated by the merger agreement and FOR approval on an advisory (non-binding) basis of the merger-related compensation and the other transactions contemplated by the merger agreement.

Shares Held in “Street Name”

If Company common stockholders hold Company common shares in an account of a bank, brokerage firm or other nominee and they wish to vote such shares, they must return their voting instructions to the bank, brokerage firm or other nominee.

If Company common stockholders hold Company common shares in an account of a bank, brokerage firm or other nominee and attend the Company’s special meeting, they should bring a proxy (referred to as a “legal proxy”) from their bank, brokerage firm or other nominee authorizing them to vote. Company common shares held by banks, brokerage firms or other nominees will NOT be voted unless such Company common stockholders instruct such banks, brokerage firms or other nominees how to vote.

Revocation of Proxies or Voting Instructions

Company common stockholders of record as of the record date may change their vote or revoke their proxy at any time before it is exercised at the Company’s special meeting by:

submitting notice in writing to the Company at MPG Office Trust, Inc., 355 South Grand Avenue, Suite 3300, Los Angeles, California 90071, Attention: Christopher M. Norton that you are revoking your proxy;
executing and delivering a later-dated proxy card or authorizing a later-dated proxy by telephone or on the Internet; or
voting in person at the Company’s special meeting.

Attending the Company’s special meeting without voting will not revoke your proxy.

Company common stockholders who hold Company common shares in an account of a bank, brokerage firm or other nominee may revoke their voting instructions by following the instructions provided by their bank, brokerage firm or other nominee.


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Tabulation of Votes

A representative of Broadridge Financial Solutions, Inc. will serve as the independent inspector of elections for the Company’s special meeting to tabulate affirmative and negative votes and abstentions.

Solicitation of Proxies

The Company has engaged MacKenzie Partners to assist in the solicitation of proxies for the special meeting and the Company estimates it will pay MacKenzie Partners a fee of approximately $50,000.


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THE MERGER – PROPOSAL 1

This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached to this proxy statement as Annex A, and the First Amendment, attached to this proxy statement as Annex B. You should read the entire merger agreement, as amended, carefully as it is the legal document that governs the merger.

The Parties

MPG Office Trust, Inc.

The Company is the largest owner and operator of Class A office properties in the Los Angeles central business district. The Company is a full-service real estate company with substantial in-house expertise and resources in property management, leasing, and financing. The Company’s common stock trades on the NYSE under the symbol MPG. For more information on the Company, visit our website at http://www.mpgoffice.com.

The Company was formed as a Maryland corporation on June 26, 2002 and elected to be a REIT for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2003. On June 27, 2003, the Company completed its initial public offering.

The Company’s operations are carried out through its operating partnership, MPG Office, L.P., referred to herein as the Partnership, which is a Maryland limited partnership. The Company is the sole general partner of the Partnership and owns 99.8% of the Partnership.

The Brookfield Parties

The Brookfield Parties that are Parties to the Merger Agreement. Brookfield DTLA was formed as a Delaware limited partnership formed on February 21, 2013 and converted to a Delaware limited liability company on May 10, 2013. Sub REIT is a Maryland corporation and was incorporated on April 19, 2013 and is an indirect wholly-owned subsidiary of Brookfield DTLA (except at or prior to the closing of the transactions contemplated by the merger agreement for preferred shares reasonably necessary to satisfy REIT requirements and the Sub REIT preferred shares to be registered with the SEC). REIT Merger Sub is a Maryland corporation and was incorporated on April 19, 2013 and is a direct wholly-owned subsidiary of Sub REIT (except at or prior to the closing of the transactions contemplated by the merger agreement for preferred shares reasonably necessary to satisfy REIT requirements). Partnership Merger Sub is a Maryland limited liability company and a direct wholly-owned subsidiary of REIT Merger Sub formed on April 19, 2013. Each of Brookfield DTLA, Sub REIT, REIT Merger Sub and Partnership Merger Sub has its principal executive offices at Brookfield Place, 181 Bay Street, Suite 330, Toronto, Ontario, Canada M5J 2T3. The telephone number of each of Brookfield DTLA, Sub REIT, REIT Merger Sub and Partnership Merger Sub principal executive offices is (416) 369-2300. Each of Brookfield DTLA, Sub REIT, REIT Merger Sub and Partnership Merger Sub is affiliated with BPO and was formed for the purpose of consummating the transactions contemplated by the merger agreement and has conducted no activities to date other than activities incidental to its formation and in connection with the transactions contemplated by the merger agreement.


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BPO. BPO is a corporation formed under the laws of Canada with its principal executive offices at Brookfield Place, 181 Bay Street, Suite 330, Toronto, Ontario, Canada M5J 2T3. The telephone number of BPO’s principal executive offices is (416) 369-2300. BPO operates head offices in New York, Toronto, Sydney and London. BPO owns, develops and manages premier office properties in the United States, Canada, Australia and the United Kingdom. As of the date hereof, BPO’s portfolio is comprised of interests in 109 properties totaling 66 million leasable square feet in the downtown cores of New York, Washington, D.C., Houston, Los Angeles, Denver, Seattle, Toronto, Calgary, Ottawa, London, Sydney, Melbourne and Perth, making it the global leader in the ownership and management of office assets. Landmark properties include the Brookfield Places in New York, Toronto and Perth, Bank of America Plaza in Los Angeles, Bankers Hall in Calgary and Darling Park in Sydney. BPO’s common shares trade on the NYSE and Toronto Stock Exchange under the symbol “BPO”. BPO is a guarantor of certain obligations of certain of the BPO parties in connection with the merger agreement. However, BPO is not an obligor of, and is not required to provide credit support for, the Sub REIT preferred shares.

General Description of the Merger

The Board has unanimously approved the merger agreement, the merger and the other transactions contemplated by the merger agreement and declared the same advisable and in the best interests of the Company. The merger agreement provides that the Company will merge with and into REIT Merger Sub. REIT Merger Sub will be the surviving corporation in the merger and will continue to do business following the merger. As a result of the merger, the Company will cease to be a publicly traded company. The officers of REIT Merger Sub will continue as the officers of the surviving corporation. See “The Merger Agreement—Directors and Officers of the Surviving Corporation” on page 85. In connection with the merger, Company common stockholders will receive the merger consideration described under “The Merger Agreement—Merger Consideration; Effects of the Merger and the Partnership Merger” on page 85.

Background of the Merger

In connection with its normal business activities and long-term planning, the Company regularly evaluates market conditions and potential financial and strategic alternatives to enhance stockholder value. From time to time since 2006, the Board considered various potential strategic alternatives, including a potential sale transaction. On two such occasions, in 2006 and again in 2008, the Company and BPO engaged in discussions regarding potential acquisition transactions. None of these conversations, with BPO or other interested parties, progressed beyond preliminary stages.

Beginning in 2008, and accelerating over the past several years, the Company carried out a business plan designed to increase stockholder value by rationalizing the Company’s portfolio. To this end, the Company systematically disposed of assets in order to generate and preserve cash, reduce its consolidated indebtedness and re-focus the Company on a concentration of trophy-quality office buildings in Downtown Los Angeles. By the end of the second quarter of 2012, the Company had made significant progress in achieving these goals. Between year-end 2008 and June 30, 2012, the Company had disposed of interests in 25 wholly-owned properties and three joint venture assets, aggregating approximately 8.7 million rentable square feet, and had reduced its consolidated indebtedness by more than $2.2 billion. In addition, by June 30, 2012, the Company had agreements in place to dispose of additional interests in four wholly-owned properties and one joint venture asset, aggregating approximately 2.3 million rentable

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square feet that would reduce its consolidated indebtedness by an incremental $759.8 million. All of these assets were disposed of by December 31, 2012. In addition, on July 9, 2012, the Company extended the maturity date of the mortgage loan secured by KPMG Tower for an additional one year to October 9, 2013.

Despite this progress, the Company’s business continued to face significant challenges, including increasing capital requirements. Market conditions in Downtown Los Angeles remained soft, and landlords (including the Company) responded to such market softness and other market pressures by increasing rental concessions and tenant improvement allowances. These market trends increased the costs of attracting and retaining tenants. Additionally, the perception among existing and prospective tenants that the Company was financially distressed also made it increasingly difficult and more expensive for the Company to attract and retain tenants. As of July 9, 2012, the Company had approximately $900.0 million of indebtedness maturing in 2013. Much of this indebtedness was not expected to be re-financeable absent significant debt pay-downs in order to “re-margin” the debt to market-acceptable levels. The combination of the magnitude of the Company’s upcoming capital needs, an indebtedness level which was significantly in excess of market peers and a capital structure that included Company preferred shares with more than $64.9 million of dividends in arrears as of June 30, 2012, made accessing the capital markets difficult. In addition, the existence of tax indemnification agreements entered into with Robert F. Maguire III at the time of the Company’s initial public offering, restricted the Company’s ability to dispose of two of its properties prior to June 27, 2013, and an additional three properties prior to June 27, 2015. These agreements limited the ability of the Company to sell assets to improve its liquidity. The Company also continued to experience negative monthly cash flow, putting additional pressure on the Company’s liquidity.

Towards the end of the second quarter of 2012, the process of rationalizing the Company’s business was nearing completion. The end result of that was a portfolio consisting primarily of core Downtown Los Angeles properties. However, the Company’s existing capital structure and on-going liquidity challenges made it difficult, and potentially impossible, for the Company to retain that portfolio while continuing to make the investments necessary to increase occupancy to the stabilized levels necessary to create long-term value.

Recognizing these developments, the Board and senior management concluded that enhancing stockholder value likely required a significant, Company-level transaction that would either reshape the Company’s capital structure while addressing the Company’s liquidity issues, or result in a sale of the Company to a buyer with the financial structure and resources necessary to potentially realize the substantial long-term value of the Company’s portfolio. The Board and senior management also noted that, despite the Company’s substantial progress in refocusing its business and shedding debt, the Company’s common share price continued to languish. Accordingly, in early 2012, the Board determined to begin a more formal and intensive exploration of potential strategic alternatives for the Company. With the Board’s consent, senior management and one of the independent directors held a series of meetings with potential financial advisors during late February 2012 and early March 2012. Thereafter, at a meeting on March 8, 2012, the Board determined to invite two financial advisors to attend a future Board meeting in late March 2012 to present their qualifications and experience.


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At a March 20, 2012 Board meeting, the Board invited Wells Fargo Securities and BofA Merrill Lynch to attend the meeting and discuss their respective qualifications and experience in acting as the Company’s financial advisor. The Board discussed, among other things, preliminary potential strategic alternatives available to the Company. Following this meeting, the Board and senior management evaluated the qualifications of each of Wells Fargo Securities and BofA Merrill Lynch, with a view toward determining whether the Company should hire one or both of them as its financial advisor.

On June 22, 2012, the Board held a meeting, together with representatives of the Company’s management, the Company’s outside legal counsel, Latham & Watkins LLP (“L&W”), Wells Fargo Securities and BofA Merrill Lynch, to discuss the Company’s existing capitalization, liquidity and operational challenges and potential strategic alternatives for the Company. These strategic alternatives included (i) continuing to operate the Company pursuant to its existing long-term plan and sell assets to maintain liquidity as needed, (ii) raising capital in one or more public offerings in an amount sufficient to address short-term and long-term liquidity needs, (iii) raising a similar amount of capital in private transactions and (iv) a sale of the Company. The Board considered that continuing operations without raising significant capital was unrealistic given the Company’s high leverage ratio, its liquidity issues and near-term debt maturities, and the need to utilize asset sales as a means of generating cash that detracted from the Company’s core strengths as a dominant owner of Downtown Los Angeles trophy-quality office assets. It also was noted that a significant capital raising transaction, whether public or private, raised significant challenges. Foremost among these was the amount of funds that the Company would need to raise in order to fully address its near-term and long-term capital requirements. Recent market precedent called into question whether it would be possible to consummate a capital-raising transaction of sufficient magnitude to achieve the Company’s goals. Even assuming that it was possible to consummate a transaction of sufficient magnitude to achieve the Company’s goals, it was likely that, given the large size of such a transaction, the market would view the transaction as a de facto “re-IPO.” Pricing would therefore likely result in significant dilution to existing holders of Company common shares. If the Company sought to raise the required capital in one or more private transactions, it was likely that a potential bidder would seek rights and protections that would require the Company to obtain stockholder approval and consents of lenders under certain of the Company’s property-level loans as conditions to closing. In evaluating whether to undertake a formal sale process, the Board acknowledged that a sale transaction also presented a number of significant challenges. First, it would require approval of stockholders holding at least two-thirds of Company common shares. Although this is the default standard under Maryland law, the Board noted that this approval threshold had sometimes been difficult to satisfy in transactions involving other REITs, even in transactions that were generally well-received by stockholders, proxy advisors and analysts. Second, the Board considered that the Company would likely be required to obtain consents from lenders under certain of the Company’s property-level loans, adding closing risk to any transaction that might emerge from the process. Additionally, prepayment restrictions and penalties on the Company’s Gas Company Tower and Wells Fargo Tower mortgage loans substantially limited, or made economically inefficient, the Company’s ability to refinance these loans as part of any such transaction. After weighing these and other factors, the Board ultimately determined that the Company should undertake a strategic transaction process focused on a potential sale of the Company, but left open the possibility of alternative transactions, possibly including investments in the Company or its subsidiaries, if those alternatives could result in the creation of greater value for the Company’s stockholders.


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The Board also concluded that, given the Company’s liquidity and debt maturity issues, it would be more challenging to undertake a sale process at a future stage if the current process were unsuccessful; accordingly, the Board determined that the Company should solicit interest from a broad list of potential bidders in order to enhance both the likelihood of success and value for the Company’s common stockholders. During and after the June 22, 2012 meeting, the Board and senior management devoted substantial time to developing a list of potential process participants, including a broad cross-section of private equity firms, advisors and operators with well-developed relationships with capital sources, sovereign wealth funds and sovereign pension funds, public REITs and other public companies, international investors and extremely high net-worth individuals. The Board and senior management stressed the importance of establishing a systematic and broad process with as level a playing field as possible, but noted that among the key considerations in selecting potential bidders was whether they would have sufficient financial resources and experience owning and operating commercial real estate assets to meet certain “qualified transferee” requirements under certain of the Company’s property-level loans. Meeting those criteria would facilitate obtaining debt consents, which, as noted above, was likely to present a risk to closing a strategic transaction.

At the conclusion of the June 22, 2012 meeting, the Board determined to engage both of Wells Fargo Securities and BofA Merrill Lynch as the Company’s financial advisors. In making that determination, the Board considered, among other things, Wells Fargo Securities’ and BofA Merrill Lynch’s respective reputation and experience in transactions involving equity REITs. In the case of Wells Fargo Securities, the Board also considered that (i) an affiliate of Wells Fargo Securities had made a personal loan to a borrower that was secured by operating partnership units and Company common shares and that, if fully foreclosed, would result in an affiliate of Wells Fargo Securities becoming the holder of more than 5.0 million operating partnership units, (ii) a Wells Fargo Securities affiliate owned approximately 1.1 million Company common shares as a result of a partial surrender of the collateral securing such loan, (iii) an affiliate held a participation interest in the mortgage loan secured by KPMG Tower that was acquired as a result of a loan portfolio acquisition, (iv) an affiliate served as master servicer on several CMBS facilities relating to Company properties, and (v) an affiliate was a tenant in Wells Fargo Tower. The Board determined, notwithstanding these matters, that engaging Wells Fargo Securities (including the Eastdil Secured real estate investment banking group) would be important to the success of any sale process because of its prominent position in the industry and its significant experience in the Downtown Los Angeles real estate market. However, the Board also believed that it would be prudent to engage a second financial advisor and that BofA Merrill Lynch was the best choice for this role given its reputation and experience in transactions involving equity REITs.

At market close on June 22, 2012, the Company common shares were trading at $1.92 per share.

From July 2012 through September 2012, in accordance with the Board’s directives, approximately 90 potential bidders were contacted based on the list of potential process participants that had been developed by the Board and senior management in consultation with the financial advisors. The Company negotiated and executed confidentiality agreements with 24 sponsors and investors and two capital sources, all of which met the qualified transferee requirements that the Board had established in its June 22, 2012 meeting. The Company gave property tours to 11 sponsors and investors and one capital source. During this period, the potential transaction parties that had executed confidentiality agreements and elected to move forward in the process were given access to an online data room to facilitate review of due diligence materials.


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Each confidentiality agreement entered into as described above contained a provision, referred to as a standstill, preventing, for periods ranging from one year to two years, the potential bidder from taking action to seek control of the Company, including by making a proposal to acquire the Company, unless specifically invited in writing by the Company. Each confidentiality agreement also contained a provision making clear that the Company reserved the right, in its sole discretion, to conduct any process it deemed appropriate with respect to any proposed transaction involving the Company. The provisions together were designed to provide the Board with control over the process of soliciting acquisition proposals for the Company and to maximize the value of such proposals in such process. In addition, each confidentiality agreement contained a provision stating that a potential bidder was not permitted to ask for a waiver of the standstill, referred to as a no-ask, no-waiver provision. The no-ask, no waiver provision was intended to prevent a situation in which a potential bidder might avoid complying with the processes determined by the Board by seeking a waiver and forcing a premature public disclosure of the Company’s strategic transaction process. As noted above, the Board had concluded that, given the Company’s liquidity and debt maturity issues, it would be more challenging to undertake a sale process at a future stage if the current process were unsuccessful. Accordingly, the no-ask, no-waiver provision was also intended to maximize the possibility that the process would be successful by incentivizing parties with interest in a potential acquisition of, or investment in, the Company to participate actively in the process. The no-ask, no-waiver provision allowed the Company to solicit competing proposals from all parties subject to such standstill provisions and allowed all such parties to make competing proposals, subject to certain conditions, without violation of the standstill.

On July 23, 2012, at the request of Robert F. Maguire III, the Company issued 3,975,707 Company common shares to an unaffiliated third party in exchange for operating partnership units owned by Mr. Maguire and related entities. As a result of these redemptions, all tax indemnification agreements in favor of Mr. Maguire and related entities expire on June 27, 2013, including the restrictions on the Company’s ability to sell in taxable transactions each of Gas Company Tower, US Bank Tower, KPMG Tower, Wells Fargo Tower and Plaza Las Fuentes. The Company announced the redemptions and the resulting acceleration of the expiration of these tax indemnification agreements on July 26, 2012.

On July 24, 2012, an article appeared in REIT Wrap, a daily email newsletter published by REIT Zone Publications, LLC, speculating that the Company was engaged in a sale process.

At market close on July 26, 2012, the Company common shares were trading at $3.26 per share, up from $2.57 a day earlier. The trading price for the Company common shares remained at or above $2.50 per share for substantially the entire period thereafter until announcement of the Company’s transaction with BPO.

On August 21, 2012, The Wall Street Journal printed an article indicating that the Company was pursuing a possible sale. These articles increased attention on the Company and speculation about the strategic transaction process.

In late September 2012, the Board established a first round bid deadline of September 28, 2012, which was relayed to the potential bidders. On October 2, 2012, the Board met to discuss the progress of the strategic review process. As of the date of the meeting, the Company had received non-binding proposals from the following four parties:

BPO proposed to acquire the Company in an all-cash transaction that valued the Company common shares at $2.10 per share. The Company preferred shares would remain outstanding and BPO would assume all of the Company’s outstanding loans. BPO’s proposal

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assumed that the definitive transaction agreement would include customary deal protections and a satisfactory termination fee. BPO had engaged in significant due diligence prior to making its bid. As a result of this and BPO’s ownership of three assets in the Downtown Los Angeles office market, BPO was familiar with the Company’s assets and the Downtown Los Angeles office market.
Investor Group A, a combination of two sophisticated investment groups that did not own assets in Downtown Los Angeles, but had significant experience with office property investments, proposed to acquire the Company in an all-cash transaction that valued the Company common shares at $5.00 per share. Investor Group A was committed to fund 50% of the equity capital required to complete the transaction and make all necessary post-closing investments. Accordingly, Investor Group A would be required to raise the remaining required equity capital from third party capital sources. Given its historical ability to raise capital, Investor Group A believed it would be able to raise the required capital. Investor Group A had not specified how the Company preferred shares or the Company’s indebtedness would be treated, and conducted limited diligence prior to making its proposal.
Investor B, a private institutional REIT with a well-known and sophisticated sponsor, proposed a transaction pursuant to which a new public company would acquire both the Company and the Investor B REIT, with the Company’s stockholders receiving equity in the new public REIT equal in value to approximately $100.0 million (or 5% of the equity value of the combined company), which would be approximately $1.65 per share based on the Company’s then fully diluted Company common shares. Investor B’s proposal contemplated that the Company preferred shares would remain outstanding and all indebtedness would remain in place. In the creation of a new public REIT, Investor B’s proposal contemplated a number of complexities absent in the other transactions, including negotiations regarding the structure and governance of the combined entity, the relative value of Investor B’s assets that consisted primarily of Class B office and apartment assets, and the terms of any external management agreement, all of which would have important implications affecting the Company’s stockholders.
Investor C, a large, well-known private equity firm with access to significant capital, proposed a $300.0 to $400.0 million single-draw, 10-year term loan to the Company with a 12% coupon, up to 4% of which would be pay-in-kind, which would begin amortizing after five years and include a five-year prepayment lockout. Investor C would also receive penny warrants equal to 19.9% of the Company common shares. Important details of the loan proposal were unspecified, including key covenants, operating restrictions and potential governance rights. Investor C also conducted limited diligence prior to making its proposal.

The Board discussed the relative merits of the four proposals, and instructed senior management, with the assistance of the financial advisors, to continue pursuing potential transactions with each of BPO, Investor Group A and Investor B. The Board preliminarily had determined not to pursue additional discussions with Investor C based largely on an initial view that Investor C’s proposal was unlikely to result in any benefit to the Company’s common stockholders. Between the significant interest rate on the proposed loan and the penny warrants contemplated by Investor C, it appeared that most or all of the value that could be generated by $300.0 million to $400.0 million of new capital would flow to Investor C and, if market conditions deteriorated, the loan could be foreclosed leaving the Company’s common

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stockholders with nothing. In addition, there was a possibility that the operating covenants in the term loan would result in a de facto change of control of the Company. The Board also requested additional information with respect to Investor C’s proposal and, if such a loan could be beneficial to the Company and achievable on terms reasonably likely to be acceptable to a potential bidder, the Board could instruct the financial advisors to re-engage with Investor C, and potentially others, to pursue such an option. After discussions with senior management and the Company’s advisors, the Board determined to target a second round bid deadline on or around October 22, 2012.

Following the October 2, 2012 meeting, a draft merger agreement and related disclosure schedule were posted to the Company’s online data room.

Throughout October 2012, BPO continued to conduct due diligence relating to the Company, including attending an in-person due diligence session and management presentation on October 16, 2012. In accordance with the Board’s directives, the financial advisors also held discussions with Investor Group A and Investor B on multiple occasions during this period, but neither bidder engaged in any meaningful due diligence on the Company leading up to the October 22, 2012 bid deadline.

No bids were submitted at the October 22, 2012 bid deadline. Nevertheless, at the Board’s request, the financial advisors continued discussions with each of the three bidders in an effort to obtain bids. These discussions included calls between the financial advisors and BPO about its bid on October 23, 2012 and again on November 2, 2012. During the November 2nd call, BPO informed the financial advisors that it was withdrawing its initial indication of interest based primarily on valuation concerns, but expressed a willingness to evaluate individual asset acquisitions. In accordance with the Board’s directives, the financial advisors informed BPO that individual assets were not for sale.

Thereafter, the financial advisors made substantial efforts on behalf of the Company to progress Investor Group A’s and Investor B’s proposals and had a number of calls and meetings with Investor Group A and Investor B. On or around October 30, 2012, the Company delivered to Investor B a draft term sheet setting forth a structure that could be used as a basis to effect a combination transaction with Investor B. No pricing terms were included, although it was noted that the value proposed by Investor B would need to be increased substantially if discussions were to progress. Investor B responded to the Company’s term sheet with a mark-up on November 5, 2012. The mark-up reflected little progress, with key features of Investor B’s proposal largely unchanged.

On November 8, 2012, the Board met to review the strategic transaction process. Senior management and the Company’s legal and financial advisors updated the Board on the status of discussions with each of the bidders. The Board discussed with the financial advisors financial aspects of Investor B’s and Investor C’s respective proposals. Based on discussions with Investor B and preliminary due diligence, the financial advisors noted for the Board a preliminary estimate of the value of Investor B’s proposal of approximately $1.28 to $1.53 per share. After discussions regarding Investor C’s loan proposal, the Board concluded that such a loan proposal would not be economically attractive to the Company or likely to increase stockholder value.

Up to this point in the process, at the Board’s direction, senior management had not engaged in direct negotiations with either Investor Group A or Investor B. In an effort to determine whether a transaction with either Investor Group A or Investor B would be viable, the Board now requested that senior management become personally involved in discussions with the two bidders and seek to negotiate directly with them in the coming weeks.

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Given the uncertainty of the remaining proposals, the Board also requested that senior management and the financial advisors review other potential alternatives available to the Company, including limited asset sales. In response to the Board’s request, senior management engaged in a series of discussions with Beacon Capital (“Beacon”), the Company’s joint venture partner in One California Plaza and Cerritos Corporate Center, about a potential acquisition by Beacon of the Company’s interest in the joint venture. Those discussions progressed rapidly and, by the end of November 2012, Beacon had made a definitive proposal that could be consummated before year-end. The Board also requested that senior management propose a retention plan that would incentivize the Company’s employees to stay with the Company in the event the sale process was unsuccessful.

In the two weeks after the November 8, 2012 Board meeting, L&W and Investor Group A’s legal counsel discussed on multiple occasions legal matters relating to Investor Group A’s proposal.

On November 9, 2012, Investor Group A informed the financial advisors that it was unlikely to be able to obtain the additional 50% equity financing necessary to consummate its earlier acquisition proposal. As a result, Investor Group A proposed instead to acquire newly issued Company common shares at a price of $4.00 per share, and warrants to acquire additional Company common shares at $5.25 per share, for aggregate consideration of $150.0 million. The initial shares would represent approximately 38.5% of the outstanding Company common shares on a post-issuance basis, and the shares subject to warrants would increase Investor Group A’s ownership to approximately 51%. Investor Group A’s proposal would require common stockholder approval under applicable NYSE rules, and would be conditioned on the extension or refinancing of all of the Company’s 2013 debt maturities.

On November 13, 2012, the Company, together with representatives of the financial advisors, met with Investor Group A to discuss Investor Group A’s proposal and a process and timeline for Investor Group A to conduct due diligence and negotiate definitive agreements. On November 21, 2012, the Company delivered a draft term sheet to Investor Group A that set forth a framework for a potential transaction. On November 26, 2012, the Company and its advisors conducted an in-person due diligence and negotiation session with Investor Group A. At the end of the meeting, Investor Group A expressed concern that there was not sufficient value in the transaction and, if it did proceed, it would want full control of the Company. Following that meeting, Investor Group A was not willing to discuss the Company’s counterproposal term sheet in detail, but suggested it would provide additional feedback in the near future. Based on these indications, it appeared that Investor Group A was unlikely to proceed with the transaction.

In accordance with the Board’s directives, the Company’s advisors met with representatives of Investor B on November 14, 2012 and November 16, 2012 to review the proposed terms of the strategic transaction. Investor B’s proposal continued to contemplate a combination of the Company and the Investor B REIT in a new public company. Despite multiple conversations in which the Company and its advisors had made it clear to Investor B that the value for the Company’s common stockholders implied in Investor B’s proposal was inadequate, Investor B had not altered its proposal to increase its potential value to the Company’s stockholders. Investor B also now proposed that, prior to a stockholder vote and regardless of whether the transaction closed, the Company would be obligated to sell 777 Tower and the 755 South Figueroa land parcel to Investor B for consideration that was substantially less than the amount that could potentially be obtained in a fully marketed sale process. Although Investor B was willing to consummate the transaction even in the absence of obtaining debt consents, Investor B was unwilling to permit the Company to spend any of its own money to obtain those consents. Proceeding with the

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transaction in the absence of debt consents raised a number of legal and financial issues, including potential violations of so-called “non-recourse carve-out guarantees” by the Partnership that could have resulted in property-level mortgage debt becoming a recourse obligation of the Partnership. This would have been significantly detrimental to holders of the Company preferred shares, which would remain outstanding following the transaction. The proposal also contemplated that all transaction costs would be paid for by the Company. Investor B was not willing to put any of its own capital at risk. The combined company also would have an external, fee-based management structure, which structure it was believed, based on other publicly traded externally managed REITs, could adversely affect the trading price of Company common shares after the closing. Finally, Investor B still had not engaged in significant due diligence efforts and had indicated that it would not be willing to proceed with due diligence and negotiation of definitive agreements unless the Company granted it exclusivity and agreed to reimburse it for its due diligence expenses. Based on these discussions, it appeared that Investor B would not deviate significantly from the terms proposed at the meeting and would be unlikely to increase its proposed merger consideration.

On November 11, 2012, in accordance with the Board’s directives, the financial advisors discussed with Overseas Union Enterprise Ltd (“OUE”), a hotel and property group controlled by Indonesia’s Lippo Group, about OUE’s potential interest in a strategic transaction. The Company entered into a confidentiality agreement with OUE on November 20, 2012, which included a standstill and a no‑ask, no waiver provision. OUE indicated that, while it might consider an investment in the Company, it was primarily interested in purchasing individual assets as the leverage level of the Company as a whole was greater than it was willing to undertake. At the Company’s direction, the financial advisors focused OUE’s interest on US Bank Tower.

On November 14, 2012, the Company’s and BPO’s senior management met briefly at a National Association of Real Estate Investment Trusts conference and BPO expressed potential interest in exploring a funding structure that could facilitate a purchase of the Company. Representatives of BPO stressed that BPO would have to raise a substantial portion of the capital for any transaction and it would not attempt to raise the capital unless the Company gave it an exclusivity period in which to do so. No specific transaction terms, including price, were discussed. On November 27, 2012, in accordance with the Board’s directives, senior management and the financial advisors had discussions with BPO as a follow up to the November 14, 2012 meeting. Representatives of BPO again indicated that BPO might be willing to make an acquisition proposal in the future, at a price in the range of $2.55 to $2.65 per share, but that any acquisition proposal would be contingent on obtaining additional third-party capital and an exclusivity period.

In response to the Board’s previous request that senior management propose a retention plan for the Company’s management and key employees that would incentivize them to stay with the Company in the event the sale process were unsuccessful, the Compensation Committee of the Board (the “Compensation Committee”) held a meeting on November 16, 2012 at which it considered certain proposed initiatives developed in consultation with the Compensation Committee’s independent compensation consultant and the Company’s outside legal advisor to enhance retention for the Company’s management and key employees. These proposed initiatives included (i) adopting a retention program for all employees, including senior management, that generally provided for certain cash payments on a quarterly basis during 2013 (12.5% per quarter) and the balance (50%) at the end of the first quarter of 2014, subject to certain payment delay by up to two calendar quarters, provided that, severance payments for senior executives with employment agreements would be reduced by an amount equal to 75% of the

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retention payment, (ii) amending the Company’s then-current change in control severance plan to provide for certain severance benefits equal to two weeks of base salary per year of service, with a cap of 26 weeks (subject to limited exceptions) in the event of a termination of employment without cause (irrespective of whether a change in control of the Company had occurred), and (iii) making certain other changes to employment arrangements for certain employees below senior management. In addition, the Company’s outside legal advisor outlined certain proposed amendments to the employment agreements with Mr. Weinstein, Mr. Norton and Ms. Moretti that would (A) for each executive, clarify that a termination of employment (other than for cause, voluntary resignation or due to death or disability) that occurred as a result of a disposition of all or substantially all of the Company’s assets would constitute a termination without cause (or for good reason, if applicable), (B) for Mr. Weinstein and Mr. Norton only, convert the agreement from a fixed employment term to an indefinite term, (C) for Ms. Moretti only, extend her existing employment term by one year until December 31, 2015, and (D) for Mr. Norton only, update his title and duties and responsibilities to reflect his promotion to Executive Vice President, General Counsel and Secretary, and include “good reason” termination provisions consistent with his position. The Compensation Committee unanimously determined to recommend to the Board that the Company adopt the proposed retention plan and amended severance plan, and approve the proposed employment agreement amendments for Mr. Weinstein, Ms. Moretti and Mr. Norton. In addition, the Compensation Committee unanimously approved the other changes to employment arrangements for certain employees below senior management.

On November 28, 2012, the Board met to consider various matters, including the continued review of potential strategic transactions. The financial advisors informed the Board of recent developments with each of BPO, Investor Group A, Investor B and OUE. Although BPO had expressed the possibility of submitting an acquisition proposal, it had not yet done so. The Board then discussed with the Company’s legal and financial advisors Investor B’s revised proposal. The Board determined that there were significant, and potentially insurmountable, problems with Investor B’s proposal. The purchase price was considered too low, the structure of the transaction would have left the Company’s stockholders owning only 5% of the combined entity, the proposed treatment of debt consents presented substantial risks to the preferred stockholders, the proposal for the sale of 777 Tower and 755 South Figueroa was commercially unacceptable and the transaction would have been taxable to the Company’s common stockholders without providing them with cash to pay such taxes. In addition, Investor B had not performed significant due diligence. The Board therefore rejected Investor B’s request for exclusivity and reimbursement of diligence expenses. Given the lack of interest by other potential bidders, the Board instructed senior management and the financial advisors to continue to pursue discussions with BPO, Investor Group A and Investor B in the hope of producing an acceptable proposal. Next, the Board considered the potential sale to Beacon of the Company’s interests in their joint venture. The Board considered the price and terms of the Beacon transaction and concluded that the transaction was in the Company’s best interest. The Board directed senior management to negotiate definitive agreements with a goal of completing the transaction before year-end. Finally, the Board received detailed information regarding the proposed retention plan and amended severance plan, and the proposed employment agreement amendments for Mr. Weinstein, Mr. Norton and Ms. Moretti that were recommended by the Compensation Committee at its November 16, 2012 meeting, and the Compensation Committee’s approval of certain other changes to employment arrangements for certain employees below senior management. Given the necessity to retain employees to continue the operation of the Company as an ongoing entity in the event that the strategic transaction process failed to produce an executable transaction that increased stockholder value and in light of the fact that the two remaining acquisition proposals were perceived to have limited probability of developing into acquisition proposals that would

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create stockholder value, the Board unanimously adopted the proposed retention plan and amended severance plan, approved the proposed employment agreement amendments for Mr. Weinstein, Ms. Moretti and Mr. Norton and approved the other changes to employment arrangements for certain employees below senior management.

On November 29, 2012, Investor Group A formally informed the Company that it was not going to proceed with its proposal to invest $150.0 million in the Company. Investor Group A stated that it would need to acquire the Company and gain full operational control. While unwilling to provide price guidance, Investor Group A noted that, assuming it was able to raise equity financing, it would expect to pay a price per Company common share above the Company’s then current market price, and that the Company preferred shares would likely remain outstanding after any such acquisition. Investor Group A indicated that it could fund only $150.0 million of any acquisition price, and would need to syndicate the remaining equity. Accordingly, it proposed a process whereby it and the Company would agree on the material terms of a transaction, and potentially the form of acquisition agreement, and then Investor Group A would be given a period of exclusivity to approach potential co-investors and raise the remaining equity financing.

Also on November 29, 2012, in accordance with the Board’s directives, the financial advisors held a call with representatives of OUE to provide information on the Company and its assets.

Between November 29, 2012 and December 4, 2012, in accordance with the Board’s directives, the Company’s legal and financial advisors engaged in a series of discussions with Investor B and, on November 30, 2012, the Company delivered to Investor B a revised term sheet which reflected terms that were consistent with the concerns raised by the Board. During this period, the Company’s and Investor B’s respective tax advisors also engaged in a series of discussions, which resulted in a mutual conclusion that Investor B’s proposal presented potentially significant tax risks for the Company’s common stockholders. On December 4, 2012, the Company’s financial advisors met in-person with Investor B to discuss its proposal.

On December 4, 2012, representatives of BPO orally relayed a proposal to acquire the Company in an all-cash transaction that valued the Company common shares at $2.70 per share. BPO indicated that this was the maximum price that it would be willing to pay for the Company. BPO would structure the transaction as a combination of the Company and its own Downtown Los Angeles properties, and would seek to create a fund that would directly or indirectly hold all of these assets. The proposal was subject to BPO’s ability to raise significant third-party equity, and BPO had proposed a transaction process whereby it and the Company would negotiate the form of definitive transaction documents during a period of exclusivity in which BPO would seek third-party equity capital commitments from its current investors in its Downtown Los Angeles portfolio and other institutional investors with which it had investment relationships. BPO was optimistic but made no assurance that it could raise the required capital. BPO also stated that its due diligence was substantially complete, except that it would seek to conduct environmental tests at certain of the Company’s Downtown Los Angeles properties for a widely used commercial building material that could potentially contain asbestos (the “building material testing”).

Later on December 4, 2012, the Board met to consider various matters, including to continue its review of the strategic transaction process. The financial advisors updated the Board on developments in the process and the Board encouraged senior management, with the assistance of the Company’s advisors, to continue efforts with BPO.


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On December 7, 2012, BPO submitted a mark-up of the Company’s proposed merger agreement, and requested that, as a condition to BPO committing to pursue a definitive agreement and raise equity capital, the Company agree to negotiate exclusively with BPO for a period of 60 days. BPO’s merger agreement mark-up, which had been delivered through its counsel, Fried, Frank, Harris, Shriver & Jacobson LLP (“Fried Frank”), presented a number of significant issues, including: (i) that BPO’s obligation to close was conditioned on receipt of consents from lenders on all of the Company’s outstanding debt, (ii) the limitations on the Company’s rights and BPO’s obligations to take actions necessary to obtain debt consents, (iii) that BPO’s obligation to close was conditioned on the Company having a minimum net worth at the closing, (iv) an extensive package of deal protection provisions, including (x) a proposed termination fee implied to be between $40.0 million and $48.0 million, (y) triggers for the payment of the termination fee that made it highly probable that the Company would ultimately have to pay the fee if the transaction were not approved by the Company’s stockholders and (z) a provision that would force the Company to terminate the agreement if the Board were required to exercise its legal duty to change its recommendation to stockholders, (v) the breadth of the definition of “material adverse effect,” which was used to qualify the Company’s representations and warranties and to determine whether adverse events prior to the closing were sufficient to relieve BPO of its obligation to close, (vi) the significant limitations on the Company’s ability to refinance, replace, extend or modify its indebtedness with near-term maturities, (vii) significant limitations on the Company’s ability to operate in the ordinary course without consent from BPO to certain matters between signing and closing, including significant restrictions on hiring or replacing employees, entering into leases, and making capital expenditures, (viii) the scope of the Company’s representations and warranties, and the extent to which those representations would need to be true at closing (colloquially, the “representation and warranty bring-down standard”) in order for BPO to remain obligated to close, (ix) questions about whether the BPO parties to the agreement would be fully credit worthy, or shell entities, (x) considerations related to whether the buyer entities would satisfy the “qualified transferee” provisions under the Company’s various loan agreements and (xi) a proposed “outside date,” after which either party would be free to terminate the agreement if they had not breached the agreement, that the Company viewed as too short.

Also on December 7, 2012, representatives of OUE contacted the Company’s financial advisors to express preliminary interest in acquiring US Bank Tower.

On December 10, 2012, Investor Group A informed the Company’s financial advisors that it was continuing to attempt to raise equity capital to pursue a transaction with the Company but was having difficulty raising the equity capital required to make a definitive proposal. Investor Group A stated that if it were unable to make progress over the next few days, it would withdraw from the process.

Between December 5, 2012 and December 10, 2012, in accordance with the Board’s directives, the financial advisors had a number of conversations with representatives of Investor B, but little progress was made in negotiations.

Between December 8, 2012 and December 10, 2012, the Company and its advisors prepared a revised draft of the merger agreement responding to the points raised in BPO’s December 7, 2012 mark‑up. L&W delivered the draft to Fried Frank on December 10, 2012.


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On December 11, 2012, the Board met to consider various matters, including an update on the strategic transaction process. The financial advisors updated the Board on developments with each of the bidders. Senior management and L&W summarized BPO’s mark-up to the draft merger agreement, highlighting key issues, as well as describing how the Company and L&W had responded to those issues in its reply draft. The Board concurred with senior management’s and L&W’s views regarding the key issues presented by BPO’s draft and the Company’s positions on responses.

The Board also considered BPO’s request for exclusivity and authorized management to negotiate and enter into an exclusivity agreement with BPO, subject to certain limitations on key terms. In making this determination, the Board noted that BPO was the only bidder that had conducted significant due diligence in the process, was the only bidder that had submitted a mark-up to the Company’s draft merger agreement and was essentially the only bidder left in the process given the low probability in the Board’s view that Investor Group A and Investor B would proceed with their respective proposals. The Board considered that Investor Group A appeared likely to withdraw from the process, that negotiations with Investor B had not progressed despite weeks of efforts, and that Investor B’s proposal also appeared to be impacted by tax issues that could result in a taxable transaction to the Company’s common stockholders without providing those stockholders with any cash consideration. The Board also considered that OUE’s interest centered primarily on US Bank Tower rather than a whole company transaction. Additionally, the Board noted that, although BPO’s proposed transaction was subject to raising significant third-party capital, BPO had a proven history of raising commercial real estate funds and deep ties with potential co‑investors. BPO also had a portfolio of high-quality office properties in Downtown Los Angeles that it could combine with the Company’s properties in any fund structure, enhancing the potential attractiveness of the investment opportunity and therefore increasing the likelihood that BPO would be able to raise the needed funds. The Board also took into consideration that BPO had expressed its unwillingness to move forward without exclusivity, in part because BPO did not believe it would be able to raise the necessary equity capital if other potential buyers were in the market seeking to raise funds for a competing transaction. In light of all these factors, the Board determined that granting BPO a period for exclusive negotiations was prudent and in the Company’s best interests.

On December 12, 2012, in accordance with the Board’s directives, senior management and the financial advisors contacted BPO to discuss its request for exclusivity and related process matters. Senior management and the financial advisors highlighted certain open points in BPO’s draft merger agreement, and indicated that, prior to granting exclusivity to BPO, the Company would need to approve a list of investors that BPO intended to approach and that the parties would need to make additional progress toward resolving these open points. Later that day, L&W delivered a revised draft of the merger agreement to Fried Frank.

On December 13, 2012, Investor B submitted a revised proposal, the terms of which were largely consistent with its prior proposal and did not address any of the major concerns that had been raised by the Board. Despite substantial efforts over two months, Investor B remained unwilling to revise its bid to address most of the significant concerns that had been raised by the Company and still had not engaged in significant due diligence. Moreover, the parties’ respective tax advisors had not been able to solve the tax risks presented by Investor B’s proposed structure. Based on these considerations, and at the Board’s request, the financial advisors informed Investor B on December 17, 2012 that the Company was unwilling to proceed on Investor B’s proposed terms. While the Company did not formally preclude Investor B from continuing to pursue a potential transaction, Investor B effectively withdrew from the process at that point.


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On December 14, 2012, in accordance with the Board’s directives, the financial advisors met in person with representatives of OUE to discuss due diligence of the Company and certain of its assets.

On December 17, 2012, representatives of BPO discussed with the Company’s financial advisors BPO’s proposed list of equity investors. The financial advisors conferred with the Company regarding these potential investors and, over a period of days thereafter, the Company and BPO agreed on a list of prospective investors that BPO could approach. The list evolved at various times thereafter with the Company’s approval.

On December 21, 2012, the Company announced the sale of its 20% joint venture interest in One California Plaza and Cerritos Corporate Center to Beacon.

Throughout late December 2012 and early January 2013, BPO, the Company, and their respective counsel negotiated the terms of an exclusivity agreement. The parties executed a definitive exclusivity agreement on January 9, 2013. The agreement provided for an exclusivity period ending on February 28, 2013, included a customary “fiduciary out” in favor of the Company, permitted the Company to concurrently pursue, but not consummate, potential sales of US Bank Tower and Plaza Las Fuentes and gave the Company the right to terminate the agreement if certain milestones were not achieved relating to negotiation of definitive agreements and BPO’s efforts to obtain requisite equity financing.

On January 10, 2013, the Board held a meeting to receive updates on a number of matters, including the strategic transaction process. As part of its contingency planning in the event that the strategic transaction process was unsuccessful, the Company had begun preparations to sell Plaza Las Fuentes. Senior management and the Board shared the view that retaining the flexibility to sell this asset was important in the negotiations with BPO. Senior management then informed the Board that earlier that day, OUE had relayed a preliminary indication of interest to acquire US Bank Tower. Senior management and the Board agreed that the Company should seek an increased purchase price and actively pursue a transaction with OUE. Although a sale of US Bank Tower would not address many of the longer-term issues facing the Company, it would provide sufficient cash to address most of the Company’s near-term liquidity needs. This cash, in turn, would mitigate the potentially negative results that may occur if no strategic transaction was consummated, and the sale would also address the pending maturity of the US Bank Tower mortgage loan in early July 2013. Retaining the flexibility to sell Plaza Las Fuentes would likewise improve the Company’s liquidity position and offset the risks of a failed strategic transaction process. As owning US Bank Tower was an element of BPO’s proposed transaction, OUE’s proposed acquisition of US Bank Tower and BPO’s proposed transaction might prove mutually exclusive. Nonetheless, the Board and senior management agreed that achieving an outcome that accommodated both transactions should be among the Company’s key negotiating goals.

On January 24, 2013, representatives of BPO discussed with the financial advisors the status of BPO’s equity-raise efforts. Representatives of BPO also reviewed with the financial advisors BPO’s investor presentation and related analyses.

On January 30, 2013, the Board met to receive updates on various matters, including the strategic transaction process. The Board was updated on the marketing of Plaza Las Fuentes and ongoing discussions with OUE regarding a potential sale of US Bank Tower and was informed that, earlier that day, OUE had submitted a revised proposal for US Bank Tower that increased the purchase price to

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$365.0 million. It was noted that OUE continued to engage in substantial due diligence on US Bank Tower. Included with the proposal to purchase US Bank Tower was a proposal to purchase $260.0 million of Company common shares at $3.00 per share. The proposal was presented as a potential alternative to OUE’s proposal for a potential acquisition of US Bank Tower, was subject to due diligence and negotiation of a purchase and sale agreement and was conditioned on the Company agreeing to provide OUE with a 30-day exclusivity period. OUE had also expressly reserved the right to revisit its proposed price per share. The Company did not respond to this alternative proposal as it was subject to an exclusivity agreement with BPO. The financial advisors informed the Board that a large private equity firm (the “potential private equity bidder”) had that morning expressed potential interest in a strategic transaction. The potential private equity bidder had been contacted as part of the initial outreach to potential process participants, but it had declined to participate in the process at the time. Accordingly, the potential private equity bidder had not engaged in any due diligence on the Company, and the extent of its interest and its willingness to submit a definitive proposal were not assured. The Board noted that the BPO exclusivity agreement would prevent the Company from engaging with this potential new bidder, and determined that it would be prudent to continue negotiations with BPO on a whole-company transaction and actively pursue negotiations with OUE on a sale of US Bank Tower only.

On February 4, 2013 and then again on February 12, 2013, the Company and its advisors participated in tax due diligence calls with representatives of BPO.

On February 12, 2013, Fried Frank distributed a revised draft of the merger agreement to L&W. The draft raised most of the same issues presented in Fried Frank’s December 7, 2012 draft and, therefore, continued to present significant value and deal certainty concerns, as well as a package of deal protections that also raised concerns. The Company and BPO agreed to instruct counsel to work through the agreement over a day or two of telephonic negotiations, with a view toward solving minor issues and identifying significant business issues. L&W and Fried Frank engaged in negotiations on February 17, 2013 and February 18, 2013, making progress on various points in the merger agreement and agreeing on a list of significant open items. L&W distributed that list to the principal negotiation parties on February 19, 2013 and the parties held an “all hands” negotiation session on February 20, 2013. The discussions left a number of key issues unresolved. In particular, representatives of BPO indicated that bridging the differences between the sides on deal protection provisions would require it to re‑evaluate its approach, and indicated that it would make a new proposal on those provisions in the near future. At this meeting, BPO agreed to the Company’s request that any definitive transaction agreement between the Company and BPO permit the Company to sell Plaza Las Fuentes, but subject to certain conditions that remained unresolved. The Company also requested that any definitive transaction agreement between the Company and BPO permit the Company to sell US Bank Tower. BPO said it would consider the request but that its underwriting assumed continued ownership of US Bank Tower Plaza. During the course of these discussions, the Company suggested that Company common stockholders who also owned Company preferred shares might have conflicting incentives when weighing whether to vote in favor of a strategic transaction, and could vote against a transaction if they viewed a liquidation of the Company to be in their financial self-interest. At the conclusion of these discussions, representatives of BPO reiterated that, prior to entering into any definitive agreement with the Company, it would need to conduct the building material testing.

Between February 21, 2013 and February 27, 2013, Company senior management and representatives of BPO discussed the Company’s request that any definitive transaction agreement between the Company and BPO permit the Company to sell US Bank Tower. Following such discussions, BPO agreed to this request, subject to certain conditions.


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On February 27, 2013, L&W distributed to Fried Frank a revised draft of the merger agreement which was intended to reflect the points agreed to by the parties in their negotiations the week before. It left unaddressed certain key points, including deal protection provisions that remained open pending a revised proposal from BPO. Among the key open points at the time were: (i) whether BPO’s obligation to close would be conditioned on receipt of debt consents for all existing indebtedness, (ii) the limitations on the Company’s rights and BPO’s obligations to take actions necessary to obtain debt consents, (iii) the breadth of the definition of “material adverse effect,”(iv) the limitations on the Company’s ability to refinance, replace, extend or modify its indebtedness with near-term maturities, (v) limitations on the Company’s ability to operate in the ordinary course between signing and closing, (vi) the scope of the Company’s representations and warranties and the representation and warranty bring-down standard and (vii) the “outside date” and whether either party would have the right to extend that date under certain conditions.

On February 28, 2013, BPO and the Company agreed to an extension of the exclusivity agreement until March 8, 2013.

On March 5, 2013, the Board met again primarily to consider various matters in connection with the potential sale of US Bank Tower to OUE. The transaction had progressed significantly, and it appeared that definitive agreements would be executed soon thereafter.

On March 8, 2013, BPO and the Company agreed to a second extension of the exclusivity agreement until March 22, 2013.

On March 11, 2013, the Company and OUE executed a purchase and sale agreement with respect to the sale of US Bank Tower and issued a press release announcing the purchase and sale agreement.

That same day, L&W and Fried Frank discussed various legal points in the draft merger agreement. Based on those discussions, Fried Frank prepared a revised draft of the merger agreement, which was delivered to L&W on March 12, 2013. This draft reflected continued incremental progress on these points, but substantial work remained on the most material issues, including debt consent provisions and deal protection provisions. With respect to deal protection provisions, the Fried Frank draft continued to leave those provisions open pending a revised proposal from BPO.

On March 13, 2013 and March 14, 2013, the parties, their respective legal advisors and the Company’s financial advisors met for in-person negotiations. The parties continued to make progress on open points in the merger agreement, but again the most material issues, including debt consent provisions and deal protection provisions, remained open. During the course of these negotiations, the Company indicated that it would be willing to accept that certain debt consents would be conditions to closing, but only if BPO agreed to pursue such consents jointly with the Company. In addition, senior management indicated to BPO that a number of things had changed since BPO and the Company entered into negotiations. Most importantly, the pending sale of US Bank Tower was at a price that was expected to create net proceeds at the Company of over $100.0 million. Senior management further indicated that in order to receive their support for any transaction, BPO would need to increase the merger consideration. In addition, senior management again expressed concern that Company common stockholders who also owned Company preferred shares might have conflicting incentives when weighing whether to vote in favor of a strategic transaction, and that BPO needed to offer preferred stockholders an alternative to leaving their Company preferred shares outstanding and offer them

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liquidity. Senior management suggested that BPO offer to conduct a tender offer for all of the Company preferred shares at the trading price prior to entering into a merger agreement. No agreements were reached on these matters at that point. On March 17, 2013, L&W distributed a revised draft of the merger agreement reflecting these discussions.

The parties continued discussions over the next two weeks while BPO focused on discussions with its equity co-investors. These discussions centered primarily on price, debt consent issues and treatment of Company preferred shares in the transaction, but no agreements were reached on these points. The Company’s exclusivity agreement with BPO expired on March 22, 2013 and, as discussed below, was not reinstated until April 10, 2013. During this two and a half week period, BPO requested on multiple occasions that the Company agree to extend exclusivity. Although the parties continued to make progress in their discussions, the Company refused these requests in an effort to spur the parties and their advisors to increase the pace of progress in negotiations. In addition, during this period, the Company did not contact OUE regarding its alternative proposal to purchase common stock of the Company or the potential private equity bidder regarding a whole Company strategic transaction because discussions with BPO remained active and productive, and neither OUE nor the potential private equity bidder had continued to pursue the applicable transaction after their respective January 30 communications. Furthermore, neither OUE nor the potential private equity bidder had engaged in due diligence on the Company, other than, in the case of OUE, its due diligence in connection with the US Bank Tower transaction. OUE had also expressly conditioned its willingness to pursue an alternative proposal for an investment in the Company’s common stock on the Company agreeing to a period of exclusivity, which was incompatible with continued pursuit of a transaction with BPO.

On March 28, 2013, in connection with matters not related to the Company’s strategic transaction process, representatives of the Company’s financial advisors had meetings with senior representatives of the potential private equity bidder. During the course of that meeting, the representatives of the potential private equity bidder, without prompting or solicitation by the financial advisors, noted that the potential private equity bidder was institutionally bearish on the Downtown Los Angeles Office Market. At no point before or after that meeting did the potential private equity bidder execute or attempt to negotiate a confidentiality agreement, or engage with the Company or its advisors in an effort to take additional steps toward making a proposal for a strategic transaction involving the Company.

On March 30, 2013, BPO delivered a proposal to the Company that sought to address all open issues in the merger agreement. BPO had agreed to increase its price from $2.70 to $3.00 per Company common share. BPO also proposed (i) to conduct a tender offer for all of the Company preferred shares at $25.00 per share, such tender offer to be conditioned on the closing of the merger as well as on the sale of US Bank Tower and (ii) that the Board increase its size to 12 directors and stagger itself into three classes. BPO was also considering a request that the Company issue to BPO an option to purchase, for cash at fair market value, a number of newly issued Company common shares equal to approximately 19.9% of the currently outstanding Company common shares. BPO was seeking a $28.0 million termination fee, payable if the Company accepted a superior proposal or if the merger agreement were terminated after the Board made an adverse recommendation change. In addition, if the Company’s common stockholders did not approve the transaction for any reason, the Company would be obligated to reimburse BPO’s transaction expenses up to a to be agreed upon cap. In the event the Company common stockholders rejected the transaction, depending on the circumstances of such rejection, one of the following would result: (x) if the Company’s common stockholders did not approve the deal and prior to the stockholder vote another potential buyer had made a competing acquisition proposal, BPO would be

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entitled to the termination fee, regardless of whether an agreement for a competing transaction were executed or whether a competing transaction were actually consummated, or (y) if no competing proposal had been made prior to the stockholder vote (colloquially referred to as a “naked no vote”), BPO would have the right to purchase KPMG Tower and the 755 South Figueroa development parcel at a to be determined price. BPO had agreed to narrow its list of required debt consents, and had proposed modifications to various provisions relating to the parties’ respective rights and obligations in connection with obtaining debt consents. BPO also proposed that the definition of “material adverse effect” would include certain uninsured casualty losses, and that each party would have the option to extend the “outside date” under certain circumstances. In connection with this proposal, BPO reiterated that, prior to entering into any definitive agreement with the Company, it would need to conduct the building material testing.

On April 1, 2013, Fried Frank sent L&W a revised draft of the merger agreement which reflected BPO’s March 30, 2013 proposal.

On April 2, 2013, the Board met to review BPO’s proposal and provide guidance to senior management and the Company’s advisors on a proposed response. After extensive deliberation, the Board was encouraged by the progress that had been made toward a deal, but concluded that BPO’s proposal continued to present significant issues. In general, the Board believed that the closing risks were still too acute and that BPO’s requested package of deal protection provisions continued to be unacceptable. The Board instructed the Company’s negotiation team to propose a package response that included the following: (i) the purchase price would increase to $3.35 per Company common share, (ii) to help ensure that the conditions to BPO’s proposed tender offer for Company preferred shares would be satisfied, the Company would have the flexibility to take certain actions in connection with the pending US Bank Tower sale, (iii) the Board would neither increase in size nor become staggered, (iv) the Company would not issue to BPO an option to purchase Company common shares, (v) the Company’s combined obligations for termination fees and expense reimbursements as part of a package of deal protection mechanisms should not exceed $15.0 million, (vi) the Company would not agree to sell any of its assets to BPO in the event of a “naked no vote,” (vii) payment of the termination fee would be tied to “superior proposal” triggers that required the Company take definitive steps to effect or facilitate a competing deal contemplating a sale of the business or a change of control, and would not be triggered merely because the Company engaged in bona fide asset sales, capital raising transactions or a determination to liquidate after termination of the transaction, (viii) the Company would accept BPO’s proposed “material adverse effect” definition, (ix) modifications to certain rights and obligations of the parties in connection with obtaining required debt consents and (x) each party would be permitted to extend the “outside date” under certain circumstances, but BPO’s right to do so would be conditioned on BPO (x) paying the Company a $5.0 million fee to defray certain operating costs and (y) waiving certain debt consents. The Board also determined that, while the Company should be prepared to facilitate BPO’s requested building material testing if necessary to facilitate a deal, these tests should be conducted only after the parties had reached agreement on substantially all of the key negotiation points.

In making its determinations regarding this package response, the Board considered various factors and information regarding Company preferred stockholders who appeared also to have extensive holdings of Company common shares. The Board continued to view this cross-ownership as a significant deal risk, and agreed it might be amenable to BPO’s proposed tender offer approach in order to provide Company preferred stockholders with a liquidity alternative. The Board viewed BPO’s requests for changes to the Board, as well as the 19.9% Company common share option, as deal protection

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mechanisms that diluted the voting power of the Company’s existing common stockholders. The Board also expressed concerns that permitting BPO, a competitor in the Downtown Los Angeles market, potentially to become the Company’s largest common stockholder would present business challenges in the event of a terminated deal. The Board also considered information regarding termination fees, expense reimbursements and triggers for the payment of each. The Board acknowledged that the Company’s capitalization structure complicated the review of BPO’s requests. While as a percentage of equity value, BPO’s requested fees and expenses were arguably high relative to other public company acquisition transactions, on an enterprise value basis, which the Board believed was the more relevant metric given the Company’s unusually high debt, BPO’s requested fees were actually very low. The Board considered whether and the extent to which the combined fees and expenses requested by BPO might deter competing bids from other potential acquirors, as well as the extent to which the possibility that the Company might be obligated to pay these fees and expenses might affect how the Company’s common stockholders viewed the transaction and whether to approve it. Since the fees and expenses requested by BPO were a small percentage of the enterprise value of the Company, the Board concluded that such fees and expenses were unlikely to deter a potential acquiror from making a competing bid, and were also unlikely to have a meaningful impact on how the Company’s common stockholders voted. The Board also expressed the view that BPO’s requests were not unreasonable given how extensively the Company had been marketed during the strategic transaction process, and in light of the extensive time and expense that BPO had devoted to structuring a complex proposal that would require it and its co‑investors to make firm, months-long investment commitments of hundreds of millions of dollars in connection with a transaction that was not assured of closing. Nevertheless, the Board believed that the downside risks of fees and expenses potentially as large as those requested by BPO was unacceptable. Moreover, the Board viewed the triggers for payment of these fees and expenses as perhaps more significant than their size. In light of the potential challenges to closing a transaction with BPO, the fact that sales of US Bank Tower and Plaza Las Fuentes could not be assured, and the Company’s long-term business challenges, the Board concluded that any possibility that the Company may be required to pay these fees and expenses in connection with ordinary course asset sales, capital raising transactions or a determination to liquidate the Company would not be commercially acceptable under any circumstances. For similar reasons, the Company determined that BPO’s request that the Company sell KPMG Tower and the 755 South Figueroa development parcel to BPO in the event of a “naked no vote” was also commercially unacceptable.

Between April 3, 2013 and April 6, 2013, the parties and their respective legal advisors exchanged mark-ups of the merger agreement, and additional progress was made on other material points. These discussions were meant, in part, to facilitate in-person negotiations among the parties and their respective legal and financial advisors on April 7, 2013 and April 8, 2013 in New York City.

On April 7, 2013 and April 8, 2013, the Company and its legal and financial advisors attended an in-person meeting with representatives of BPO and its legal advisor regarding the merger agreement. The negotiations addressed all of the major negotiation points, and agreement was reached on most of them. Progress was made on negotiations on price, but no agreement was reached. Subject to the Company agreeing to BPO’s proposed termination fees (discussed below), BPO agreed to increase its proposed purchase price to $3.15 per Company common share, subject to potential further increase of up to $3.25 per Company common share if certain conditions were met. The Company agreed to reduce its requested asking price from $3.35, but continued to push for a flat purchase price of $3.25 per Company common share. BPO had agreed to provide the Company with the flexibility that the Board had requested in respect of the pending US Bank Tower sale. The parties also agreed that BPO would be

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given the option, but not the obligation, to elect to acquire all remaining Company preferred shares (i.e., shares not tendered in the offer) at the tender offer price so long as (i) at least two-thirds of existing Company preferred shares had been tendered in the tender offer, (ii) the tender offer price was greater than or equal to the liquidation preference of the Company preferred shares, and (iii) doing so otherwise complied with applicable law and the Company’s charter in all respects. BPO agreed to drop its requests for changes to the Board, the 19.9% Company common share option and the right to acquire KPMG Tower and the 755 South Figueroa development parcel in the event of a “naked no vote.” BPO also agreed that a “naked no vote” would not trigger the payment of the full termination fee, but instead proposed a $10.0 million “naked no vote” fee (i.e., a fee payable to BPO if the Company’s common stockholders rejected the transaction, regardless of whether a competing deal was in the market at the time of the stockholder vote). No agreement was reached on BPO’s request for a “naked no vote” fee, but the Company’s negotiating team indicated that it would address the request with the Board. BPO also agreed to address many of the Board’s concerns regarding triggers for the payment of the termination fee. Specifically, BPO agreed that, in the event the Company common stockholders did not approve the transaction, BPO would be entitled to a full termination fee only if, within 12 months thereafter, three or more of the Company’s Downtown Los Angeles properties were sold to a single buyer in a Company‑level transaction or in a single transaction or a series of related transactions. The size of the termination fee and expense reimbursement cap remained open, but BPO had reduced its requests to an aggregate of $28.0 million. The Company and BPO reached agreement on substantially all points relating to debt consents and the parties’ respective rights and obligations in connection with obtaining those consents, as well as all remaining points regarding limitations on the Company’s operations between signing and closing. The parties agreed that the Company would be able to extend the outside date under the merger agreement until September 16, 2013, but that BPO would be able to extend only until August 30, 2013. All conditions to closing other than the stockholder vote and receipt of debt consents would need to be satisfied before either party would be entitled to extend the outside date. Finally, the Company agreed to BPO’s requests regarding inclusion of certain uninsured casualty losses in the definition of “material adverse effect.”

Between April 8, 2013 and April 9, 2013, L&W and Fried Frank worked on revisions to the merger agreement to reflect the points agreed to in the parties’ negotiation sessions.

On April 9, 2013, the Board met to discuss the status of negotiations relating to the merger agreement. Representatives from the Company’s legal and financial advisors updated the Board on recent discussions with BPO, including proposed agreements between the parties and the parties’ respective provisions on open issues. After extensive discussion, the Board expressed its support for the items that the Company’s negotiating team had agreed to with BPO since the Board’s last meeting, all of which the Board viewed as consistent with its advice and instructions. The Board also provided direction on how the negotiating team should seek to resolve the remaining open issues. The Board noted that the Company had negotiated a 17%-20% increase in BPO’s proposed purchase price over the past two weeks, and that the price now represented a significant premium to the recent trading price of the Company common shares on the NYSE. Accordingly, the Board viewed BPO’s proposed price of $3.15 per Company common share, with the possibility of increase to $3.25 if certain conditions were met, as potentially acceptable, subject to resolution of the remaining open points in the merger agreement and related matters. The Board determined that it was acceptable for BPO to receive a termination fee, expense reimbursements and a “naked no vote” fee, but instructed the negotiating team to continue its efforts to reduce these amounts. The Board suggested that the Company initially counter with a termination fee of $15 million, a “naked no vote” fee of $4.0 million, and an expense reimbursement

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capped at $6.0 million, but indicated that it was prepared to increase those amounts if necessary to reach final agreement with BPO. In making these determinations, the Board considered various factors. Among these were the factors considered at its April 2, 2013 meeting, many of which had been updated and refined based on Board questions and discussions at that meeting, but all of which the Board believed continued to support its views regarding the reasonableness of the fees and expense reimbursements requested by BPO. The Board also noted that the sizes of the termination fee and expense reimbursement were significant as standalone issues, but they were part of a package of deal protection provisions, with respect to which BPO had made significant concessions during recent negotiations. All of these concessions had addressed specific, and significant, risks that had been identified by the Board. The Board discussed these requests with the Company’s legal and financial advisors and the Board considered that the foregoing factors, in particular the significant monetary resources that BPO and its equity sources had committed to a potential transaction, rendered BPO’s request for a “naked no vote” fee reasonable under the circumstances. The Board noted that compensating BPO to some extent for the risk in the event that the Company’s common stockholders rejected the transaction was reasonable if doing so were necessary in order for BPO to agree to a deal that was in the best interests of the Company and its common stockholders. The Board also considered that BPO had explicitly conditioned its willingness to increase its purchase price on the Company’s agreement to a higher termination fee and expense reimbursement and on the Company’s willingness to pay a “naked no vote” fee. BPO had maintained this view consistently in recent weeks, despite repeated efforts by the Company’s negotiation team to convince BPO to drop the request, and the Board determined that agreeing to the basic fee / expense reimbursement proposed by BPO was necessary in order to reach a final deal. Furthermore, the Board took into account the fact that BPO’s requested termination fee, expense reimbursement and “naked no vote” fee amounts represented approximately 0.8%, 0.3% and 0.2%, respectively, of the Company’s enterprise value, which were relatively small in size and, in the Board’s view, would not preclude competing bids by other potential buyers. With regard to BPO’s request for the aforementioned building material testing, given the progress that had been made in negotiations, the Board concluded that it was appropriate to permit BPO to begin testing, which was expected to take at least one week.

In accordance with the Board’s directives, senior management and the Company’s financial advisors communicated the Company’s counterproposal to representatives of BPO later that day.

On April 10, 2013, BPO and the Company agreed to reinstate the exclusivity agreement for 10 days from April 10, 2013 to and including April 19, 2013. That same day, BPO commenced the building material testing.

Between April 10, 2013 and April 17, 2013, L&W and Fried Frank traded revisions and comments to the draft merger agreement and a number of ancillary agreements, including drafts of a guarantee to be delivered to the Company by BPO in favor of the Company with respect to certain obligations of certain of the BPO parties in connection with the merger agreement specified therein (the “guarantee”). The merger agreement and principal ancillary agreements, including the guarantee, were largely finalized by April 17, 2013.

On April 17, 2013, BPO informed the Company that it had found the building material referred to above during the initial building material testing, that it had not conducted further testing to determine if this building material in the Company’s buildings actually contained any asbestos, and that it was prepared to cease the building material testing in exchange for a reduction in the purchase price to

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$3.05 per Company common share and the Company’s agreement to a $17.0 million termination fee, a $6.0 million expense reimbursement cap and a $4.0 million “naked no vote” fee. The Company countered with a higher purchase price and the parties engaged in extensive negotiations over the next day.

On April 18, 2013, BPO and the Company reached a tentative agreement, subject to approval by the Board and by BPO’s equity co-investors, whereby BPO would cease the building material testing and accept potential environmental risks as discussed by the parties, the purchase price would be $3.15 per Company common share and the termination fee, expense reimbursement cap and “naked no vote” fee would be the amounts most recently proposed by BPO (i.e., $17.0 million, $6.0 million and $4.0 million, respectively).

On April 19, 2013, the Board held a meeting, joined by the Company’s legal and financial advisors to discuss the latest developments in negotiations with BPO. The meeting began with a review of the directors’ duties presented by Venable LLP, the Company’s Maryland counsel. L&W then provided a summary of the key provisions of the merger agreement, including the proposed resolution of environmental, price and deal protection provisions that had been negotiated between the parties over the prior two days. The financial advisors discussed with the Board an overview of the process undertaken to reach a near-final agreement with BPO and the types of financial analyses that would be performed in evaluating the fairness, from a financial point of view, of the merger consideration. The Board also discussed with representatives of MacKenzie Partners potential stockholder responses to the proposed transaction, and a recommended process for seeking common stockholder approval of the deal. The Board engaged in full discussion, and considered each of the positive and negative factors and risks associated with the proposed transaction that are discussed in detail in the section entitled “The Merger—Proposal 1—Recommendation of the Board and Its Reasons for the Merger” on page 44. The Board also reviewed the treatment of the Company preferred shares in the transaction, including the proposed tender offer, the terms of the Sub REIT preferred shares and the Company’s obligations in respect of the Company preferred shares under the Company’s charter. As BPO was still discussing the transaction with its equity co-investors, the Board made no formal determinations regarding the proposed transaction at this meeting.

Between April 18, 2013 and April 24, 2013, L&W and Fried Frank finalized the transaction documents.

On April 24, 2013, BPO informed the Company that it had finished discussions with its equity co-investors and was prepared to execute definitive agreements.

Also on April 24, 2013, the Board met with Company management, representatives of L&W and Venable LLP as well as the financial advisors. L&W reviewed the minor changes that had been made to each of the transaction documents since the Board’s April 19 meeting. At the meeting, Wells Fargo Securities and BofA Merrill Lynch each reviewed with the Board its financial analysis of the merger consideration and rendered to the Board an oral opinion, confirmed by delivery of a written opinion, dated April 24, 2013, to the effect that, as of such date and based on and subject to various qualifications, limitations and assumptions stated in its opinion, the merger consideration to be received pursuant to the merger agreement by holders of Company common shares was fair, from a financial point of view, to such holders. After further deliberations, the Board resolved, by unanimous vote, that the merger agreement and the transactions contemplated thereby, including the merger, were advisable and in the best

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interests of the Company. The Board recommended that the holders of Company common shares vote to approve the merger and the other transactions contemplated by the merger agreement on the terms and conditions set forth in the merger agreement. The Board further authorized officers of the Company to submit the merger and the other transactions contemplated by the merger agreement for consideration at a meeting of the holders of Company common shares. In addition, the Board authorized a waiver of certain ownership limits on the Company preferred shares contained in the Company’s charter for the purposes of facilitating the tender offer of the Company preferred shares.

Immediately following the meeting of the Board, the parties executed the merger agreement and the guarantee. On April 25, 2013, before the opening of trading on the NYSE, each of the Company and BPO issued a press release announcing the execution of the merger agreement.

On May 15, 2013, the Board met with Company management and representatives of L&W to discuss, among other things, a proposed form of waiver and amendment to the merger agreement to address certain issues involving the Form S-4 to be filed by Sub REIT and the treatment of Company preferred shares not tendered in the tender offer. The Board discussed the proposed waiver and amendment with Company management and representatives of L&W and determined that the proposed waiver and amendment was beneficial to the Company and facilitated the closing of the merger. The proposed amendment was discussed with representatives of BPO on May 16, 2013, and later that day representatives of L&W and Fried Frank finalized the terms of the proposed waiver and amendment. The Board, by unanimous vote, authorized the Company to finalize and enter into the proposed waiver and amendment to the merger agreement. On May 19, 2013, the parties executed the waiver and amendment to the merger agreement.


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Recommendation of the Board and Its Reasons for the Merger

By vote at a meeting held on April 24, 2013, the Board unanimously (i) determined and declared that the merger agreement, the merger and the other transactions contemplated by the merger agreement are advisable and in the best interests of the Company, (ii) approved the merger agreement, the merger and the other transactions contemplated by the merger agreement, (iii) directed that the merger and the other transactions contemplated by the merger agreement be submitted for consideration at a meeting of the Company’s stockholders, and (iv) recommended the approval of the merger and the other transactions contemplated by the merger agreement by the Company’s common stockholders. The Board unanimously recommends that the Company’s common stockholders vote FOR the proposal to approve the merger and the other transactions contemplated by the merger agreement, FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies to approve the merger and the other transactions contemplated by the merger agreement and FOR the proposal to approve, on an advisory (non-binding) basis, the merger-related compensation.

In evaluating the merger agreement, the Board consulted with the Company’s management and legal and financial advisors and, in deciding to declare advisable and approve the merger agreement, the merger and the other transactions contemplated by the merger agreement and to recommend that the Company’s common stockholders vote to approve the merger and the other transactions contemplated by the merger agreement, the Board considered several factors that it viewed as supporting its decision, including the following material factors:

the Board’s and management’s strong understanding of the business, operations, financial condition, earnings and prospects of the Company, as well as of the current and prospective environment in which the Company operates, including economic and market conditions;
the consideration of several strategic alternatives that might have been available, in addition to pursuing a potential sale of the Company, including (i) continuing to operate the Company as a stand-alone entity, (ii) raising capital in one of more public offerings in amounts necessary to adequately address current liquidity issues and near-term debt maturities, or (iii) raising a similar amount of capital in private transactions, and the conclusion, after consideration of the potential benefits and risks, that the best alternative for maximizing value for Company common stockholders is a sale of the Company;
the risks facing the Company in the future if it does not pursue a sale of the Company, including that:
the Company’s cash generated from operations is currently insufficient to cover operating costs, resulting in a “negative cash burn”;
if the merger is not consummated, the Company may have to relinquish certain properties to the property mortgage lenders in order to avoid additional negative cash burn with respect to such properties, and that in such case, any equity value attributable to such properties would be eliminated;

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the Company’s significant on-going cash needs could require it to engage in additional asset sales for cash, and that any additional asset sales of properties constituting its core Downtown Los Angeles portfolio could diminish any portfolio value currently attributable to its remaining holdings as well as reduce the attractiveness of any future strategic event;
the Company’s existing high leverage, complex capital structure and accrued preferred dividend significantly limit capital raising and liquidity alternatives and, based on such matters, the Company is not currently likely to be able to successfully raise capital through a public or private equity offering and any such offering, even if successful, would result in extreme dilution to the Company’s current common stockholders;
the Company historically has lost significant executives and employees due to its financial and operational difficulties, and the loss of key executives and employees could continue or accelerate in the future;
adverse press regarding the Company’s financial position could negatively impact leasing activity and retention of key employees;
the Downtown Los Angeles market is characterized by challenging leasing conditions, including limited numbers of new tenants coming into the market and the downsizing of large tenants in the market such as accounting firms, banks and law firms;
the Company’s leasing activity had been, and would likely continue to be, impacted by increased competition for tenants in the Downtown Los Angeles market, including aggressive attempts by competing landlords to fill large vacancies by providing tenants with lower rental rates, increasing amounts of free rent and providing larger allowances for tenant improvements;
a market perception that the Company is in financial difficulty could lead prospective tenants to not enter into new leases with us or current tenants to not renew their existing leases with us, or could result in more onerous demands by prospective tenants (or current tenants with respect to renewals) relating to collateralization of tenant improvement allowances and leasing commissions and demands by lenders that the Company establish reserves for such expenditures that are much larger than in the past;
the Company’s assets may require substantial capital expenditures in future years that may be difficult for the Company to finance; and
the Company’s stock price has increased since press reports of the commencement of a strategic transaction process by the Company and such stock price could fall substantially in the event of the failure by the Company to pursue a sale;
the sale of the Company allows the common stockholders to take advantage of currently favorable conditions in the real estate market, including the impact of a consistently low interest rate environment and substantial global monetary stimulus, facilitating financing alternatives for high-quality borrowers like BPO and its affiliates and increasing demand for alternative, potentially higher-yielding investments like commercial real estate;

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the fact that the merger agreement resulted from a third-party solicitation and negotiation process lasting more than eight months, during which more than 90 potential bidders were contacted, of which 26 executed confidentiality agreements, 12 participated in property tours of the Company’s assets and four submitted preliminary bids;
the consideration of several proposals in addition to the BPO proposal, and the conclusion, after consideration of the potential benefits and risks to the Company and its common stockholders associated with each of those proposals, that the best alternative for maximizing value for Company common stockholders is a sale of the Company to BPO or its affiliates;
the risks contained in the other investor proposals, including:
Investor Group A’s initial proposal was made before it had completed thorough due diligence to substantiate its proposal, and after updating its proposal, Investor Group A’s inability to obtain satisfactory commitments for the $450.0 million that it estimated it would need to acquire the Company and make necessary investments to refinance, lease, and maintain the Company’s properties, and further, that after conducting further due diligence, Investor Group A dropped its proposal;
the fact that Investor B’s proposal would, among other things, have (i) provided a lower implied value, (ii) left Company common stockholders owning only 5% of the combined entity, (iii) required the sale of one of the Downtown Los Angeles properties prior to stockholder vote with any discount to market value being unrecoverable, (iv) contemplated having the closing occur without obtaining debt consents, and (v) been taxable to the Company’s common stockholders without providing such stockholders with cash to pay such taxes; and
the fact that Investor C’s proposal contemplated (i) a term loan of $300.0 million to $400.0 million, which did not support all required refinancing capital, (ii) distributing penny warrants to the investor, which would result in significant dilution to the Company’s existing stockholder base, and (iii) the possibility that the operating covenants in the term loan would result in a de facto change of control;
the current and historical prices of Company common shares and the fact that the merger consideration of $3.15 per Company common share in cash represents a premium of approximately 21% to the Company’s closing share price of $2.60 on April 24, 2013;
the all-cash merger consideration allows the Company’s common stockholders to immediately realize a fair value that is liquid and certain;
the fixed merger consideration that will not fluctuate as a result of changes in the price of Company common shares during the pendency of the transaction, which limits the impact of external factors on the transaction;

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the separate financial presentations and written opinions, dated April 24, 2013, of Wells Fargo Securities and BofA Merrill Lynch to the Board as to the fairness, from a financial point of view and as of such date, of the merger consideration to be received pursuant to the merger agreement by holders of Company common shares, which opinions were based on and subject to the assumptions made, procedures followed, factors considered and limitations on the review undertaken as further described in the section of this proxy statement entitled “The Merger—Proposal 1—Opinions of the Company’s Financial Advisors”;
the efforts made by the Board to evaluate, with the assistance of senior management and the Company’s advisors, the terms of the merger agreement, make recommendations regarding its negotiations, and execute a merger agreement favorable to Company common stockholders;
the careful review of the provisions of the merger agreement, the ancillary documents, and the preparation of the Company’s disclosure letter, by the management team and L&W;
the merger agreement provisions permitting the Board to withhold, withdraw, modify or qualify its recommendation with respect to the merger (referred to herein as an adverse recommendation change), at any time prior to the stockholder approval, if (i) (a) the Board receives an alternative acquisition proposal in compliance with the no solicitation provision of the merger agreement, that is not withdrawn, (b) the Board determines in the good faith that the acquisition proposal represents a superior proposal (as defined in the merger agreement) and that a failure to take such action would be inconsistent with its duties under applicable law, and (c) (1) the Company provides Brookfield DTLA three business days prior written notice, (2) the Company negotiates in good faith with Brookfield DTLA during such three-day period to make revisions to the merger agreement that would permit the Board not to effect an adverse recommendation change or terminate the merger agreement, and (3) the Board determines that the acquisition proposal continues to be a superior proposal compared to the merger agreement, as revised by any changes irrevocably committed to by Brookfield DTLA; or (ii) other than in response to an acquisition proposal, the Board determines in good faith that the failure to make an adverse recommendation change would be inconsistent with its duties under applicable law;
the commitment of the parties to complete the merger pursuant to their respective obligations under the terms of the merger agreement, and the likelihood that BPO and its affiliates will complete the transactions contemplated by the merger agreement based on, among other things:
the fact that BPO and its affiliates own significant assets in Downtown Los Angeles, similar to the Company’s existing property portfolio, which are expected to offer substantial opportunities to realize synergies and provide an advantage in seeking additional equity capital;
the fact that there is no financing or due diligence condition to the completion of the merger;
the Board’s assessment of BPO’s and its affiliates’ resources and access to financing sources to fund the consideration contemplated by the merger agreement;

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the fact that the financial and other terms and conditions of the merger agreement and the other transactions contemplated thereby were the product of extensive arm’s-length negotiations among the parties; and
the fact that the outside date under the merger agreement allows for sufficient time to complete the merger;
the guarantee of BPO of the obligations of certain of its affiliates under the merger agreement;
the merger agreement provides the Company with the ability to complete the sale of US Bank Tower and Plaza Las Fuentes during the pendency of the transaction, thereby mitigating the risk associated with the Company’s liquidity position should the transaction fail to close;
the provisions of the merger agreement that provide the Company with the necessary flexibility to operate its business in the ordinary course and to address reasonably anticipated challenges that may arise during the pendency of the merger;
the availability of NOL carryforwards to substantially shield tax gains recognized by the Company in connection with the transaction, while enabling BPO and its affiliates to structure a taxable transaction giving its investors the benefit of a step-up in tax basis of the Company’s assets;
the parties’ respective obligations in respect of debt consents;
the fact that Brookfield DTLA agreed to assume certain potential environmental risks under the merger agreement;
the ability of the Company to pursue other strategic alternatives or continue to operate in the event of the failure of the transaction;
the understanding, after extensive negotiations with BPO and its affiliates and discussions with advisors, that the termination fee, no vote termination fee and expense reimbursement were necessary as part of the deal protection provisions in order to reach an agreement with BPO and its affiliates in light of the significant resources that BPO and its affiliates have committed and will commit to the potential transaction, and are a small risk in comparison to the Company’s common stockholders losing the option to accept a transaction offering substantial value and liquidity;
the understanding that the termination fee, expense reimbursement, and no vote termination fee represent less than 0.8%, 0.3% and 0.2%, respectively of the Company’s enterprise value and, due to their small size relative to the Company’s enterprise value, in the Board’s view would not preclude competing bids by other strategic or financial buyers;
the fact that the Company will not have to pay the full termination fee after a no vote, unless a subsequent acquisition proposal, within 12 months of termination of the merger agreement, involves the sale of three or more of the Company’s Downtown Los Angeles properties to a single buyer in a company-level transaction or in a single asset-level transaction or a series of related transactions, and the Company’s belief that such a subsequent acquisition proposal is unlikely to occur or could be structured to avoid payment of the full termination fee;

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the merger being subject to approval of the Company’s common stockholders who have the option to reject the merger agreement and the merger; and
the tender offer for all of the Company preferred shares that will be commenced by BPO or one of its affiliates, which, unlike the other proposals received by the Company, provides the opportunity for holders of Company preferred shares to achieve certainty of value and liquidity.
The Board also identified and considered various risks and potentially negative factors concerning the merger agreement and the transactions contemplated by it, including the merger. These factors included, among others:
the potential risk of diverting management’s focus and resources from operational matters and other strategic opportunities while working to implement the merger;
the substantial costs to be incurred in connection with the transaction, including the transaction expenses arising from the merger and payments to the external advisors of the Company;
the possibility that the merger may be unduly delayed or not completed, including due to holders of less than two-thirds of the Company common shares approving the merger and the other transactions contemplated by the merger agreement;
the risk that failure to complete the merger could negatively affect the price of the Company common shares and the operating results of the Company, particularly in light of the costs incurred in connection with the transaction;
the risk that failure to complete the merger could negatively affect the Company’s ability to attract and retain tenants and personnel and finance its properties and operations;
the Company’s higher stock trading price being primarily predicated on the market believing BPO, or another entity, will acquire the Company;
the interests of some of the Company’s directors and officers in the transaction are different from, or in addition to, the interests of the common stockholders generally;
the restrictions on the conduct of the Company’s business between the date of the merger agreement and the effective time of the merger;
the risk related to obtaining the debt consents that are triggered as a result of the merger, which are not in the control of the parties, including the increased costs and delay on closing the transaction;
the risk that the sale of US Bank Tower might fail to close, which could heighten the risks associated with the failure to complete the merger;

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the $17.0 million termination fee, $6.0 million expense reimbursement and/or $4.0 million no vote termination fee to be paid to Brookfield DTLA if the merger agreement is terminated under circumstances specified in the merger agreement, which represent approximately 10.9%, 3.8% and 2.6%, respectively, of the common equity value of the Company based on the closing price per share of the Company’s common shares on April 24, 2013, the last full trading day prior to announcement of the merger, and 0.8%, 0.3% and 0.2%, respectively, of the Company’s enterprise value on that date;
the terms of the merger agreement placing limitations on the ability of the Company to solicit, initiate, or knowingly encourage or knowingly facilitate the making, submission or announcement of any acquisition proposal or any proposal or offer that would reasonably be expected to lead to an alternative acquisition proposal from a third party;
the cash merger consideration and cancellation of the Company common shares upon completion of the merger which precludes common stockholders from having the opportunity to participate in the future performance of the Company’s assets and to realize any potential future appreciation in the value of the Company common shares;
the tax consequences to the Company’s common stockholders from their receipt of the cash consideration in the merger;
the absence of appraisal rights for Company common and preferred stockholders under Maryland law;
the two-thirds vote requirement under Maryland law coupled with the $4.0 million no vote termination fee; and
the accumulation of Company common shares by holders of Company preferred shares, which could make it difficult to effect a strategic transaction favored by the board and common stockholders who do not also own Company preferred shares and the fact that if these stockholders block the merger, the Company will be required to pay Brookfield DTLA the $4.0 million no vote termination fee and up to $6.0 million of expense reimbursement payments.

The Board also considered the interests that certain executive officers and directors of the Company may have with respect to the merger (see the section entitled “The Merger—Proposal 1—Interests of Our Directors and Executive Officers in the Merger” on page 68), which the Board considered as being neutral in its evaluation of the proposed transaction.

Although the foregoing discussion sets forth the material factors considered by the Board in reaching its recommendation, it may not include all of the factors considered by the Board, and each director may have considered different factors or given different weights to different factors. In view of the various factors and the amount of information considered, the Board did not find it practicable to, and did not, make specific assessments of, quantify or otherwise assign relative weights to the specific factors considered in reaching its recommendation. The Board did not reach any specific conclusion with respect to any of the factors considered and instead conducted an overall review of such factors and determined that, in the aggregate, the potential benefits considered outweighed the potential risks or possible negative consequences of approving the merger agreement.


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THE BOARD UNANIMOUSLY RECOMMENDS THAT THE COMPANY’S COMMON STOCKHOLDERS VOTE “FOR” THE PROPOSAL TO APPROVE THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, “FOR” THE PROPOSAL TO ADJOURN THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES TO APPROVE THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND “FOR” THE PROPOSAL TO APPROVE ON AN ADVISORY (NON-BINDING) BASIS THE MERGERRELATED COMPENSATION.

In considering the recommendation of the Board with respect to the merger and the other transactions contemplated by the merger agreement, you should be aware that certain of the Company’s directors and officers have arrangements that cause them to have interests in the transaction that are different from, or are in addition to, the interests of the Company’s common stockholders generally. See “The Merger—Proposal 1—Interests of Our Directors and Executive Officers in the Merger” on page 68.

The explanation of the reasoning of the Board and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements” on page 14.

Opinions of the Company’s Financial Advisors

Wells Fargo Securities, LLC

The Company has retained Wells Fargo Securities to act as the Company’s financial advisor in connection with the merger. As part of Wells Fargo Securities’ engagement, the Board requested that Wells Fargo Securities evaluate the fairness, from a financial point of view, of the merger consideration to be received pursuant to the merger agreement by holders of Company common shares. On April 24, 2013, at a meeting of the Board held to evaluate the merger, Wells Fargo Securities rendered to the Board an oral opinion, confirmed by delivery of a written opinion dated April 24, 2013, to the effect that, as of such date and based on and subject to various qualifications, limitations and assumptions stated in its opinion, the merger consideration to be received pursuant to the merger agreement by holders of Company common shares was fair, from a financial point of view, to such holders.

The full text of Wells Fargo Securities’ written opinion, dated April 24, 2013, to the Board is attached as Annex D to this proxy statement and is incorporated herein by reference. The written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken by Wells Fargo Securities in rendering its opinion. The following summary is qualified in its entirety by reference to the full text of the opinion. The opinion was addressed to the Board (in its capacity as such) for its information and use in connection with its evaluation of the merger consideration from a financial point of view and did not address any other terms, aspects or implications of the merger or any related transactions. Wells Fargo Securities’ opinion did not address the merits of the underlying decision by the Company to enter into the merger agreement or the relative merits of the merger or any related transactions compared with other business strategies or transactions available or that have been or might be considered by the Company’s management or the Board or in which the Company might engage. The opinion should not be construed as creating any fiduciary duty on the part of Wells Fargo Securities to any party and the opinion does not constitute a recommendation to the

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Board or any other person or entity in respect of the merger or any related transactions, including whether any preferred stockholder should participate in the tender offer for the Company preferred shares or how any stockholder should vote or act in connection with the merger or any related transactions.

The terms of the merger were determined through negotiations between the Company and BPO, rather than by any financial advisor, and the decision to enter into the merger was solely that of the Board. Wells Fargo Securities did not recommend any specific form of consideration to the Board or that any specific form of consideration constituted the only appropriate consideration for the merger or any related transactions. The opinion was only one of many factors considered by the Board in its evaluation of the merger and should not be viewed as determinative of the views of the Board, management or any other party with respect to the merger or any related transactions or the consideration payable in the merger or any related transactions.

In arriving at its opinion, Wells Fargo Securities, among other things:

reviewed an execution version, provided on April 24, 2013, of the merger agreement, including the financial terms of the merger;
reviewed certain publicly available business, financial and other information regarding the Company, including information set forth in its annual reports to stockholders and annual reports on Form 10-K for the fiscal years ended December 31, 2010, 2011 and 2012;
reviewed certain other business and financial information regarding the Company furnished to Wells Fargo Securities by and discussed with the Company’s management, including financial forecasts and estimates prepared by the Company’s management for fiscal years ending December 31, 2013 through 2017 after giving effect to pending and planned sales and dispositions of, and refinancings of loans related to, certain properties of the Company;
discussed with the Company’s management the operations and prospects of the Company, including the historical financial performance and trends in the results of operations of the Company;
participated in discussions among representatives of the Company, BPO and their respective advisors regarding the proposed merger and related transactions and considered the results of the efforts on behalf of the Company to solicit, at the direction of the Company, indications of interest and definitive proposals from third parties with respect to a possible acquisition of the Company;
analyzed the estimated net asset value of the Company’s real estate portfolio based upon financial forecasts and estimates referred to above and related assumptions discussed with and confirmed as reasonable by the Company’s management;
analyzed the estimated value of the Company upon liquidation based upon financial forecasts and estimates referred to above and related assumptions discussed with and confirmed as reasonable by the Company’s management;
analyzed the estimated present value of the future cash flows of the Company based upon financial forecasts and estimates referred to above and related assumptions discussed with and confirmed as reasonable by the Company’s management; and

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considered other information, such as financial studies, analyses, and investigations, as well as financial, economic and market criteria, that Wells Fargo Securities deemed relevant.

In connection with its review, Wells Fargo Securities assumed and relied upon the accuracy and completeness of the financial and other information provided, discussed with or otherwise made available to Wells Fargo Securities, including all accounting, tax, regulatory and legal information, and Wells Fargo Securities did not make (and assumed no responsibility for) any independent verification of such information. Wells Fargo Securities relied upon assurances of the Company’s management that it was not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the financial forecasts, estimates and other information utilized in Wells Fargo Securities’ analyses, Wells Fargo Securities was advised by the Company’s management and, at the Company’s direction, Wells Fargo Securities assumed that they were reasonably prepared and reflected the best currently available estimates, judgments and assumptions of such management as to the future financial performance of the Company. Wells Fargo Securities assumed no responsibility for, and expressed no view as to, such forecasts, estimates or other information utilized in Wells Fargo Securities’ analyses or the judgments or assumptions upon which they were based. Wells Fargo Securities also assumed that there were no material changes in the condition (financial or otherwise), results of operations, business or prospects of the Company since the respective dates of the most recent financial statements and other information provided to Wells Fargo Securities. In arriving at its opinion, Wells Fargo Securities did not conduct physical inspections of the properties or assets of the Company or any other entity, nor did it make, and it was not provided with, any evaluations or appraisals of the properties, assets or liabilities (contingent or otherwise) of the Company or any other entity. Wells Fargo Securities also did not evaluate the solvency or fair value of the Company, BPO or any other entity under any state, federal or other laws relating to bankruptcy, insolvency or similar matters.

In rendering its opinion, Wells Fargo Securities assumed, at the Company’s direction, that the final form of the merger agreement, when signed by the parties thereto, would not differ from the execution version of the merger agreement reviewed by Wells Fargo Securities in any respect meaningful to its analyses or opinion, that the merger and related transactions would be consummated in accordance with the terms described in the merger agreement and in compliance with all applicable laws, without amendment or waiver of any material terms or conditions, that, in the course of obtaining any necessary legal, regulatory or third party consents, approvals or agreements for the merger and related transactions, no delay, limitation or restriction, including any divestiture or other requirements, would be imposed or action would be taken that would have an adverse effect on the Company or the merger and that no such adverse effect would result in the event that the merger was effected through an alternative structure as permitted under the terms of the merger agreement. Wells Fargo Securities was advised by representatives of the Company that the Company has operated in conformity with the requirements for qualification as a REIT for U.S. federal income tax purposes since its formation as a REIT. Wells Fargo Securities’ opinion was necessarily based on economic, market, financial and other conditions existing, and information made available to Wells Fargo Securities, as of the date of its opinion. The credit, financial and stock markets have been experiencing unusual volatility and Wells Fargo Securities expressed no opinion or view as to any potential effects of such volatility on the Company or the merger. Although subsequent developments may affect the matters set forth in its opinion, Wells Fargo Securities does not have any obligation to update, revise, reaffirm or withdraw its opinion or otherwise comment on or consider any such events occurring or coming to Wells Fargo Securities’ attention after the date of its opinion.


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Wells Fargo Securities’ opinion only addressed the fairness, from a financial point of view and as of the date of its opinion, of the merger consideration to be received pursuant to the merger agreement by holders of Company common shares to the extent expressly specified in its opinion, and no opinion or view was expressed with respect to any other consideration to be received or other amounts payable in respect of any other securities of the Company or any other party. Wells Fargo Securities’ opinion did not address any other terms, aspects or implications of the merger, any related transactions or any other agreement, arrangement or understanding entered into in connection with or contemplated by the merger, any related transactions or otherwise, including, without limitation, the form or structure of the merger or any terms, aspects or implications of the Partnership merger or any related transactions, including the purchase by DTLA Fund Holding Co. of newly issued common units representing limited partnership interests in the Partnership or the tender offer for the Company preferred shares. Wells Fargo Securities’ opinion also did not address any terms or other aspects of pending or planned sales or dispositions of, or refinancings of loans related to, certain properties of the Company or any alternatives with respect to such properties. In addition, Wells Fargo Securities’ opinion did not address the fairness of the amount or nature of, or any other aspects relating to, any compensation to be received by any officers, directors, managers or employees of any parties to the merger or any related transactions, or class of such persons, relative to the merger consideration or otherwise. Wells Fargo Securities also did not express any view or opinion with respect to, and with the Company’s consent relied upon the assessments of the Company’s representatives regarding, accounting, tax, regulatory, legal or similar matters and Wells Fargo Securities understood that the Company obtained such advice as it deemed necessary from qualified professionals. Except as described in this summary, the Company imposed no other instructions or limitations on Wells Fargo Securities with respect to the investigations made or procedures followed by Wells Fargo Securities in rendering its opinion.

In connection with rendering its opinion, Wells Fargo Securities performed certain financial, comparative and other analyses as summarized below. This summary is not a complete description of the financial analyses performed and factors considered in connection with such opinion. In arriving at its opinion, Wells Fargo Securities did not ascribe a specific value to Company common shares but rather made its determinations as to the fairness, from a financial point of view, of the merger consideration on the basis of various financial and comparative analyses taken as a whole. The preparation of a financial opinion is a complex process and involves various determinations as to the most appropriate and relevant methods of financial and comparative analyses and the application of those methods to the particular circumstances. Therefore, a financial opinion is not readily susceptible to summary description.

In arriving at its opinion, Wells Fargo Securities did not attribute any particular weight to any single analysis or factor considered but rather made qualitative judgments as to the significance and relevance of each analysis and factor relative to all other analyses and factors performed and considered and in the context of the circumstances of this particular transaction. Accordingly, the analyses must be considered as a whole, as considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying such opinion. The fact that any specific analysis has been referred to in the summary below is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary. No company or transaction is identical to the Company or the merger and an evaluation of Wells Fargo Securities’ analyses is not entirely mathematical; rather, such analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the public trading or other values of the companies reviewed.


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In performing its analyses, Wells Fargo Securities considered industry performance, general business and economic conditions and other matters existing as of the date of its opinion, many of which are beyond the control of the Company or any other parties to the merger. None of the Company, Wells Fargo Securities or any other person assumes responsibility if future results are different from those discussed whether or not any such difference is material. Any estimates contained in these analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of properties, businesses or securities do not purport to be appraisals or necessarily reflect the prices at which properties, businesses or securities may actually be sold or acquired. Accordingly, the assumptions and estimates used in, and the results derived from, the following analyses are inherently subject to substantial uncertainty.

The following is a summary of the material financial analyses provided on April 24, 2013 to the Board by Wells Fargo Securities in connection with its opinion. Certain financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of such financial analyses.

Net Asset Value Analysis. Wells Fargo Securities performed a net asset valuation of the Company as of March 31, 2013 and projected as of September 30, 2013 based on internal estimates of the Company’s management. An estimated range of gross asset values for the Company’s properties was calculated based on asset-level discounted cash flow analyses of such properties (or, in the case of US Bank Tower, the proposed purchase price for such property as reflected in the Company’s definitive agreement for the pending sale of such property), taking into consideration per square foot values and capitalization rates implied by such property values, and applying a 5% increase/decrease to such estimated gross asset values. An implied net asset value range was then calculated for the Company by deducting property-level outstanding debt and taking into account the Company’s other tangible assets and liabilities as reflected on its balance sheet and/or estimated by the Company’s management and the Company’s outstanding preferred stock at its liquidation preference plus accrued dividends as of March 31, 2013 and projected as of September 30, 2013. An implied per share equity value range for the Company was calculated based on the Company’s implied net asset value divided by the number of fully diluted Company common shares and Partnership units per the Company’s management. This analysis indicated the following approximate implied per share equity value reference ranges for the Company as of March 31, 2013 and September 30, 2013, as compared to the merger consideration:

Implied Per Share
Equity Value Reference Ranges as of:
 

Merger Consideration
March 31, 2013
 
September 30, 2013
 
 
 
 
 
 
$3.04 – $5.21
 
$2.45 – $3.99
 
$3.15

Wells Fargo Securities also noted for the Board that, after taking into account certain transaction costs estimated by the Company’s management, this analysis indicated implied per share equity value reference ranges for the Company as of March 31, 2013 and September 30, 2013 of $2.53 to $4.68 and $2.16 to $3.68, respectively.


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Liquidation Analysis. Wells Fargo Securities performed a liquidation analysis of the Company to calculate a range of implied present values of estimated net proceeds available for distribution to the Company’s stockholders on December 31, 2013 upon an orderly liquidation of the Company based on the Company’s public filings and internal estimates of the Company’s management. Net liquidation proceeds were calculated as total net cash flows for the Company after the disposition of the Company’s properties utilizing the estimated range of gross asset values for such properties as derived from Wells Fargo Securities’ net asset value analysis described above or internal estimates of the Company’s management, after adjustment for each property’s estimated debt outstanding and working capital as of such property’s disposition and estimated transaction costs associated with such disposition per the Company’s management. Further adjustments were then made for certain tangible assets and liabilities as reflected on the Company’s balance sheet and/or estimated by the Company’s management as of March 31, 2013, less liquidation costs estimated by the Company’s management, the redemption amount payable in respect of Company preferred shares at its liquidation preference and payment of accrued dividends through December 31, 2013 and estimated income tax liabilities per the Company’s management. Estimated net liquidation proceeds per share were calculated by dividing the estimated net liquidation proceeds by the number of fully diluted Company common shares and Partnership units per the Company’s management. The present values (as of March 31, 2013) of such net liquidation proceeds per share were then calculated using a discount rate range of 12.5% to 27.5%. This analysis indicated the following approximate implied per share equity value reference range for the Company, as compared to the merger consideration:

Implied Per Share
Equity Value Reference Range
 

Merger Consideration
 
 
 
$1.56 – $3.22
 
$3.15

Discounted Cash Flow Analysis. Wells Fargo Securities performed a discounted cash flow analysis of the Company utilizing internal estimates of the Company’s management to calculate a range of implied present values of the standalone unlevered free cash flows that the Company was forecasted to generate during the last nine months of the fiscal year ending December 31, 2013 through the full fiscal year ending December 31, 2017 and of terminal values for the Company based on gross asset values of the Company’s remaining properties as of December 31, 2017. Estimated gross asset values as of December 31, 2017 were based on asset-level discounted cash flow analyses of such properties, taking into consideration per square foot values and capitalization rates implied by such property values, and applying a 5% increase/decrease to such estimated gross asset values. Present values (as of March 31, 2013) of the unlevered free cash flows and terminal values were then calculated using a discount rate range of 9.0% to 11.0%. An implied per share equity value range for the Company was calculated based on the Company’s implied enterprise value derived from such analysis less the Company’s net debt and outstanding preferred stock at its liquidation preference plus accrued dividends as of March 31, 2013 divided by the number of fully diluted Company common shares and Partnership units per the Company’s management. This analysis indicated the following approximate implied per share equity value reference range for the Company, as compared to the merger consideration:

Implied Per Share
Equity Value Reference Range
 

Merger Consideration
 
 
 
$(0.28) – $1.91
 
$3.15


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Miscellaneous

Wells Fargo Securities is the trade name for certain capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Securities, LLC. Wells Fargo Securities is an internationally recognized investment banking firm which is regularly engaged in providing financial advisory services in connection with mergers and acquisitions. The Company selected Wells Fargo Securities to act as its financial advisor because of its qualifications, reputation and experience and its familiarity with the Company and its business. The issuance of Wells Fargo Securities’ opinion was approved by an authorized committee of Wells Fargo Securities.

In connection with its engagement, the Company has agreed to pay Wells Fargo Securities an aggregate fee currently estimated to be approximately $5.7 million, a portion of which was payable upon delivery of its opinion and approximately $4.7 million of which is contingent upon consummation of the merger. The Company also has agreed to reimburse certain of Wells Fargo Securities’ expenses, including fees and disbursements of Wells Fargo Securities’ counsel, and to indemnify Wells Fargo Securities and certain related parties against certain liabilities, including liabilities under the U.S. federal securities laws, that may arise out of Wells Fargo Securities’ engagement. Wells Fargo Securities and its affiliates provide a full range of investment banking and financial advisory, securities trading, brokerage and lending services in the ordinary course of business, for which Wells Fargo Securities and such affiliates receive customary fees. In connection with unrelated matters, Wells Fargo Securities and its affiliates in the past have provided, currently are providing and in the future may provide banking and financial services to the Company, BPO and certain of their respective affiliates, for which Wells Fargo Securities and such affiliates have received and expect to receive fees, including (i) acting as syndication agent for and/or lender or participant under certain credit facilities of, and providing certain real estate, financial advisory and other financial services to, the Company and (ii) acting as a lender under certain credit facilities of, and providing real estate, financial advisory, capital markets and other financial services to, BPO and its affiliates. Wells Fargo Securities’ affiliate, Eastdil Secured, LLC, was retained by the Company to provide certain real estate brokerage services relating to pending and planned sales of certain properties, expected to be consummated prior to the closing of the merger, for which services such affiliate will receive customary compensation. The Company and/or its affiliates also lease or in the past have leased various properties to Wells Fargo Securities or its affiliates. From January 1, 2011 through the first quarter of 2013 (the approximate two-year period prior to the date of Wells Fargo Securities’ opinion rendered on April 24, 2013), the investment banking, capital markets and real estate advisory divisions of Wells Fargo Securities and its affiliates received aggregate fees of less than $25.0 million from BPO and certain of its affiliates and of less than $3.0 million from the Company and certain of its affiliates for certain services unrelated to the merger. In addition, an affiliate of Wells Fargo Securities filed a Schedule 13G with respect to its beneficial ownership of approximately 9.79% of outstanding Company common shares. In the ordinary course of business, Wells Fargo Securities and its affiliates may actively trade, hold or otherwise effect transactions in the securities or financial instruments (including bank loans or other obligations) of the Company, BPO and their respective affiliates for Wells Fargo Securities’ and its affiliates’ own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities or financial instruments.


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Merrill Lynch, Pierce, Fenner & Smith Incorporated

As part of BofA Merrill Lynch’s engagement, the Board requested that BofA Merrill Lynch evaluate the fairness, from a financial point of view, of the merger consideration to be received in the merger pursuant to the merger agreement by holders of Company common shares. At the April 24, 2013 meeting of the Board held to evaluate the merger, BofA Merrill Lynch rendered to the Board an oral opinion, confirmed by delivery of a written opinion dated April 24, 2013, to the effect that, as of that date and based on and subject to various qualifications, limitations and assumptions described in the opinion, the merger consideration to be received by holders of Company common shares was fair, from a financial point of view, to such holders.

The full text of BofA Merrill Lynch’s written opinion, dated April 24, 2013, is attached as Annex E to this proxy statement and is incorporated herein by reference. The written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken by BofA Merrill Lynch in rendering its opinion. The following summary of BofA Merrill Lynch’s opinion is qualified in its entirety by reference to the full text of the opinion. BofA Merrill Lynch delivered its opinion to the Board for the benefit and use of the Board (in its capacity as such) in connection with and for purposes of its evaluation of the merger consideration from a financial point of view and did not address any other terms, aspects or implications of the merger or any related transactions. BofA Merrill Lynch expressed no opinion or view as to the relative merits of the merger or any related transactions in comparison to other strategies or transactions that might be available to the Company or in which the Company might engage or as to the underlying business decision of the Company to proceed with or effect the merger or any related transactions. The opinion should not be construed as creating any fiduciary duty on BofA Merrill Lynch’s part to any party and BofA Merrill Lynch expressed no opinion or recommendation as to whether any preferred stockholder should participate in the tender offer for the Company preferred shares or how any stockholder should vote or act in connection with the merger or any related matter.

In connection with its opinion, BofA Merrill Lynch, among other things:

reviewed certain publicly available business and financial information relating to the Company;
reviewed certain internal financial and operating information with respect to the business, operations and prospects of the Company furnished to or discussed with BofA Merrill Lynch by the Company’s management, including certain financial forecasts relating to the Company prepared by such management after giving effect to pending and planned sales and dispositions of, and refinancings of loans related to, certain properties of the Company, referred to as the Company forecasts;
discussed the past and current business, operations, financial condition and prospects of the Company with members of the Company’s senior management;
reviewed the trading history for Company common shares and a comparison of that trading history with the trading histories of other companies BofA Merrill Lynch deemed relevant;
compared certain financial and stock market information of the Company with similar information of other companies BofA Merrill Lynch deemed relevant;

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compared certain financial terms of the merger to financial terms, to the extent publicly available, of other transactions BofA Merrill Lynch deemed relevant;
considered the results of the efforts on behalf of the Company to solicit, at the direction of the Company, indications of interest and definitive proposals from third parties with respect to a possible acquisition of the Company;
reviewed an execution version, provided on April 24, 2013, of the merger agreement; and
performed such other analyses and studies and considered such other information and factors as BofA Merrill Lynch deemed appropriate.

In arriving at its opinion, BofA Merrill Lynch assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with it and BofA Merrill Lynch relied upon the assurances of the Company’s management that it was not aware of any facts or circumstances that would make such information or data inaccurate or misleading in any material respect. With respect to the Company forecasts, BofA Merrill Lynch was advised by the Company, and BofA Merrill Lynch assumed, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the Company’s management as to the future financial performance of the Company. BofA Merrill Lynch did not make and was not provided with any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Company or any other entity, nor did BofA Merrill Lynch make any physical inspection of the properties or assets of the Company or any other entity. BofA Merrill Lynch did not evaluate the solvency or fair value of the Company, BPO or any other entity under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. BofA Merrill Lynch assumed, at the Company’s direction, that the merger and related transactions would be consummated in accordance with their respective terms without waiver, modification or amendment of any material term, condition or agreement, that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the merger and related transactions, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on the Company or the merger and that no such adverse effect would result in the event that the merger was effected through an alternative structure as permitted under the terms of the merger agreement. BofA Merrill Lynch also assumed, at the Company’s direction, that the final executed merger agreement would not differ in any material respect from the execution version of the merger agreement reviewed by BofA Merrill Lynch. BofA Merrill Lynch was advised by representatives of the Company that the Company had operated in conformity with the requirements for qualification as a REIT for U.S. federal income tax purposes since its formation as a REIT.

BofA Merrill Lynch expressed no view or opinion as to any terms or other aspects or implications of the merger (other than the merger consideration to the extent expressly specified in its opinion), any related transactions or any other agreement, arrangement or understanding entered into in connection with or contemplated by the merger, any related transactions or otherwise, including, without limitation, the form or structure of the merger or any terms, aspects or implications of the Partnership merger or any related transactions, including (i) the purchase by DTLA Fund Holding Co. of newly issued common units representing limited partnership interests in the Partnership or (ii) the tender offer for the Company preferred shares. BofA Merrill Lynch also expressed no view or opinion as to any terms or

59



other aspects of pending or planned sales or dispositions of, or refinancings of loans related to, certain properties of the Company or any alternatives with respect to such properties. BofA Merrill Lynch’s opinion was limited to the fairness, from a financial point of view, of the merger consideration to be received by holders of Company common shares and no opinion or view was expressed with respect to any consideration received in connection with the merger or any related transactions by, or other amounts payable to, holders of any other securities of the Company or any other party or any class of securities, creditors or other constituencies of any party. In addition, no opinion or view was expressed with respect to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to any officers, directors, managers or employees of any party to the merger or any related transactions, or class of such persons, relative to the merger consideration or otherwise. BofA Merrill Lynch also expressed no view or opinion with respect to, and relied, with the Company’s consent, upon the assessments of the Company’s representatives regarding, legal, regulatory, accounting, tax and similar matters as to which BofA Merrill Lynch understood that the Company obtained such advice as it deemed necessary from qualified professionals.

BofA Merrill Lynch’s opinion was necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to BofA Merrill Lynch as of, the date of its opinion. The credit, financial and stock markets have been experiencing unusual volatility and BofA Merrill Lynch expressed no opinion or view as to any potential effects of such volatility on the Company or the merger. It should be understood that subsequent developments may affect BofA Merrill Lynch’s opinion, and BofA Merrill Lynch does not have any obligation to update, revise or reaffirm its opinion. The issuance of BofA Merrill Lynch’s opinion was approved by BofA Merrill Lynch’s Americas Fairness Opinion Review Committee. Except as described in this summary, the Company imposed no other instructions or limitations on the investigations made or procedures followed by BofA Merrill Lynch in rendering its opinion.

The following represents a brief summary of the material financial analyses presented by BofA Merrill Lynch in connection with its opinion, dated April 24, 2013, to the Board. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses performed by BofA Merrill Lynch, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses performed by BofA Merrill Lynch. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by BofA Merrill Lynch.

Selected Public Companies Analysis. BofA Merrill Lynch reviewed publicly available financial and stock market information of the Company and the following six publicly traded office REITs:

Boston Properties, Inc.
Brookfield Office Properties Inc.
Douglas Emmett, Inc.
Kilroy Realty Corporation

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SL Green Realty Corp.
Vornado Realty Trust

BofA Merrill Lynch reviewed, among other things, enterprise values of the selected REITs, calculated as equity values based on closing stock prices on April 23, 2013, plus debt, preferred stock and minority interest, less cash and cash equivalents, as a multiple of calendar year 2013 estimated earnings before interest, taxes, depreciation and amortization, referred to as EBITDA. The observed low, mean, median and high calendar year 2013 estimated EBITDA multiples for the selected REITs were 18.0x, 21.4x, 21.4x and 23.4x, respectively. BofA Merrill Lynch then applied a selected range of calendar year 2013 estimated EBITDA multiples of 21.5x to 23.5x derived from the selected REITs to corresponding data of the Company. Financial data of the selected REITs were based on publicly available research analysts’ estimates, public filings and other publicly available information. Financial data of the Company were based on the Company forecasts. This analysis indicated the following approximate implied per share equity value reference range for the Company, as compared to the merger consideration:

Implied Per Share
Equity Value Reference Range

Merger Consideration
 
 
 
$0.00 – $2.38
 
$3.15

No company used in this analysis is identical to the Company. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which the Company was compared.

Illustrative Selected Precedent Transactions Analysis. For illustrative purposes, BofA Merrill Lynch reviewed publicly available financial information relating to the following nine selected transactions in the office REIT sector:

Announcement Date
 
Acquiror
 
Target
 
 
 
 
 
•     7/24/2007
 
•     Liberty Property Trust
 
•     Republic Property Trust
•     5/22/2007
 
•     Morgan Stanley Real Estate Fund
 
•     Crescent Real Estate
       Equities Company
•     11/19/2006
 
•     Blackstone Group L.P.
 
•     Equity Office Properties Trust
•     11/6/2006
 
•     JP Morgan Asset Management
 
•     Columbia Equity Trust, Inc.
•     8/21/2006
 
•     Morgan Stanley Real Estate Fund
 
•     Glenborough Realty Trust Incorporated
•     8/3/2006
 
•     SL Green Realty Corporation
 
•     Reckson Associates Realty Corp.
•     7/23/2006
 
•     Lexington Corporate Properties Trust
 
•     Newkirk Realty Trust, Inc.
•     6/5/2006
 
•     Brookfield Properties Corporation /
       The Blackstone Group
 
•     Trizec Properties, Inc.
•     3/6/2006
 
•     The Blackstone Group
 
•     Carramerica Realty Corporation


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BofA Merrill Lynch reviewed, among other things, transaction values, calculated as the purchase prices paid for the target companies in the selected transactions plus debt, preferred stock and minority interest, less cash and cash equivalents, as a multiple of the target company’s forward year estimated EBITDA. The observed low, mean, median and high forward year estimated EBITDA multiples for the selected transactions were 11.5x, 17.5x, 17.9x and 20.9x, respectively. BofA Merrill Lynch then applied a selected range of forward year EBITDA multiples of 19.0x to 21.0x derived from the selected transactions to the Company’s calendar year 2013 estimated EBITDA. Financial data of the selected transactions were based on publicly available research analysts’ estimates, public filings and other publicly available information. Financial data of the Company were based on the Company forecasts. This analysis did not indicate a positive implied per share equity value reference range for the Company.

No company, business or transaction used in this analysis is identical to the Company or the merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which the Company and the merger were compared.

Corporate-Level Discounted Cash Flow Analysis. BofA Merrill Lynch performed a discounted cash flow analysis of the Company by calculating the estimated present value of the standalone unlevered, after-tax free cash flows that the Company was forecasted to generate during the nine months ending December 31, 2013 through the three months ending March 31, 2018 based on the Company forecasts. BofA Merrill Lynch calculated terminal values for the Company by applying to the Company’s next 12 months (as of March 31, 2018) estimated net operating income a range of exit capitalization rates of 5.60% to 6.10%. The Company’s cash flows and terminal value were then discounted to present value as of March 31, 2013 using discount rates ranging from 8.5% to 10.5%. An implied per share equity value range for the Company was calculated based on the Company’s implied enterprise value derived from such analysis less the Company’s net debt and outstanding preferred stock at its liquidation preference plus accrued dividends as of March 31, 2013 divided by the number of fully diluted Company common shares and Partnership units. This analysis indicated the following approximate implied per share equity value reference range for the Company, as compared to the merger consideration:

Implied Per Share
Equity Value Reference Range
 

Merger Consideration
 
 
 
$0.00 – $1.99
 
$3.15

Net Asset Value Analysis. BofA Merrill Lynch performed a net asset valuation of the Company as of March 31, 2013 based on the Company forecasts. An estimated range of gross asset values for the Company’s properties was calculated based on asset-level discounted cash flow analyses of such properties (or, in the case of US Bank Tower, the proposed purchase price for such property as reflected in the Company’s definitive agreement for the pending sale of such property), taking into consideration per square foot values and capitalization rates implied by such property values, and applying a 5% increase/decrease to such estimated gross asset values. An implied net asset value range was then calculated for the Company by deducting property-level outstanding debt and taking into account the Company’s unrestricted cash and cash equivalents, net tangible assets and liabilities as reflected on its balance sheet and/or estimated by the Company’s management and the Company’s outstanding preferred stock at its liquidation preference plus accrued dividends as of March 31, 2013. An implied per share equity value range for the Company was calculated based on the Company’s implied net asset value divided by the number of fully diluted Company common shares and Partnership units per the Company’s management.

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This analysis indicated the following approximate implied per share equity value reference range for the Company, as compared to the merger consideration:

Implied Per Share
Equity Value Reference Range
 
Merger Consideration
 
 
 
$2.42 – $4.16
 
$3.15

Liquidation Analysis. BofA Merrill Lynch performed a liquidation analysis of the Company to calculate a range of implied present values of estimated net proceeds available for distribution to the Company’s stockholders on December 31, 2013 upon an orderly liquidation of the Company based on the Company’s public filings and the Company forecasts. Net liquidation proceeds were calculated as total net cash flows for the Company after the disposition of the Company’s properties utilizing the estimated range of gross asset values for such properties as derived from BofA Merrill Lynch’s net asset value analysis described above or internal estimates of the Company’s management, after adjustment for each property’s estimated debt outstanding and working capital as of such property’s disposition and estimated transaction costs associated with such disposition per the Company’s management. Further adjustments were then made for certain tangible assets and liabilities as reflected on the Company’s balance sheet and/or estimated by the Company’s management as of March 31, 2013, less liquidation costs estimated by the Company’s management, the redemption amount payable in respect of Company preferred shares at its liquidation preference and payment of accrued dividends through December 31, 2013 and estimated income tax liabilities per the Company’s management. Estimated net liquidation proceeds per share were derived by dividing the estimated net liquidation proceeds by the number of fully diluted Company common shares and Partnership units per the Company’s management. The present values (as of March 31, 2013) of such net liquidation proceeds per share were then calculated using a discount rate range of 17.5% to 22.5%. This analysis indicated the following approximate implied per share equity value reference range for the Company, as compared to the merger consideration:

Implied Per Share
 Equity Value Reference Range
 

Merger Consideration
 
 
 
$1.08 – $2.46
 
$3.15

Other Factors. BofA Merrill Lynch also noted certain additional factors that were not considered part of BofA Merrill Lynch’s financial analyses with respect to its opinion but were referenced for informational purposes, including, among other things, the following:

historical trading performance of Company common shares during the 52-week period ended April 23, 2013, which reflected low and high closing prices for Company common shares during such period of approximately $1.66 to $3.81 per share; and

publicly available Wall Street research analyst stock price and net asset value per share targets for the Company, which indicated a target stock price for the Company of approximately $3.50 per share and a range of target net asset values for the Company of approximately $2.31 to $3.45 per share.


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Miscellaneous

As noted above, the discussion set forth above is a summary of the material financial analyses presented by BofA Merrill Lynch to the Board in connection with its opinion and is not a comprehensive description of all analyses undertaken or factors considered by BofA Merrill Lynch in connection with its opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. BofA Merrill Lynch believes that the analyses summarized above must be considered as a whole. BofA Merrill Lynch further believes that selecting portions of its analyses considered or focusing on information presented in tabular format, without considering all analyses or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying BofA Merrill Lynch’s analyses and opinion. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.

In performing its analyses, BofA Merrill Lynch considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company. The estimates of the future performance of the Company in or underlying BofA Merrill Lynch’s analyses are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those estimates or those suggested by BofA Merrill Lynch’s analyses. These analyses were prepared solely as part of BofA Merrill Lynch’s analysis of the fairness, from a financial point of view, of the merger consideration to be received by holders of Company common shares in the merger and were provided to the Board in connection with the delivery of BofA Merrill Lynch’s opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or acquired or the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis described above are inherently subject to substantial uncertainty and should not be taken to be BofA Merrill Lynch’s view of the actual value of the Company.

The type and amount of consideration payable in the merger was determined through negotiations between the Company and BPO, rather than by any financial advisor, and was approved by the Board. The decision to enter into the merger agreement was solely that of the Board. As described above, BofA Merrill Lynch’s opinion and analyses were only one of many factors considered by the Board in its evaluation of the merger and should not be viewed as determinative of the views of the Board, management or any other party with respect to the merger or any related transactions or the consideration payable in the merger or any related transactions.

In connection with its engagement, the Company has agreed to pay BofA Merrill Lynch an aggregate fee of $1.5 million, a portion of which was payable upon the rendering of its opinion and $700,000 of which is contingent upon consummation of the merger. The Company has agreed to reimburse BofA Merrill Lynch for its expenses, including fees and expenses of BofA Merrill Lynch’s legal counsel, incurred in connection with BofA Merrill Lynch’s engagement and to indemnify BofA Merrill Lynch and related persons against liabilities, including liabilities under the federal securities laws, arising out of BofA Merrill Lynch’s engagement.


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BofA Merrill Lynch and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of its businesses, BofA Merrill Lynch and its affiliates may invest on a principal basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in equity, debt or other securities or financial instruments (including derivatives, bank loans or other obligations) of the Company, BPO and certain of their respective affiliates.

The Company and/or its affiliates lease or in the past have leased various properties to BofA Merrill Lynch or its affiliates.

In addition, BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to BPO and/or its affiliates and have received or in the future may receive compensation for the rendering of these services, including having (i) acted or acting as a lender under certain credit facilities and (ii) provided or providing certain treasury management services. From January 1, 2011 through the first quarter of 2013 (the approximate two-year period prior to the date of BofA Merrill Lynch’s opinion rendered on April 24, 2013), BofA Merrill Lynch and its affiliates received less than $5.0 million in the aggregate from BPO and certain of its affiliates for corporate, commercial and investment banking services unrelated to the merger.

BofA Merrill Lynch is an internationally recognized investment banking firm which is regularly engaged in providing financial advisory services in connection with mergers and acquisitions. The Company selected BofA Merrill Lynch to act as its financial advisor in connection with the merger on the basis of BofA Merrill Lynch’s experience in similar transactions and its reputation in the investment community.

Certain Prospective Financial Information Reviewed by the Company

The Company does not as a matter of course make public projections as to future cash flows, revenues, earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, the Company is including certain unaudited prospective financial information that was made available to the Board and to BPO in connection with the evaluation of the merger. This information also was provided to the financial advisors for use in connection with their respective financial analyses summarized under the section entitled “The Merger—Proposal 1—Opinions of the Company’s Financial Advisors” on page 51. The inclusion of this information should not be regarded as an indication that any of the Company, the financial advisors or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.

The unaudited prospective financial information has been prepared by, and is the responsibility of, our management. The unaudited prospective financial information was not prepared with a view toward public disclosure; and, accordingly, do not necessarily comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or generally accepted accounting principles, or GAAP. KPMG LLP, our independent registered public accounting firm, has not audited, compiled or performed

65



any procedures with respect to the unaudited prospective financial information and does not express an opinion or any form of assurance related thereto. In addition, the unaudited prospective financial information requires significant estimates and assumptions that make it inherently less comparable to the similarly titled GAAP measures in the Company’s historical GAAP financial statements.

The unaudited prospective financial information consists of (i) projected cash flows for the nine months ending December 31, 2013, assuming a sale or disposition of all of the Company’s assets during 2013 (the “Liquidation Cash Flow Projections”), and (ii) projected cash flows on an unlevered basis (i.e., calculated without reducing projected cash flows for debt service and common and preferred dividends) for the nine months ending December 31, 2013 and for the fiscal years ending December 31, 2014 through 2017, assuming that the Company continues as a going concern (the “Unlevered Going Concern Cash Flow Projections”).

Liquidation Cash Flow Projections

The Liquidation Cash Flow Projections are intended to estimate the Company’s cash flow for 2013 assuming that the Company had elected to liquidate and therefore sold or disposed of all of its assets and repaid all of its indebtedness during the last nine months of 2013. The Liquidation Cash Flow Projections assume: (i) the sale or disposition of all of the Company’s assets during 2013 and the repayment of all of the Company’s indebtedness, (ii) the disposition of Gas Company Tower and Wells Fargo Tower and extinguishment of related mortgage indebtedness for no equity proceeds, (iii) the closing of sale of the currently pending US Bank Tower sale pursuant to the terms of the applicable acquisition agreement and (iv) the redemption of the Company preferred shares as of December 31, 2013. The Liquidation Cash Flow Projections also give effect to estimated transaction costs and estimated costs to operate the Company for the remainder of 2013, but do not reflect estimated income taxes, the costs to liquidate the Company or changes in corporate net working capital.

The following is a summary of the Liquidation Cash Flow Projections (all dollar amounts in thousands):

 
For the Nine Months Ending
December 31, 2013
Total Property-level Net Cash Flow
$
(3,105
)
Net Cash Flow before Dispositions (1)
(23,599
)
Total Net Cash Flow (2)
376,337

Unrestricted Cash before Estimated Taxes, Liquidation Costs, Net Working Capital Adjustments and Payments to Preferred Stockholders
521,288

__________
(1)
Represents Total Property-Level Net Cash Flow, plus general and administrative expense and other corporate income and expenses.
(2)
Represents Net Cash Flow before Dispositions, plus the aggregate net proceeds from asset dispositions. Net proceeds from asset dispositions have been calculated to reflect estimates for debt repayments, transaction costs and any tangible working capital at the applicable projected sale dates.


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Unlevered Going Concern Cash Flow Projections

The Unlevered Going Concern Cash Flow Projections are intended to estimate the Company’s unlevered cash flows for the last nine months of 2013 and for the fiscal years ending December 31, 2014 through 2017 assuming that the Company continues as a going concern. Because the Unlevered Going Concern Cash Flow Projections are determined on an “unlevered” basis–i.e., without reducing projected cash flows for debt service and common and preferred dividends – these projections provide an estimate of cash that would be available for distribution to all sources of current or future debt and equity financing (i.e., lenders, holders of Company preferred shares, holders of Company common shares, our minority operating partnership unit holders and potentially other sources of financing). The Unlevered Going Concern Cash Flow Projections assume: (i) the disposition of Gas Company Tower and Wells Fargo Tower and extinguishment of related mortgage indebtedness for no equity proceeds, (ii) the closing of sale of the currently pending US Bank Tower sale pursuant to the terms of the applicable acquisition agreement, (iii) the sale of Plaza Las Fuentes in approximately mid-year 2013, and (iv) that the Company will continue to operate as a going concern owning a portfolio consisting only of KPMG Tower, 777 Tower and the 755 South Figueroa development parcel.

The following is a summary of the Unlevered Going Concern Cash Flow Projections (all dollar amounts in thousands):

 
For the
Nine Months Ending
December 31, 2013
 
Fiscal Year Ending December 31,
 
2014
 
2015
 
2016
 
2017
Total Operating Cash Flow
$
6,589

 
$
6,624

 
$
16,599

 
$
23,869

 
$
30,707

Total Cash Flow from Other Transactions (1)
424,986

 

 

 

 

Total Unlevered Cash Flow (2)
431,575

 
6,624

 
16,599

 
23,869

 
30,707

__________
(1)
Represents estimated asset sale proceeds, net of estimated transaction costs and estimated taxes.
(2)
Represents cash flow before debt service and common and preferred dividends. The Company’s obligations for debt service and accrued dividends on the Company preferred shares are significant. Although asset dispositions assumed for purposes of the Unlevered Going Concern Cash Flow Projections would reduce debt service going forward, the three properties included in the going concern portfolio for fiscal years 2014 through 2017 were encumbered by approximately $634.4 million of mortgage indebtedness. Please see our most recent Quarterly Report on Form 10-Q for additional information regarding this mortgage indebtedness. As of March 31, 2013, the aggregate amount of accrued dividends on the Company preferred shares was $78.8 million.

The unaudited prospective financial information, while presented with numerical specificity, necessarily was based on numerous variables and assumptions that are inherently uncertain and many of which are beyond the control of our management. These assumptions and variables include, among other things, interest rates, corporate financing activities, occupancy and tenant retention levels, changes in rent, the potential amount, timing and cost of existing and planned development properties, the amount and timing of asset sales, the amount of income taxes paid, and the amount of general and administrative costs. These assumptions involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions which may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, the risks and uncertainties described under the caption “Cautionary Statement Regarding Forward-Looking Statements” on page 14 and the risks described in the periodic reports filed by the Company with the SEC, which reports can be found as

67



described under the caption “Where You Can Find Additional Information” on page 118. The unaudited prospective financial information also reflects assumptions as to certain business decisions that are subject to change. Many or most of the assumptions made by our management may not be realized; accordingly, actual results likely will differ, and may differ materially, from those reflected in the unaudited prospective financial information. In addition, because portions of the unaudited prospective financial information cover multiple years, by their nature, they become subject to greater uncertainty with each successive year.

Readers of this proxy statement are cautioned not to place undue reliance on the unaudited prospective financial information set forth above. No representation is made by the Company or any other person to any Company stockholder regarding the ultimate performance of the Company compared to the information included in the above unaudited prospective financial information. The inclusion of unaudited prospective financial information in this proxy statement should not be regarded as an indication that the prospective financial information will be necessarily predictive of actual future events, and such information should not be relied on as such.

THE COMPANY DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ABOVE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE, EXCEPT AS MAY BE REQUIRED BY LAW.

Interests of Our Directors and Executive Officers in the Merger

In considering the recommendation of the Board to approve the merger and the other transactions contemplated by the merger agreement, the Company’s common stockholders should be aware that certain executive officers and directors of the Company have interests in the merger that may be different from, or in addition to, the interests of the Company’s common stockholders generally. These interests may create potential conflicts of interest. The Board was aware of those interests and considered them, among other matters, in reaching its decision to approve the merger agreement and the transactions contemplated thereby.

These interests are described in more detail below, and certain of them are quantified in the tables that follow the narrative below and under the heading “Advisory Vote on Merger-Related Compensation—Proposal 3” on page 114. The dates used below to quantify these interests have been selected for illustrative purposes only and do not necessarily reflect the dates on which certain events will occur.

For further information with respect to the compensatory arrangements between the Company and its executive officers and directors, please also see the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed with the SEC on March 18, 2013 under the headings “Compensation Discussion and Analysis” and “Director Compensation.”


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Stock Options

The merger agreement provides that, immediately prior to the effective time, each outstanding Stock Option, whether or not then exercisable, will be canceled in exchange for the right to receive a single lump sum cash payment equal to the product of (i) the number of shares subject to such Stock Option immediately prior to the effective time, and (ii) the excess, if any, of the merger consideration over the exercise price per share of such Stock Option (the “Option Merger Consideration”), without interest and less any required withholding tax. If the exercise price per share of any such Stock Option is equal to or greater than the merger consideration, such Stock Option will be canceled without any cash payment being made in respect thereof. For more information, please see “The Merger Agreement—Merger Consideration; Effects of the Merger and the Partnership Merger—Merger Consideration—Stock Options” on page 85.

Pursuant to the terms of the applicable stock option agreements evidencing the Stock Options granted to the Company’s executive officers, in the event that a change in control of the Company, such as the completion of the merger, occurs and the grantee remains employed by the Company until at least immediately prior to such change in control, the Stock Option will become fully vested and exercisable. Pursuant to the terms of the applicable stock option agreements evidencing the Stock Options granted to the Company’s directors, in the event that of a merger of the Company with or into another corporation or a change in control of the Company, such as the completion of the merger, occurs, the Stock Option will become fully vested and exercisable.

The table below sets forth information regarding the Stock Options held by the Company’s executive officers and directors as of May 31, 2013, having an exercise price per share less than $3.15 that would be canceled in exchange for the right to receive the Option Merger Consideration that would be paid in connection with the consummation of the merger, assuming that the completion of the merger had occurred on May 31, 2013.

 
 
Vested Options to be Canceled
in Exchange for the
Option Merger Consideration
 
Unvested Options to be Accelerated
and Canceled in Exchange for the
Option Merger Consideration
 
 
Name
 
Number of
Options
 
Weighted
Average
Exercise
Price
Per Option
 
Option Merger Consideration
 
Number of
Options
 
Weighted
Average
Exercise
Price
Per Option
 
Option Merger Consideration
 
Total Merger
Consideration
of Options
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
David L. Weinstein
 
475,000

 
$
2.26

 
$
422,250

 
15,000

 
$
2.93

 
$
3,300

 
$
425,550

Kelly E. Samuelson
 
8,167

 
0.58

 
20,989

 

 

 

 
20,989

Peggy M. Moretti
 
60,000

 
0.58

 
154,200

 

 

 

 
154,200

Christopher M. Norton
 

 

 

 

 

 

 

Robert M. Deutschman
 

 

 

 

 

 

 

Christine N. Garvey
 
75,000

 
1.52

 
122,250

 
15,000

 
2.93

 
3,300

 
125,550

Michael J. Gillfillan
 
82,500

 
1.49

 
136,800

 
15,000

 
2.93

 
3,300

 
140,100

Edward J. Ratinoff
 

 

 

 

 

 

 

Joseph P. Sullivan
 
82,500

 
1.49

 
136,800

 
15,000

 
2.93

 
3,300

 
140,100

George A. Vandeman
 
45,000

 
2.15

 
45,150

 
15,000

 
2.93

 
3,300

 
48,450

Paul M. Watson
 
75,000

 
1.52

 
122,250

 
15,000

 
2.93

 
3,300

 
125,550



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Restricted Stock

The merger agreement provides that, immediately prior to the effective time, each outstanding share of Restricted Stock will cease to be subject to any forfeiture or vesting conditions and each such share will be automatically canceled in exchange for, the right to receive the merger consideration (the “Restricted Stock Merger Consideration”), without interest and less any required withholding tax. For more information, please see “The Merger Agreement—Merger Consideration; Effects of the Merger and the Partnership Merger—Merger Consideration—Restricted Stock” on page 86.

Pursuant to the terms of the applicable restricted stock award agreement evidencing the Restricted Stock granted to the Company’s executive officers, in the event that a change in control of the Company, such as the completion of the merger, occurs, each share of Restricted Stock will become fully vested.

The table below sets forth information regarding the Restricted Stock held by the Company’s executive officers as of May 31, 2013, that would be subject to accelerated vesting and canceled in exchange for the right to receive the Restricted Stock Merger Consideration, assuming that the completion of the merger had occurred on May 31, 2013. As of May 31, 2013, none of the directors of the Company held any Restricted Stock.

Name
 
Number of
Shares of
Restricted Stock
to be Accelerated
 
Restricted Stock
Merger Consideration (1)
 
 
 
 
 
David L. Weinstein
 

 
$

Kelly E. Samuelson
 
2,043

 
6,435

Peggy M. Moretti
 

 

Christopher M. Norton
 

 

___________
(1)
The Restricted Stock Merger Consideration is calculated by multiplying the number of shares of restricted stock that would be accelerated by $3.15.

Restricted Stock Units

The merger agreement provides that, immediately prior to the effective time, each outstanding RSU will be canceled in exchange for the right to receive a single lump sum cash payment equal to the product of (i) the number of shares subject to such RSU immediately prior to the effective time, whether or not vested, and (ii) the merger consideration (the “RSU Merger Consideration”), without interest and less any required withholding tax. For more information, please see “The Merger Agreement—Merger Consideration; Effects of the Merger and the Partnership Merger—Merger Consideration—Restricted Stock Units” on page 86.

Pursuant to the terms of the applicable RSU award agreement evidencing the RSUs granted to the Company’s executive officers and directors, in the event that a change in control of the Company, such as the completion of the merger, occurs, all of the RSUs granted thereunder will become fully vested.


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The table below sets forth information regarding the RSUs held by the Company’s executive officers and directors as of May 31, 2013, that would be canceled in exchange for the right to receive the RSU Merger Consideration, assuming that the completion of the merger had occurred on May 31, 2013.

 
 
Vested RSUs to be Canceled
in Exchange for the
RSU Merger Consideration
 
Unvested RSUs to be Accelerated
and Canceled in Exchange for the
RSU Merger Consideration
Name
 
Number of
RSUs
 
RSU Merger Consideration (1)
 
Number of
RSUs
 
RSU Merger Consideration (1)
 
 
 
 
 
 
 
 
 
David L. Weinstein
 
583,973

 
$
1,839,515

 
616,027

 
$
1,940,485

Kelly E. Samuelson
 
23,847

 
75,118

 
16,682

 
52,549

Peggy M. Moretti
 
166,683

 
525,051

 
41,957

 
132,165

Christopher M. Norton
 
50,282

 
158,388

 
58,498

 
184,269

Robert M. Deutschman
 
9,583

 
30,186

 
42,292

 
133,220

Christine N. Garvey
 
8,333

 
26,249

 
41,667

 
131,251

Michael J. Gillfillan
 
8,333

 
26,249

 
41,667

 
131,251

Edward J. Ratinoff
 
9,583

 
30,186

 
42,292

 
133,220

Joseph P. Sullivan
 
8,333

 
26,249

 
41,667

 
131,251

George A. Vandeman
 
8,333

 
26,249

 
41,667

 
131,251

Paul M. Watson
 
8,333

 
26,249

 
41,667

 
131,251

________
(1)
The RSU Merger Consideration is calculated by multiplying the number of RSUs by $3.15.

Employment Agreements

The Company has previously entered into employment agreements with each of its four officers, including its three named executive officers which provide for specified payments and benefits in the event of certain terminations of employment and/or a change in control of the Company. For more information with respect to the agreements between the Company and its named executive officers, please see “Advisory Vote on Merger-Related Compensation—Proposal 3” on page 114.

Weinstein Employment Agreement

David L. Weinstein serves as the Company’s President and Chief Executive Officer pursuant to an amended and restated employment agreement effective December 15, 2011, as amended on June 29, 2012 and November 28, 2012 (the “Weinstein Employment Agreement”). Pursuant to the terms of the Weinstein Employment Agreement:

If Mr. Weinstein’s employment is terminated by the Company without “cause” or by him for “good reason” (each as defined in the Weinstein Employment Agreement), subject to his execution and non-revocation of a general release of claims, Mr. Weinstein will receive the following severance payments and benefits:
A lump-sum cash payment equal to 200% of the sum of his annual base salary in effect on the date of termination plus the average actual annual bonus awarded to him for the three full fiscal years immediately preceding the year in which the date of termination occurs (or such lesser number of full fiscal years that he has been employed by the Company if he has not been employed by the Company for at least three full fiscal years);

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A lump-sum cash payment equal to any unpaid prior year annual bonus;
A lump-sum cash payment equal to a pro-rated annual bonus for the year in which the termination occurs, reduced by any semi-annual or quarterly incentive bonus payments made during the fiscal year in which the termination date occurs;
To the extent not previously vested and exercisable as of the date of termination, any outstanding equity-based awards (including stock options, restricted common stock and restricted stock units) held by Mr. Weinstein, other than equity-based awards subject to performance vesting, will immediately vest and become exercisable in full; and
Certain health insurance benefits at the Company’s expense for up to 18 months.
If Mr. Weinstein’s employment is terminated by the Company without cause or by him for good reason within two years after a “change in control” (as defined in the Weinstein Employment Agreement), subject to his execution and non-revocation of a general release of claims, he will receive the benefits and payments described above, except that the pro-rated annual bonus will be calculated based on Mr. Weinstein’s maximum annual bonus (250% of his then-current annual base salary). Additionally, to the extent not previously vested and exercisable as of the date of a change in control, any outstanding equity-based awards (including stock options, restricted common stock and restricted stock units), other than equity-based awards subject to performance vesting, will immediately vest and become exercisable in full upon a change in control.
Notwithstanding the foregoing, the amount of cash severance payable to Mr. Weinstein in the event that his employment is terminated by the Company without cause or by him for good reason, as described in the preceding two paragraphs, will be reduced by an amount equal to 75% of the Retention Bonus paid to him under the Retention Bonus Plan (not including any Additional Retention Payments), as further described in the section entitled “Retention Bonus Plan” below.
Any Company stock, options and other equity awards that were granted to Mr. Weinstein prior to November 21, 2010 in connection with his service as a member of the Board will immediately vest and become exercisable in full in the event that (i) Mr. Weinstein incurs a termination of employment by the Company without cause or by Mr. Weinstein for good reason, or (ii) a change in control occurs.

Samuelson Employment Agreement

Kelly E. Samuelson serves as the Company’s Vice President, Chief Accounting Officer and principal accounting officer pursuant to an employment agreement effective January 1, 2012, as amended on November 28, 2012 (the “Samuelson Employment Agreement”). Pursuant to the terms of the Samuelson Employment Agreement:

If Ms. Samuelson’s employment is terminated by the Company without “cause” (as defined in the Samuelson Employment Agreement) prior to December 31, 2013 (which is the expiration date of the Samuelson Employment Agreement), subject to her execution and non‑revocation of a general release of claims, Ms. Samuelson will receive a severance payment equal to her remaining base salary due through December 31, 2013; or

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If Ms. Samuelson’s employment is terminated solely due to the expiration of the Samuelson Employment Agreement on December 31, 2013, she will not be entitled to the above severance payment.

In addition to the severance payable under the terms of the Samuelson Employment Agreement, Ms. Samuelson is eligible to receive severance pay under the Severance Plan, as further described in the section entitled “Severance Plan” below.

Moretti Employment Agreement

Peggy M. Moretti serves as the Company’s Executive Vice President, Investor and Public Relations & Chief Administrative Officer pursuant to an amended and restated employment agreement effective January 1, 2012, as amended on June 29, 2012 and November 28, 2012 (the “Moretti Employment Agreement”). Pursuant to the terms of the Moretti Employment Agreement:

If Ms. Moretti’s employment is terminated by the Company without “cause” (as defined in the Moretti Employment Agreement), subject to her execution and non-revocation of a general release of claims, Ms. Moretti will receive the following severance payments and benefits:
A lump-sum cash payment equal to 100% of the sum of her then-current annual base salary and her then-current target annual bonus;
A lump-sum cash payment equal to any unpaid prior year annual bonus;
A lump-sum cash payment equal to a pro-rated annual bonus for the year in which the termination occurs, reduced by any semi-annual or quarterly incentive bonus payments made during the fiscal year in which the termination date occurs;
Certain health insurance benefits at the Company’s expense for up to 18 months; and
Reasonable outplacement services at the Company’s expense for up to one year following the date of termination.
Ms. Moretti is not entitled to receive any enhanced severance payments if she is terminated in connection with a change in control.

Notwithstanding the foregoing, the amount of cash severance payable to Ms. Moretti in the event that her employment is terminated by the Company without cause as described in the preceding paragraph will be reduced by an amount equal to 75% of the Retention Bonus paid to her under the Retention Bonus Plan (not including any Additional Retention Payments), as further described in the section entitled “Retention Bonus Plan” below.

Norton Employment Agreement

Christopher M. Norton serves as the Company’s Executive Vice President, General Counsel and Secretary pursuant to a second amended and restated employment agreement effective November 28, 2012 (the “Norton Employment Agreement”).

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Pursuant to the terms of the Norton Employment Agreement:

If Mr. Norton’s employment is terminated by the Company without “cause” or by him for “good reason” (each as defined in the Norton Employment Agreement), subject to his execution and non-revocation of a general release of claims, Mr. Norton will receive the following severance payments and benefits:
A lump-sum cash payment equal to 100% of the sum of his annual base salary in effect on the date of termination plus the annual bonus earned by him for the most recently completed fiscal year of the Company preceding the termination;
A lump-sum cash payment equal to any unpaid prior year annual bonus;
A lump-sum cash payment equal to a pro-rated annual bonus for the year in which the termination occurs, reduced by any semi-annual or quarterly incentive bonus payments made during the fiscal year in which the termination date occurs; and
Certain health insurance benefits at the Company’s expense for up to 18 months.
Mr. Norton is not entitled to receive any enhanced severance payments if he is terminated in connection with a change in control.

Notwithstanding the foregoing, the amount of cash severance payable to Mr. Norton in the event that his employment is terminated by the Company without cause or by him for good reason as described in the preceding paragraph will be reduced by an amount equal to 75% of the Retention Bonus paid to him under the Retention Bonus Plan (not including any Additional Retention Payments), as further described in the section entitled “Retention Bonus Plan” below.

Retention Bonus Plan

The Company maintains the MPG Office Trust, Inc. Retention Bonus Plan (the “Retention Bonus Plan”), as amended on March 20, 2013, which provides eligible employees with certain cash retention bonus payments in connection with their continued employment with the Company. Mr. Weinstein, Mr. Norton, Ms. Samuelson and Ms. Moretti each participate in the Retention Bonus Plan. Pursuant to the Retention Bonus Plan, each participant will be eligible to receive payment of a retention bonus (the “Retention Bonus”) in an amount determined by the Compensation Committee and paid as follows, subject to the participant’s continued employment with the Company:

12.5% of the retention bonus will be paid to the participant on the last day of each calendar quarter of 2013; and
50% of the retention bonus will be paid to the participant on the last day of the first calendar quarter of 2014.


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The Compensation Committee may, in its sole discretion, elect to delay the payment of 25% of the final installment of the Retention Bonus (i.e., 12.5% of the total Retention Bonus) for up to two additional calendar quarters. In the event that such an election is made, the participant will be entitled to receive for each calendar quarter that such payment is delayed, an additional amount (an “Additional Retention Payment”) equal to 12.5% times the amount of the Retention Bonus, subject to the participant’s continued employment with the Company through the last day of the applicable calendar quarter. In the event of a termination of a participant’s employment by the Company without cause or by the participant for good reason (if such participant has an employment agreement with the Company which provides for such right), the participant will receive payment of any unpaid portion of the Retention Bonus, plus in the event the Company has made an election to delay the payment of 25% of the final installment of the Retention Bonus, any unpaid Additional Retention Payment(s). In the event of a termination of employment for any other reason, the participant will forfeit any unpaid portion of the Retention Bonus and Additional Retention Payment(s), if applicable.

Pursuant to the Retention Bonus Plan, the Compensation Committee (or its designee) has the authority to award Retention Bonuses at any time during the term of the Retention Bonus Plan, including after the completion of one or more calendar quarters in 2013. Such Retention Bonuses may be in the form of a reallocation of amounts forfeited by participants whose employment with the Company has terminated. With respect to any Retention Bonus awarded to a participant during 2013 after a completed 2013 calendar quarter, any amount of the Retention Bonus that would have otherwise been paid to the participant for a previously completed 2013 calendar quarter will instead be paid to the participant as part of the final installment payment of the Retention Bonus in accordance with the terms of the Retention Bonus Plan.

The Compensation Committee awarded the following Retention Bonuses to the executive officers of the Company under the Retention Bonus Plan: Mr. Weinstein – $2,625,000; Ms. Samuelson – $101,000; Ms. Moretti – $100,000; and Mr. Norton – $350,000. On March 29, 2013, the first installment of the Retention Bonuses was paid. The executive officers received: Mr. Weinstein – $328,125; Ms. Samuelson – $9,563; Ms. Moretti – $12,500; and Mr. Norton – $43,750.

Severance Plan

The Company maintains the MPG Office Trust, Inc. Severance Plan (the “Severance Plan”), which provides employees at the level of Vice President and below with certain severance pay in the event of a qualifying termination of employment. The Severance Plan generally provides that if a participant’s employment is involuntarily terminated, the participant will receive a lump-sum cash severance payment in an amount equal to two weeks of the participant’s annual base compensation for each year of service (pro-rated for any partial year), subject to a maximum payment of 26 weeks of annual base compensation, provided that the participant executes and does not revoke a general release of claims. Ms. Samuelson is eligible to receive severance pay under the Severance Plan, in addition to the severance payable under the terms of her employment agreement. Mr. Weinstein, Ms. Moretti and Mr. Norton do not participate in the Severance Plan.


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Pro Rata Bonus

Pursuant to the merger agreement, immediately prior to, but conditioned on, the merger, the Company and/or the Partnership will pay to each employee who is a participant in the Company’s quarterly cash incentive bonus program a pro-rata portion of the cash bonuses that would otherwise be payable to such employee as of the end of the applicable quarter in which the closing of the merger occurs, pursuant to the terms and conditions of the program. Each of Mr. Weinstein, Ms. Samuelson, Ms. Moretti and Mr. Norton is a participant in the Company’s quarterly cash incentive bonus program.

Agreements with Members of the Company’s Current Management Team

In connection with the merger, no member of the Company’s management has entered into an employment agreement or other agreement or commitment with respect to continuing employment, nor has any member of the Company’s management entered into an equity rollover agreement or other agreement or commitment with the Brookfield parties with respect to a co-investment with the Brookfield parties in the Company. It is possible that members of the Company’s management will enter into agreements with the Brookfield parties or their affiliates after the date of this proxy statement. Any such agreements would not become effective until the merger is completed.

Employee Benefits

The merger agreement requires Brookfield DTLA (or the surviving corporation or its affiliate) to continue to provide certain compensation and benefits for a period of at least one year following the effective time, to honor in accordance with their terms all employment, severance and retention plans and agreements of employees, and to take certain other actions in respect of employee benefits provided to the Company’s employees, including its executive officers. For a detailed description of these requirements, please see “The Merger Agreement—Employee Benefits” on page 104.

Section 16 Matters

Pursuant to the merger agreement, the Board has adopted a resolution to cause to be exempt under Rule 16b-3 under the Exchange Act any dispositions of Company common shares that are treated as dispositions under Rule 16b-3 and result from the transactions contemplated under the merger agreement by each officer or director of the Company who is or will be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company.

Indemnification and Insurance

Subject to certain exceptions, Brookfield DTLA, Sub REIT, the surviving corporation and the Partnership will indemnify, among others, each director or executive officer of the Company to the fullest extent permitted by law against all claims, judgments, fines, penalties and amounts paid in settlement. Brookfield DTLA, Sub REIT, the surviving corporation and the Partnership will also pay or advance to each director or executive officer, to the fullest extent permitted by law, any expenses incurred in defending, serving as a witness with respect to or otherwise participating in any claim in advance of the final disposition of such claim, subject to repayment of such expenses if it is ultimately determined that such party is not entitled to indemnification. The indemnification and advancement obligations will

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extend to acts or omissions occurring at or before the effective time of the merger and any claim relating thereto. The foregoing is in addition to any other rights the directors and executive officers may have under any employment or indemnification agreement or under the organizational documents of the Company.

The surviving corporation and the Partnership will (i) for a period of six years after the effective time of the merger maintain in effect in their respective organizational documents, provisions regarding elimination of liability of directors and officers, indemnification of officers, directors and employees and advancement of expenses that are no less advantageous to the intended beneficiaries as those currently contained in the organizational documents, and (ii) on or before the closing date, in consultation with Brookfield DTLA, obtain a directors’ and officers’ liability insurance “tail” policy lasting for six years with respect to claims arising from facts or events that occurred on or before the effective time of the merger for the benefit of each person covered by, and on terms no less advantageous to, the Company’s existing insurance policies, except that the maximum premium payable will not exceed 300% of the annual directors’ and officers’ liability insurance premiums payable by the Company beginning in September 2012. See “The Merger Agreement—Indemnification; Director and Officer Insurance” on page 104.

The Board was aware of the interests described in this section and considered them, among other matters, in approving the merger agreement and making its recommendation that the Company’s common stockholders approve the merger and the other transactions contemplated by the merger agreement. See “The Merger—Proposal 1—Recommendation of the Board and Its Reasons for the Merger” on page 44.


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Security Ownership of Our Directors and Executive Officers and Current Beneficial Owners

The following table sets forth the only persons known to us to be the beneficial owner, or deemed to be the beneficial owner, of more than 5% of the Company common shares (or Company common shares currently outstanding and Company common shares issuable at our option upon the redemption of noncontrolling common units of the Partnership as of May 31, 2013:

Name of Beneficial Owner
 
Amount and
Nature of
Beneficial
Ownership
 
Percent  of
Common
Stock (1)
 
Percent  of
Common
Stock and
Units (1)
(a)
 
(b)
 
(c)
 
(d)
Wells Fargo & Company (2)
420 Montgomery Street
San Francisco, CA 94104
 
5,597,662

 
9.76
%
 
9.74
%
 
 
 
 
 
 
 
DW Investment Management, LP (3)
590 Madison Avenue, 9th Floor
New York, NY 10022
 
4,625,267

 
8.07
%
 
8.05
%
 
 
 
 
 
 
 
HG Vora Capital Management, LLC (4)
870 Seventh Avenue
Second Floor
New York, NY 10019
 
4,521,500

 
7.89
%
 
7.87
%
 
 
 
 
 
 
 
Appaloosa Partners Inc. (5)
c/o Appaloosa Management L.P.
51 John F. Kennedy Parkway
Short Hills, NJ 07078
 
4,099,174

 
7.15
%
 
7.13
%
__________
(1)
Amounts and percentages in this table are based on 57,335,249 Company common shares and 135,526 noncontrolling common units of the Partnership (other than units held by the Company) outstanding as of May 31, 2013. Partnership units are redeemable for cash or, at our option, Company common shares on a one-for-one basis.
(2)
Information regarding Wells Fargo & Company (“WFC”) and Wells Fargo Bank, N.A. (“WFB”) is based solely on a Schedule 13G filed with the SEC on February 13, 2013. The Schedule 13G indicates that (i) WFC had sole voting and dispositive power with respect to 5,596,227 Company common shares and shared voting or dispositive power with respect to 1,435 Company common shares; and (ii) WFB had sole voting and dispositive power with respect to 5,594,220 Company common shares and shared voting or dispositive power with respect to 1,435 Company common shares. The Schedule 13G indicates that WFB is subsidiary of WFC and that aggregate beneficial ownership reported by WFC is on a consolidated basis and includes any beneficial ownership reported by a subsidiary. The business address of WFB is 101 North Phillips Avenue, Sioux Falls, SD 57104.
(3)
Information regarding DW Investment Management, LP (“DWIM”) and DW Investment Partners, LLC (“DWIP”) is based solely on a Schedule 13G filed with the SEC on February 14, 2013. The Schedule 13G indicates that DWIM and DWIP have shared voting and dispositive power with respect to 4,625,267 Company common shares and no sole voting or dispositive power. The Schedule 13G indicates that DWIM serves as the investment manager of the accounts of certain private funds and may direct the vote and dispose of the 4,625,267 Company common shares held by such funds. DWIP serves as the general partner of DWIM and may direct DWIM to direct the vote and disposition of the 4,625,267 Company common shares held by such funds. The business address of DWIP is 590 Madison Avenue, 9th Floor, New York, NY 10022.
(4)
Information regarding HG Vora Special Opportunities Master Fund, Ltd. (the “Fund”), HG Vora Capital Management, LLC (the “Investment Manager”) and Parag Vora is based solely on a Schedule 13G/A filed with the SEC on February 14, 2013. The Schedule 13G/A indicates that (i) the Fund directly owned and had shared voting and dispositive power with respect to 4,521,500 Company common shares and no sole voting or dispositive power; (ii) the Investment Manager may be deemed to have beneficially owned and had shared voting and dispositive power with respect to 4,521,500 Company common shares and no sole voting or dispositive power; and (iii) Mr. Vora may be deemed to have beneficially owned and had shared voting and dispositive power with respect to 4,521,500 Company common shares and no sole voting or dispositive power. The business address of the Fund is Queensgate House, South Church Street, Grand Cayman, KY1-1108, Cayman Islands. The business address of Mr. Vora is 870 Seventh Avenue, Second Floor, New York, NY 10019.

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(5)
Information regarding Appaloosa Investment Limited Partnership I (“AILP”), Palomino Fund Ltd. (“Palomino”), Thoroughbred Fund L.P. (“TFLP”), Thoroughbred Master Ltd. (“TML”), Appaloosa Management L.P. (“AMLP”), Appaloosa Partners Inc. (“API”) and David A. Tepper is based solely on a Schedule 13G/A filed with the SEC on February 14, 2013. The Schedule 13G/A indicates that (i) AILP had shared voting and dispositive power with respect to 1,319,771 Company common shares and no sole voting or dispositive power; (ii) Palomino had shared voting and dispositive power with respect to 1,927,644 Company common shares and no sole voting or dispositive power; (iii) TFLP had shared voting and dispositive power with respect to 416,736 Company common shares and no sole voting or dispositive power; (iv) TML had shared voting and dispositive power with respect to 435,023 Company common shares and no sole voting or dispositive power; (v) AMLP had shared voting and dispositive power with respect to 4,099,174 Company common shares and no sole voting or dispositive power; (vi) API had shared voting and dispositive power with respect to 4,099,174 Company common shares and no sole voting or dispositive power; and (vii) Mr. Tepper had shared voting and dispositive power with respect to 4,099,174 Company common shares and no sole voting or dispositive power. The Schedule 13G/A indicates that Mr. Tepper is the sole stockholder and the President of API. API is the general partner of, and Mr. Tepper owns a majority of the limited partnership interest in, AMLP. AMLP is the general partner of AILP and TFLP, and acts as investment advisor to Palomino and TML.

The following table sets forth the beneficial ownership of the Company common shares (or Company common shares currently outstanding and Company common shares issuable at the Company’s option upon the redemption of noncontrolling common units of the Partnership of (1) our current directors, (2) our Chief Executive Officer, (3) our Chief Accounting Officer, (4) each of our other current executive officers, other than our Chief Executive Officer, as of May 31, 2013, and (5) our current directors and executive officers as a group, in each case as of May 31, 2013. In preparing this information, we relied solely upon information provided to us by our directors and current executive officers.

Name of Beneficial Owner (1)
 
Amount and
Nature of
Beneficial
Ownership (2)
 
Percent  of
Common
Stock (3)
 
Percent  of
Common
Stock and
Units (3)
(a)
 
(b)
 
(c)
 
(d)
David L. Weinstein (4)
 
931,217

 
1.61
%
 
1.61
%
Kelly E. Samuelson (5)
 
26,137

 
*

 
*

Peggy M. Moretti (6)
 
68,395

 
*

 
*

Christopher M. Norton (7)
 

 
*

 
*

Robert M. Deutschman (8)
 

 
*

 
*

Christine N. Garvey (9)
 
108,960

 
*

 
*

Michael J. Gillfillan (10)
 
97,500

 
*

 
*

Edward J. Ratinoff (8)
 

 
*

 
*

Joseph P. Sullivan (10)
 
97,500

 
*

 
*

George A. Vandeman (11)
 
73,500

 
*

 
*

Paul M. Watson (12)
 
113,500

 
*

 
*

Directors and Executive Officers as a group
(11 persons) (13)
 
1,516,709

 
2.60
%
 
2.59
%
__________
*
Less than 1.0%.
(1)
The address for each listed beneficial owner is c/o MPG Office Trust, Inc., 355 South Grand Avenue, Suite 3300, Los Angeles, California 90071.
(2)
Unless otherwise indicated, each person is the direct owner of and has sole voting and dispositive power with respect to such Company common share. Amounts and percentages in this table are based on 57,335,249 Company common shares and 135,526 noncontrolling common units of the Partnership (other than units held by the Company) outstanding as of May 31, 2013. Partnership units are redeemable for cash or, at our option, Company common shares on a one-for-one basis.

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(3)
The total number of shares outstanding used in calculating the percentages shown in columns (c) and (d) assumes that all Company common shares that each person has the right to acquire upon exercise of stock options within 60 days of May 31, 2013 are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the ownership percentage of any other beneficial owner.
(4)
Includes (i) 428,717 Company common shares held directly and (ii) 502,500 Company common shares issuable upon exercise of stock options. Excludes 1,200,000 restricted stock units, of which 700,274 units will be vested within 60 days of May 31, 2013. Vested restricted stock units will not be distributed in Company common shares or, at our option, paid in cash until the earliest to occur of the last regularly scheduled vesting date (December 19, 2013 with respect to 600,000 restricted stock units and June 29, 2015 with respect to 600,000 restricted stock units), the date of the occurrence of a change in control or the date of Mr. Weinstein’s separation from service for any reason.
(5)
Includes (i) 15,927 Company common shares held directly, (ii) 2,043 shares of unvested restricted common stock, and (iii) 8,167 Company common shares issuable upon exercise of stock options. Excludes 40,529 restricted stock units, of which 27,262 units will be vested within 60 days of May 31, 2013. Vested restricted stock units will not be distributed in Company common shares or, at our option, paid in cash until the earliest to occur of the last regularly scheduled vesting date (December 9, 2013 with respect to 12,165 restricted stock units, December 19, 2013 with respect to 14,182 restricted stock units and June 29, 2015 with respect to 14,182 restricted stock units), the date of the occurrence of a change in control or the date of Ms. Samuelson’s separation from service for any reason.
(6)
Includes (i) 8,395 Company common shares held directly and (ii) 60,000 Company common shares issuable upon exercise of stock options. Excludes 208,640 restricted stock units, of which 178,183 units will be vested within 60 days of May 31, 2013. Vested restricted stock units will not be distributed in Company common shares or, at our option, paid in cash until the earliest to occur of the last regularly scheduled vesting date (October 2, 2013 with respect to 79,250 restricted stock units, December 9, 2013 with respect to 85,000 restricted stock units, December 19, 2013 with respect to 24,390 restricted stock units and June 29, 2015 with respect to 20,000 restricted stock units), the date of the occurrence of a change in control or the date of Ms. Moretti’s separation from service for any reason.
(7)
Excludes 108,780 restricted stock units, of which 60,990 units will be vested within 60 days of May 31, 2013. Vested restricted stock units will not be distributed in Company common shares or, at our option, paid in cash until the earliest to occur of the last regularly scheduled vesting date (December 19, 2013 with respect to 48,780 restricted stock units and June 29, 2015 with respect to 60,000 restricted stock units), the date of the occurrence of a change in control or the date of Mr. Norton’s separation from service for any reason.
(8)
Excludes 51,875 restricted stock units, of which 17,917 units will be vested within 60 days of May 31, 2013. Vested restricted stock units will not be distributed in Company common shares or, at our option, paid in cash until the earliest to occur of the date of the grantee’s death, the date of the occurrence of a change in control or the date of the grantee’s separation from service for any reason.
(9)
Includes (i) 4,460 Company common shares held indirectly, (ii) 2,000 Company common shares held directly and (iii) 102,500 Company common shares issuable upon exercise of stock options. Excludes 50,000 restricted stock units, of which 16,667 units will be vested within 60 days of May 31, 2013. Vested restricted stock units will not be distributed in Company common shares or, at our option, paid in cash until the earliest to occur of the date of Ms. Garvey’s death, the date of the occurrence of a change in control or the date of Ms. Garvey’s separation from service for any reason.
(10)
Includes 97,500 Company common shares issuable upon exercise of stock options. Excludes 50,000 restricted stock units, of which 16,667 units will be vested within 60 days of May 31, 2013. Vested restricted stock units will not be distributed in Company common shares or, at our option, paid in cash until the earliest to occur of the date of the grantee’s death, the date of the occurrence of a change in control or the date of the grantee’s separation from service for any reason.
(11)
Includes (i) 1,000 Company common shares held directly and (ii) 72,500 Company common shares issuable upon exercise of stock options. Excludes 50,000 restricted stock units, of which 16,667 units will be vested within 60 days of May 31, 2013. Vested restricted stock units will not be distributed in Company common shares or, at our option, paid in cash until the earliest to occur of the date of Mr. Vandeman’s death, the date of the occurrence of a change in control or the date of Mr. Vandeman’s separation from service for any reason.
(12)
Includes (i) 11,000 Company common shares held indirectly and (ii) 102,500 Company common shares issuable upon exercise of stock options. Excludes 50,000 restricted stock units, of which 16,667 units will be vested within 60 days of May 31, 2013. Vested restricted stock units will not be distributed in Company common shares or, at our option, paid in cash until the earliest to occur of the date of Mr. Watson’s death, the date of the occurrence of a change in control or the date of Mr. Watson’s separation from service for any reason.
(13)
Excludes 1,911,699 restricted stock units, of which 1,085,878 units will be vested within 60 days of May 31, 2013. Vested restricted stock units will not be distributed in Company common shares or, at our option, paid in cash until the earliest to occur of the anniversary of the date of grant (or in the case of members of the Board, their date of death), the date of the occurrence of a change in control or the date of the grantee’s separation from service for any reason.


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Regulatory Approvals

The completion of the merger is not expected to require any consent, approval, authorization or permit of, or filing with or notification to, any United States federal, state, county or local or any foreign government, governmental, regulatory or administrative authority, agency, instrumentality or commission or any court, tribunal, or judicial or arbitral body, except for (i) applicable requirements, if any, of the Securities Act, the Exchange Act, state securities or “blue sky” laws and state takeover laws, (ii) the filing with the SEC of this proxy statement, as amended or supplemented from time to time, (iii) any filings required under the rules and regulations of the NYSE, and (iv) the filing of the articles of merger and Partnership articles of merger with the SDAT in accordance with the MGCL and the MRULPA, as applicable. The Company is working to evaluate and comply in all material respects with these requirements, as appropriate, and does not currently anticipate that they will hinder, delay or restrict completion of the merger.

It is possible that one or more of the regulatory approvals required to complete the merger will not be obtained on a timely basis or at all. Under the merger agreement, the Company and Brookfield DTLA have each agreed to use its commercially reasonable efforts to take, or cause to be taken, all reasonably appropriate action, and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws to consummate and make effective the merger and the other contemplated transactions, including, without limitation, using its commercially reasonable efforts to obtain all permits, consents, approvals, authorizations, waivers, exemptions, qualifications and orders as are necessary for the consummation of the merger and the other contemplated transactions and to fulfill the conditions to the closing.

Form S-4

Sub REIT will prepare and file with the SEC the Form S-4 relating to the issuance of Sub REIT preferred shares to the holders of Company preferred shares pursuant to the merger agreement. Thereafter, Sub REIT will use its commercially reasonable efforts to (a) have the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing, (b) ensure that the Form S-4 complies in all material respects with the Exchange Act or Securities Act, and (c) keep the Form S-4 effective for so long as necessary to complete the contemplated transactions. The parties have agreed, among other things, to furnish to Sub REIT all necessary information and such other assistance as may be reasonably requested to prepare, file and distribute the Form S-4 and to cooperate to file any necessary amendments or supplements to the Form S-4.

In the absence of an SEC stop order that is then in effect, the effectiveness of the Form S-4 is not a condition to the relevant Brookfield parties’ obligations to consummate the merger or the other transactions contemplated by the merger agreement. However, if all the conditions to the obligations of the relevant Brookfield parties to consummate the mergers and the other transactions contemplated by the merger agreement have been satisfied (other than those required to be satisfied or waived at the closing of the merger) but either (i) the Form S-4 has not become effective or (ii) the SEC has issued a stop order suspending the effectiveness of the Form S-4 that remains in effect, then Brookfield DTLA will have the right, by written notice to the Company delivered one or more times, to delay the closing until the earliest to occur of (A) the date specified in the written notice by Brookfield DTLA, (B) one business day after the date of effectiveness of the Form S-4, (C) one business day after any stop order in respect of the Form S-4 has been lifted, reversed or otherwise terminated, and (D) September 25, 2013. If Brookfield

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DTLA exercises this right, then (x) it will be deemed to have immediately and irrevocably waived all of the conditions to its obligations to close the merger and the other transactions contemplated by the merger agreement, other than the conditions relating to the following: (1) the absence of a legal restraint prohibiting the consummation of the merger and the other transactions contemplated by the merger agreement to the extent not related to a stop order suspending the effectiveness of the Form S-4, (2) performance by the Company and the Partnership of their agreements and covenants under the merger agreement, but only if the failure of such condition to be satisfied arises from an action by the Company or the Partnership that constitutes a willful and material breach of the merger agreement, and (3) the absence of a Material Adverse Effect (as defined below), and (y) after August 15, 2013, Brookfield DTLA will be deemed to have irrevocably waived all conditions to its obligations to close the merger and the other transactions contemplated by the merger agreement except for the condition related to the Company and Partnership performance of agreements and covenants under the merger agreement, but only if the failure of such condition to be satisfied arises from an action by the Company or the Partnership that constitutes a willful and material breach of the merger agreement.

Delisting and Deregistration

If the merger is completed, the Company common shares will be delisted from the NYSE and deregistered under the Exchange Act, and the Company will no longer file periodic reports with the SEC.

Litigation Relating to the Merger

After the announcement of the execution of the merger agreement, the Coyne Action and the Masih Action were filed in the Superior Court of the State of California in Los Angeles County and the Kim Action, Perkins Action and Dell’Osso Action were filed in the Circuit Court of the State of Maryland in Baltimore, naming the Company, the members of the Board, the Partnership, BPO, Sub REIT, REIT Merger Sub, Partnership Merger Sub and Brookfield DTLA Inc. as defendants. In each of these lawsuits, the plaintiffs allege, among other things, that the Company’s directors breached their fiduciary duties in connection with the proposed merger by failing to maximize the value of the Company and ignoring or failing to protect against conflicts of interest, and that the relevant Brookfield parties named as defendants aided and abetted those breaches of fiduciary duty. The Kim Action further alleges that the Partnership also aided and abetted the breaches of fiduciary duty by the Company’s directors and the Dell’Osso Action further alleges that the Company and the Partnership aided and abetted the breaches of fiduciary duty by the Company’s directors. The Dell’Osso Action also alleges that the preliminary proxy statement filed by the Company with the SEC on May 21, 2013 is false and/or misleading because it fails to include certain details of the process leading up to the merger and fails to provide adequate information concerning the Company’s financial advisor. The plaintiffs in the five lawsuits seek an injunction against the proposed merger, rescission or rescissory damages in the event the merger has been consummated, an award of fees and costs, including attorneys’ and experts’ fees, and other relief.


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THE MERGER AGREEMENT

This section of this proxy statement describes the material provisions of the merger agreement, which is attached as Annex A to this proxy statement, and the First Amendment, which is attached as Annex B, and are incorporated herein by reference. As a stockholder, you are not a third party beneficiary of the merger agreement and therefore you may not directly enforce any of its terms and conditions.

This summary may not contain all of the information about the merger agreement that is important to you. The Company urges you to read carefully the full text of the merger agreement because it is the legal document that governs the merger. The merger agreement is not intended to provide you with any factual information about the Company. In particular, the assertions embodied in the representations and warranties contained in the merger agreement (and summarized below) are qualified by information the Company filed with the SEC prior to the effective date of the merger agreement, as well as by certain disclosure letters each of the parties to the merger agreement delivered to the other in connection with the signing of the merger agreement, that modify, qualify and create exceptions to the representations and warranties set forth in the merger agreement. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may apply contractual standards of materiality in a way that is different from what may be viewed as material by investors or that is different from standards of materiality generally applicable under the U.S. federal securities laws or may not be intended as statements of fact, but rather as a way of allocating risk among the parties to the merger agreement. The representations and warranties and other provisions of the merger agreement and the description of such provisions in this document should not be read alone but instead should be read in conjunction with the other information contained in the reports, statements and filings that the Company filed with the SEC and the other information in this proxy statements. See “Where You Can Find Additional Information” beginning on page 118.

The Company acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this proxy statement not misleading.

Form, Effective Time and Closing of the Merger

The REIT Merger

The merger agreement provides for the merger of the Company with and into REIT Merger Sub, upon the terms and subject to the conditions set forth in the merger agreement. REIT Merger Sub will be the surviving corporation in the merger and will continue to do business following the merger. Brookfield DTLA has the option to restructure the merger such that the REIT Merger Sub will merge with and into the Company with the Company surviving the merger. The merger will become effective at such time as the articles of merger have been accepted for record by the SDAT or at a later date and time agreed to by the parties and specified in the articles of merger, but not to exceed five days after the articles of merger are accepted for record by the SDAT.


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The merger agreement provides that the closing of the merger will take place upon the later of the first business day after June 27, 2013 on which the last of the conditions to closing of the merger (described under “The Merger Agreement—Conditions to Completion of the Merger”) have been satisfied or waived (other than the conditions that by their terms are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of those conditions) and the second business day after the last of the conditions to closing of the merger (described under “The Merger Agreement—Conditions to Completion of the Merger”) have been satisfied or waived (other than the conditions that by their terms are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of those conditions) and in each case subject to the foregoing , the closing of the merger shall take place at such time and on a date to be specified by the parties. Notwithstanding the foregoing, if the closing is scheduled to occur on the second day through last business day of any month, Brookfield DTLA has a one-time right to delay the closing until the earlier of one business day prior to August 15, 2013 and the last business day of such month. Additionally, Brookfield DTLA and the Company each may extend the closing to August 30, 2013 and September 16, 2013, respectively, under certain circumstances, as discussed under “The Merger Agreement—Termination” on page 101.

The Partnership Merger

The merger agreement also provides for the merger of Partnership Merger Sub with and into the Partnership, upon the terms and subject to the conditions set forth in the merger agreement. The Partnership will be the surviving partnership in the merger. At the election of Brookfield DTLA, immediately after the effective time of the merger and immediately prior to the effective time of the partnership merger, DTLA Fund Holding Co., a Maryland corporation, will purchase from the Partnership newly issued Limited Partner Common Units, as that term is defined in the merger agreement (such election to purchase, the “DTLA Fund Holding Co. Investment”).

After the effective time of the merger and, if Brookfield DTLA elects, the DTLA Fund Holding Co. Investment, Partnership Merger Sub and the Partnership will duly execute and file with the SDAT articles of merger. The partnership merger will become effective at such time as the partnership articles of merger have been accepted for record by the SDAT or at a later date and time agreed to by the parties and specified in the articles of merger, but not to exceed five days after the articles of merger are accepted for record by the SDAT.

Organizational Documents of the Surviving Corporation and the Surviving Partnership

Upon completion of the merger, the charter and bylaws of the surviving corporation will be in the forms attached as exhibits to the merger agreement, subject to any modifications reasonably approved by the Company.

The certificate of limited partnership of the Partnership, as in effect immediately prior to the partnership merger effective time, will be the certificate of limited partnership of the surviving partnership. The limited partnership agreement of the Partnership, as in effect immediately prior to the Partnership merger effective time, will be the limited partnership agreement of the surviving partnership (subject to any amendments made or requested by Brookfield DTLA substantially contemporaneously with the closing in order to effectuate certain provisions of the merger agreement) (the “surviving partnership agreement”) until thereafter amended or further amended as provided therein or by law.


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Directors and Officers of the Surviving Corporation

At the effective time of the merger, the board of directors of REIT Merger Sub immediately prior to the effective time and, if all of the Company preferred shares are not purchased in the tender offer, the two directors of the Company who were elected by the holders of the Company preferred shares, will be the directors of the surviving corporation. The officers of REIT Merger Sub immediately prior to effective time will be the initial officers of the surviving corporation.

The surviving corporation will be the general partner of the surviving partnership following the partnership merger effective time.

Merger Consideration; Effects of the Merger and the Partnership Merger

Merger Consideration

At the effective time of the merger and by virtue of the merger, each Company common share issued and outstanding immediately prior to the effective time will be converted into, and canceled in exchange for, a right to receive an amount in cash to be paid by Brookfield DTLA equal to $3.15, which is referred to herein as the merger consideration, without interest and less any required withholding tax.

7.625% Series A Cumulative Redeemable Preferred Stock. Each Company preferred share issued and outstanding immediately prior to the effective time of the merger will automatically, and without a vote by Company preferred stockholders, be converted into, and canceled in exchange for, one share of 7.625% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share, of Sub REIT, without interest and less any required withholding tax, with the rights, terms and conditions set forth in the Sub REIT charter and bylaws; unless more than 66.6% of the Company preferred shares are purchased in the tender offer, in which case Brookfield DTLA will have the right, but not the obligation, to cause all remaining Company preferred shares not tendered in the tender offer to be converted into a price per share equal to the tender offer price, in cash, without interest and less any required withholding tax, as long as such conversion complies in all respects with applicable law and the Company’s charter. Pursuant to the First Amendment, Brookfield DTLA has irrevocably waived its right to cash out nontendered Company preferred shares as described above. Accordingly, all Company preferred shares that are not validly tendered and accepted for payment in the tender offer will be converted into Sub REIT preferred shares. The Sub REIT preferred shares will be issued by Sub REIT, an entity affiliated with BPO. However, BPO will not be an obligor of, and will not be required to provide credit support for, the Sub REIT preferred shares.

Stock Options. Immediately prior to the effective time, each outstanding Stock Option, whether or not then exercisable, will be canceled in exchange for the right to receive a single lump sum cash payment equal to the product of (i) the number of Company common shares subject to such Stock Option immediately prior to the effective time, and (ii) the excess, if any, of the merger consideration over the exercise price per share of such Stock Option (the “Option Merger Consideration”), without interest and less any required withholding tax. If the exercise price per share of any such Stock Option is equal to or greater than the merger consideration, such Stock Option will be canceled without any cash payment being made in respect thereof. For more information as it relates to the Company’s executive officers and directors who hold Stock Options, please see “The Merger—Proposal 1—Interests of Our Directors and Executive Officers in the Merger—Stock Options” on page 69.


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Restricted Stock. Immediately prior to the effective time, each outstanding share of Restricted Stock will cease to be subject to any forfeiture or vesting conditions and each such share will be automatically converted into , and canceled in exchange for the right to receive the merger consideration, without interest (the “Restricted Stock Merger Consideration”) in accordance with the terms and conditions of the conversion and cancellation of the Company common shares. For more information as it relates to the Company’s executive officers who hold Restricted Stock, please see “The Merger—Proposal 1—Interests of Our Directors and Executive Officers in the Merger—Restricted Stock” on page 70.

Restricted Stock Units. Immediately prior to the effective time, each outstanding RSU will be canceled in exchange for the right to receive a single lump sum cash payment equal to the product of (i) the number of Company common shares subject to such RSU immediately prior to the effective time, whether or not vested, and (ii) the merger consideration (the “RSU Merger Consideration”), without interest and less any required withholding tax. For more information as it relates to the Company’s executive officers and directors who hold RSUs, please see “The Merger—Proposal 1—Interests of Our Directors and Executive Officers in the Merger—Restricted Stock Units” on page 70.

Partnership Merger Consideration. As a result of the partnership merger, each outstanding limited partner common unit in the Partnership, other than such units held by the Company or any subsidiary or acquired by DTLA Fund Holding Co., will be converted into, and canceled in exchange for, the right to receive an amount in cash equal to the merger consideration, which is referred to herein as the partnership merger consideration, without interest and less any required withholding tax. Each outstanding limited partner common unit in the Partnership held by any Company subsidiary and each general partner common unit in the Partnership will be converted into, and canceled in exchange for, one Series B partnership general partner unit, with the rights, terms and conditions set forth in the surviving partnership agreement. The Series B partnership general partner units will rank junior to the Partnership’s 7.625% Series A Cumulative Redeemable Partnership Units. Each limited partner common unit in the Partnership acquired by DTLA Fund Holding Co. or via partnership redemptions will remain outstanding as one limited partner common unit of the surviving partnership. Each general partner preferred unit will remain outstanding as one general partner preferred unit of the surviving partnership. All partnership interest in Partnership Merger Sub will automatically be canceled, retired and cease to exist.

Procedures for Exchange of Company Common Shares, Preferred Shares and Unit Certificates

The exchange of Company common shares into the right to receive the merger consideration will occur automatically at the effective time of the merger. In accordance with the merger agreement, Brookfield DTLA will appoint a paying agent reasonably satisfactory to the Company to handle the payment and delivery of the merger consideration. On or before the effective time of the merger, Brookfield DTLA will deposit with the paying agent the merger consideration and partnership merger consideration. As promptly as practicable after the effective time, but in any event within five business days thereafter, the surviving corporation will cause the paying agent to send to each record holder of Company common shares immediately prior to the effective time, a letter of transmittal and instructions explaining how to surrender Company common shares to the paying agent in exchange for merger consideration. As promptly as practicable after the effective time, but in any event within five business days thereafter, Sub REIT will cause the paying agent to send to each record holder of Company preferred shares immediately prior to the effective time, a letter of transmittal and instructions explaining how to

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surrender Company preferred shares to the paying agent in exchange for Sub REIT preferred shares. As promptly as practicable after the partnership effective time, but in any event within five business days thereafter, the surviving corporation will cause the paying agent to send to each record holder of Limited Partner Common Units immediately prior to the effective time, a letter of transmittal and instructions explaining how to surrender Limited Partner Common Units to the paying agent in exchange for partnership merger consideration.

Upon adherence to the applicable procedures set forth in the letter transmittal or surrender of a certificate for cancellation, as the case may be, the holder of such Company common share or certificate will receive the merger consideration due to such stockholder, without interest and less any required withholding tax. At the effective time of the merger, each certificate that previously represented Company common shares will only represent the right to receive the merger consideration into which those Company common shares have been converted. At the effective time of the partnership merger, each certificate that previously represented a Limited Partner Common Unit in the Partnership will only represent the right to receive the partnership merger consideration into which those Limited Partner Common Units in the Partnership have been converted.

Payment of Option Merger Consideration, Restricted Stock Merger Consideration and RSU Merger Consideration

Prior to the effective time, the Company will deliver to Brookfield DTLA a schedule setting forth the amount of the Option Merger Consideration to be paid to the holders of Stock Options, the Restricted Stock Merger Consideration to be paid to the holders of Restricted Stock and the RSU Merger Consideration to be paid to the holders of RSUs. On or before the effective time, Brookfield DTLA will deposit with the Company the Option Merger Consideration, the Restricted Stock Merger Consideration, and the RSU Merger Consideration to be paid to the holders of such Stock Options, Restricted Stock and RSUs, as the case may be. The Company will thereafter pay, without interest and less any required withholding tax, the Option Merger Consideration, the Restricted Stock Merger Consideration and the RSU Merger Consideration to the holders of such Stock Options, Restricted Stock and RSUs, as the case may be, reasonably promptly (but in no event more than five business days) following the closing. At the effective time of the merger, holders of Stock Options, Restricted Stock and RSUs will have no further rights with respect to any such award, other than the right to receive the Option Merger Consideration, the Restricted Stock Merger Consideration or the RSU Merger Consideration, as applicable, due to such holder.

Available Funds

Brookfield DTLA has represented in the merger agreement that it currently has, or has access to, and will have, on the closing date, cash sufficient to pay the merger consideration, partnership merger consideration and Option Merger Consideration, respectively, and to satisfy the obligations of the relevant Brookfield parties set forth in the merger agreement including all transactions contemplated by the merger agreement and all related expenses to be paid by Brookfield DTLA or REIT Merger Sub.

Concurrently with the execution of the merger agreement, BPO has agreed to deliver to the Company a guarantee, attached hereto as Annex C, in favor of the Company with respect to payment and monetary obligations of the relevant Brookfield parties under the merger agreement.


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Withholding

All payments under the merger agreement are subject to required withholding requirements.

Dissenters’ Rights

No dissenters’ or appraisal rights, or rights of objecting common or preferred stockholders under Section 3-202 of the MGCL, will be available with respect to the merger or the other transactions contemplated by the merger agreement.

Representations and Warranties

The merger agreement contains a number of customary representations and warranties made by the MPG parties, on the one hand, and certain of the Brookfield parties, on the other hand. The representations and warranties were made by the parties as of the date of the merger agreement and do not survive the effective time of the merger. Certain of these representations and warranties are subject to specified exceptions and qualifications contained in the merger agreement and qualified by information each of BPO and the Company filed with or furnished to the SEC on or after January 1, 2010 and prior to April 12, 2013 and in the disclosure schedules delivered in connection with the merger agreement.

Representations and Warranties of the MPG Parties

The MPG parties made representations and warranties in the merger agreement relating to, among other things:

due incorporation/formation/organization, valid existence, good standing and qualification of the Company, the Partnership and all subsidiaries of the Company;
absence of certain Company subsidiary securities;
due authorization and valid issuance of equity securities of the Company’s subsidiaries;
capitalization;
authority to enter into the merger agreement;
due authorization, execution and delivery of the merger agreement;
absence of certain organizational, regulatory and contractual conflicts;
consents and approvals required for the merger agreement and the surviving partnership agreement;
possession of necessary permits and compliance with permits and the law;
SEC filings, financial statements and internal controls under the Sarbanes-Oxley Act;
absence of a Material Adverse Effect (as defined below) and conduct of business in the ordinary course since December 31, 2012;

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absence of undisclosed liabilities;
absence of material litigation that would prevent or materially delay the consummation of the contemplated transactions or have a Material Adverse Effect;
employee benefit plans and compensation arrangements;
labor and other employment matters;
accuracy of disclosure documents to be sent to common stockholders in connection with the mergers and the contemplated transactions;
real property (owned and leased);
intellectual property;
tax matters;
environmental matters;
material contracts;
investment banking and broker fees paid to financial advisors;
receipt of opinions from financial advisors;
insurance;
related party transactions;
inapplicability of state takeover statutes;
absence of need to register under the Investment Company Act of 1940; and
billing arrangements.

Representations and Warranties of Certain of the Brookfield Parties

Certain of the Brookfield parties, jointly and severally, made representations and warranties in the merger agreement relating to, among other things:

due incorporation/formation, valid existence and good standing;
authority to enter into the merger agreement;
due authorization, execution and delivery of the merger agreement;
absence of certain organizational, regulatory and contractual conflicts;
consents and approvals required for the merger agreement and the surviving partnership agreement;

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absence of material litigation against certain of the Brookfield parties that would prevent or delay consummation of the mergers or other contemplated transactions;
investment banking and broker fees paid to financial advisors;
availability of funds to pay the required consideration for the merger;
ownership of Sub REIT, REIT Merger Sub and Partnership Merger Sub;
absence of ownership of Company or Partnership securities;
accuracy of disclosure documents supplied to the Company for inclusion in the proxy statement or other filings;
absence of entry into any contract with certain members of the Company or its affiliates; and
due execution, validity and enforceability of the guarantee made by BPO in favor of the Company.

Definition of Material Adverse Effect

Many of the representations of the Company in the merger agreement are qualified by a “Material Adverse Effect” standard (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect). For the purposes of the merger agreement, “Material Adverse Effect” means (x) any casualty loss (as defined in the merger agreement) or (y) other event, circumstance, change or effect that is materially adverse to the financial condition, assets, properties or results of operations of the Company and its subsidiaries, taken as a whole. However, for purposes of clause (y) above, any event, circumstance, change or effect will not be considered a Material Adverse Effect to the extent arising out of or attributable to:

any decrease in the market price of Company common shares (but not any event, circumstance, change or effect underlying such decrease to the extent that such event, circumstance, change or effect would otherwise constitute a Material Adverse Effect or be taken into account in determining whether a Material Adverse Effect has occurred or is reasonably likely to occur);
any events, circumstances, changes or effects that affect the real estate ownership and leasing business generally;
any changes in the United States or global economy or capital, financial, banking or securities markets generally, including changes in interest or exchange rates;
national or international political or social conflicts, including the commencement or escalation of a war or hostilities or the occurrence of acts of terrorism or sabotage;
any changes in the general economic, labor, legal, regulatory or political conditions in the geographic regions in which the Company or its subsidiaries operate;

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any events, circumstances, changes or effects arising from the consummation or anticipation of the transactions contemplated by the merger agreement or the announcement of the execution of the merger agreement;
any events, circumstances, changes or effects arising from the compliance with the terms of, or the taking of any action required by, the merger agreement;
fires, earthquakes, terrorism, flooding, hurricanes, other natural disasters, acts of God or other casualty;
changes in law or Generally Accepted Accounting Principles (“GAAP”) after the date of the merger agreement;
any change in the tenant occupancy of Company properties;
damage or destruction of any Company property caused by casualty, whether or not covered by insurance;
the bankruptcy or insolvency of any tenant or tenants of any Company property or the default by any tenant or tenants under the terms of any Company lease;
any failure by the Company to meet internal or analysts’ projections for any period ending (or for which revenues, earnings or other financial data are released) on or after the date of the merger agreement (but not any event, circumstance, change or effect underlying such failure to the extent that such event, circumstance, change or effect would otherwise constitute a Material Adverse Effect or be taken into account in determining whether a Material Adverse Effect has occurred or is reasonably likely to occur);
any impairment or other similar write down in the value of any Company property (but not any event, circumstance, change or effect underlying such impairment or other similar write down to the extent that such event, circumstance, change or effect would otherwise constitute a Material Adverse Effect or be taken into account in determining whether a Material Adverse Effect has occurred or is reasonably likely to occur);
the issuance of a qualified, modified or “going-concern” opinion in respect of the Company and/or its subsidiaries by the Company’s independent auditors;
any change in the trading price of the Company preferred shares, or failure to declare or pay dividends on the Company preferred shares; or
certain other environmental conditions.


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Conditions to Completion of the Merger

Mutual Closing Conditions

The obligation of each of the relevant Brookfield parties and the MPG parties to complete the merger is subject to the satisfaction or waiver, at or prior to the effective time of the merger, of the following conditions:

Approval of the merger and the other transactions contemplated by the merger agreement by the Company’s common stockholders; and
the absence of any law, order, stipulation, or other legal restraint of any court of competent jurisdiction or governmental authority prohibiting the merger and the other transactions contemplated by the merger agreement.

Additional Closing Conditions for the Benefit of Certain of the Brookfield Parties

The obligation of the relevant Brookfield parties under the merger agreement to complete the merger is subject to the satisfaction or waiver, at or prior to the effective time of the merger, of the following conditions: