1
EXHIBIT 10.9
COMMON SHARE PURCHASE AGREEMENT
dated as of July 3, 1997
Between
AMERICAN INDUSTRIAL PROPERTIES REIT
and
LASALLE ADVISORS LIMITED PARTNERSHIP
as Agent for and for the benefit of a
particular client
2
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . -1-
1.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.2 RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 2. PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
2.1 PURCHASE AND SALE OF THE COMMON SHARES . . . . . . . . . . . . . . . . . . -10-
2.2 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
2.3 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . -11-
3.1 ORGANIZATION AND RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . -11-
3.2 CAPITAL STOCK; TITLE TO SHARES. . . . . . . . . . . . . . . . . . . . . . -12-
3.3 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
3.4 SEC REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
3.5 AUTHORIZATION; NO CONFLICTS . . . . . . . . . . . . . . . . . . . . . . . -14-
3.6 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
3.7 COMPLIANCE WITH LAW AND PERMITS . . . . . . . . . . . . . . . . . . . . . -15-
3.8 DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . -16-
3.9 CERTAIN INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.10 NO BROKERS OR FINDERS . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.11 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
3.12 LABOR MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
3.13 PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
3.14 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
3.15 MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
3.16 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
3.17 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
3.18 TRUST RECORDS; ACCOUNTING RECORDS . . . . . . . . . . . . . . . . . . . . -23-
3.19 NEW YORK STOCK EXCHANGE LISTING . . . . . . . . . . . . . . . . . . . . . -23-
3.20 DISCLOSURE OF FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
3.21 PENSION-HELD REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
3.22 SHAREHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
SECTION 4. REPRESENTATIONS AND WARRANTIES OF INVESTOR . . . . . . . . . . . . . . . . . . -24-
4.1 ORGANIZATION AND RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . -24-
4.2 AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.3 NO CONFLICTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.4 NO BROKERS OR FINDERS . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.5 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.6 INVESTMENT REPRESENTATION . . . . . . . . . . . . . . . . . . . . . . . . -25-
4.7 LEGENDS; STOP-TRANSFER ORDERS . . . . . . . . . . . . . . . . . . . . . . -25-
-i-
3
4.8 STATUS FOR REIT OWNERSHIP AND INCOME TESTS . . . . . . . . . . . . . . . . -25-
4.9 AUTHORITY OF THE INVESTOR . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 5. COVENANTS WITH RESPECT TO CONDUCT OF SELLER PRIOR TO CLOSING . . . . . . -26-
5.1 ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
5.2 MATERIAL ADVERSE CHANGES; SEC FILINGS; REPORTS; FINANCIAL STATEMENTS . . . -26-
5.3 CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
5.4 NOTIFICATION OF CERTAIN MATTERS . . . . . . . . . . . . . . . . . . . . . -29-
5.5 ADJUSTMENT OF SHARE PRICE . . . . . . . . . . . . . . . . . . . . . . . . -29-
SECTION 6. ADDITIONAL CONTINUING COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . -30-
6.1 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
6.2 APPOINTMENT OF TRUST MANAGER . . . . . . . . . . . . . . . . . . . . . . . -30-
6.3 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.4 STATUS FOR REIT OWNERSHIP AND INCOME TESTS . . . . . . . . . . . . . . . . -32-
6.5 PROHIBITED TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.6 SELLER/BUYER REGISTRATION RIGHTS AGREEMENT . . . . . . . . . . . . . . . . -32-
6.7 REIT QUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.8 PREEMPTIVE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.9 DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
6.10 FURNISH DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
6.11 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
6.12 ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
6.13 MSRE AND MSAM CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
SECTION 7. GENERAL CONDITIONS OF PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . -34-
7.1 NO ORDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
7.2 APPROVALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
7.3 ABSENCE OF LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
7.4 NEW YORK STOCK EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . -34-
7.5 SHAREHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
SECTION 8. CONDITIONS TO OBLIGATIONS OF THE INVESTOR . . . . . . . . . . . . . . . . . . . -34-
8.1 ACCURACY OF SELLER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . -35-
8.2 PERFORMANCE BY SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
8.3 NO MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . . . . . . . . . . -35-
8.4 CERTIFICATION BY SELLER . . . . . . . . . . . . . . . . . . . . . . . . . -35-
8.5 OPINION OF SELLER'S COUNSEL . . . . . . . . . . . . . . . . . . . . . . . -35-
8.6 SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
8.7 REALCO, MSRE AND MSAM CONSENT . . . . . . . . . . . . . . . . . . . . . . -35-
8.8 ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
8.9 CLOSING OF MSRE AND MSAM PURCHASE TRANSACTIONS . . . . . . . . . . . . . . -36-
-ii-
4
SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER . . . . . . . . . . . . . . . . . . . . . . -36-
9.1 ACCURACY OF THE INVESTOR'S REPRESENTATIONS AND WARRANTIES . . . . . . . . -36-
9.2 BUYERS' PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
9.3 CERTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
9.4 OPINION OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
9.5 REIT STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
SECTION 10. TERMINATION OF OBLIGATIONS; SURVIVAL . . . . . . . . . . . . . . . . . . . . . -36-
10.1 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . -36-
10.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
10.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . -37-
SECTION 11. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
11.1 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
11.2 OBLIGATIONS OF THE INVESTOR AND THE PECUNIARY OWNER. . . . . . . . . . . -38-
11.3 PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
11.4 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
11.5 NOTICE BY SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
SECTION 12. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
12.1 AMENDMENTS; WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
12.2 SCHEDULES; EXHIBITS; INTEGRATION . . . . . . . . . . . . . . . . . . . . . -40-
12.3 BEST EFFORTS; FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . -40-
12.4 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.5 NO ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.6 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.7 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.8 PUBLICITY AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.9 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.10 PARTIES IN INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
12.11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
12.12 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
12.13 REMEDIES; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
12.14 REPRESENTATION BY COUNSEL; INTERPRETATION . . . . . . . . . . . . . . . . -43-
12.15 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
12.16 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-
12.17 AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-
EXHIBITS
EXHIBIT A Registration Rights Agreement
-iii-
5
SCHEDULES
SCHEDULE 3.1 Jurisdictions; Officers and Trust Managers
SCHEDULE 3.2 Capital Stock; Title to Shares
SCHEDULE 3.3 Additional Liabilities or Contingencies
SCHEDULE 3.5 Permits and Approvals
SCHEDULE 3.6 Litigation
SCHEDULE 3.7 Compliance with Law and Permits
SCHEDULE 3.8 Dividends and Other Distributions
SCHEDULE 3.9 Certain Interests
SCHEDULE 3.11 Seller Benefit Plans
SCHEDULE 3.13 Properties and Encumbrances
SCHEDULE 3.14 Taxes
SCHEDULE 3.15 Material Contracts
SCHEDULE 3.16 Insurance
SCHEDULE 3.17 Environmental Compliance
SCHEDULE 3.18 Trust Records
SCHEDULE 5.3 Conduct of Business
SCHEDULE 8.5 List of Opinions of Seller's Counsel
SCHEDULE 9.4 List of Opinions of Investor's Counsel
-iv-
6
COMMON SHARE PURCHASE AGREEMENT
THIS COMMON SHARE PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of July 3, 1997, by and among AMERICAN INDUSTRIAL PROPERTIES
REIT, a Texas real estate investment trust ("SELLER"), and LASALLE ADVISORS
LIMITED PARTNERSHIP, a registered investment advisor (the "Investor"), as
agent for and for the benefit of a particular client.
R E C I T A L S
A. Seller qualifies and operates as a real estate investment
trust for federal income tax purposes.
B. Seller desires to sell to Investor, and Investor desires to
purchase from Seller, the number of Common Shares having an aggregate purchase
price as specified herein (the "Shares") upon the terms and subject to the
conditions set forth in this Agreement.
C. The proceeds from the sale of the Shares are to be used for
the purposes set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION
a. DEFINITIONS. The capitalized terms used in this
Agreement, the Exhibits and the Schedules attached hereto
shall have the meanings set forth below:
"ACTION" means any action, complaint, investigation, suit or
other proceeding, whether civil or criminal, in law or in equity, or before any
mediator, arbitrator or Governmental Entity.
"AFFILIATE" means a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, a specified Person.
"AGREEMENT" means this Common Share Purchase Agreement, by and
between Seller and the Investor, as agent for and for the benefit of a
particular client, as amended from time to time pursuant to the terms of this
Agreement, together with all Exhibits and all Schedules attached hereto.
-1-
7
"ANNUAL MEETING" shall mean the Seller's annual meeting that
was held on June 30, 1997.
"APPROVAL" means any approval, authorization, consent,
qualification or registration, or any waiver of the foregoing, or any notice,
statement or other communication required to be filed with or delivered to any
Governmental Entity or any other Person.
"ASSOCIATE" of a Person means
(i) a corporation or organization (other than Seller or a
party to this Agreement) of which such Person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities;
(ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar capacity; and
(iii) any relative or spouse of such Person who has the same
residence as such Person.
"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.3(a) of this Agreement.
"AUDITORS" means Ernst & Young, LLP, independent public
accountants to Seller.
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy," as now and hereafter in effect, and any successor
statute, as well as any existing or future law of any jurisdiction, foreign or
domestic, relating to bankruptcy, insolvency, reorganization, conservatorship
or relief of debtors.
"BUSINESS DAY" means a day other than a Saturday, a Sunday or
a day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"CAPITALIZED LEASE" means any lease of property, real or
personal, the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the lessee.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the
obligation of such Person to pay rent or other amounts under a Capitalized
Lease and, for purposes of this Agreement, the amount of such obligation shall
be the capitalized amount thereof, determined in accordance with GAAP.
"CAPITAL STOCK" means any capital stock, beneficial interest
or other equity interest, or any securities convertible into or exchangeable or
exercisable for capital stock, beneficial interests
-2-
8
or other equity interests, or any other rights, warrants or options to acquire
any of the foregoing securities.
"CHARTER DOCUMENTS" means Seller's Third Amended and Restated
Declaration of Trust and Fourth Amended and Restated Bylaws as in effect as of
the date of this Agreement.
"CLOSING" has the meaning set forth in Section 2.3(a) of this
Agreement.
"CLOSING AGREEMENT" shall mean a written and legally binding
agreement with a taxing authority relating to Taxes.
"CLOSING DATE" means each date specified in Section 2.3(a) of
this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended,
and, as applicable, the regulations promulgated thereunder.
"COMMISSION" means the United States Securities and Exchange
Commission or any successor entity.
"COMMON SHARES" means common shares of beneficial interest,
par value $.10 per share, of Seller.
"CONTRACT" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
whether or not in writing.
"CURRENTLY OUTSTANDING SHARES" has the meaning set forth in
Section 2.4 of this Agreement.
"DEBT" means, with respect to any Person, without duplication,
and without regard to whether it is contingent or direct, (a) all indebtedness
of such Person for borrowed money, (b) any obligation incurred for all or any
part of the purchase price of property or services, other than accounts
payable and accrued expenses included in current liabilities in accordance with
GAAP and incurred in respect of property or services purchased in the ordinary
course of business, (c) indebtedness or obligations evidenced by bonds, notes
or similar written instruments, (d) all reimbursement obligations of such
Person (whether contingent or otherwise) in respect of letters of credit,
banker's acceptances, surety or other bonds and similar instruments, (e) any
obligation (whether or not such Person has assumed or becomes liable for the
payment of such obligation) secured by a lien on any property of such Person,
(f) all Capitalized Lease Obligations of such Person and (g) all Guarantees by
such Person of obligations of any other Person of the types referred to in the
foregoing clauses (a) through (f), inclusive, excluding, (i) the payment of
commissions to Prudential Securities Incorporated in connection with the
transactions contemplated herein and approved at the Annual Meeting, and (ii) a
$25 million line of credit from Prudential Securities Incorporated or its
Affiliates (the "Prudential Line of Credit").
-3-
9
"ENCUMBRANCE" means any claim, charge, easement, encumbrance,
lease, covenant, security interest, lien, option, pledge, rights of others,
preferential right, right of first refusal or restriction (whether on voting,
sale, transfer, disposition or otherwise), whether imposed by agreement,
understanding, law, equity or otherwise, except that "Encumbrance" does not
include any such item that (i) is reflected in the Audited Financial Statements
or (ii) constitutes a statutory lien arising in the ordinary course of
business.
"ENVIRONMENTAL CLAIMS" means any of the following to the
extent they relate to, or arise out of, directly or indirectly, Environmental
Noncompliance with respect to the Properties or actual or alleged Environmental
Conditions or any Notification which may lead to: (i) claims, demands, suits,
causes of action for personal injury, death or property damage; (ii) claims for
actual or threatened damages to natural resources; (iii) claims for the
recovery of response costs, or administrative or judicial orders directing the
performance of investigations, response or remedial actions under any
Environmental Law; (iv) a requirement to implement "corrective action" pursuant
to any restitution, contribution or equitable indemnity to third parties or any
Governmental Entity; (v) fines, penalties, liens against the Properties; (vi)
claims for injunctive relief or other orders or notices of violation from any
Governmental Entity; or (vii) with regard to any present or former employees,
tenants or guests, exposure to or injury from Environmental Conditions.
"ENVIRONMENTAL CONDITIONS" means conditions of the
environment, including the ocean, natural resources (including flora and
fauna), soil, surface water, ground water, any actual or potential drinking or
water supply, subsurface strata, or air, including ambient air, relating to or
arising out of the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal, dumping or threatened
release of Hazardous Materials from, in, on, or onto the Properties.
"ENVIRONMENTAL NONCOMPLIANCE" means any of the following to
the extent they are applicable to the Properties or alleged to be applicable to
the Properties or to Seller, Subsidiaries or a Seller Partnership: (i) the
Release of any Hazardous Material into the environment, any storm drain, sewer,
septic system or publicly-owned treatment works, in violation of any effluent
or emission limitations, standards or other criteria or guidelines established
by any Environmental Law; (ii) any noncompliance of physical structure,
equipment, process or premises with the requirements of building or fire codes,
zoning or land use regulations or ordinances or conditional use permits; (iii)
any noncompliance with federal, state or local requirements governing
occupational safety and health; (iv) any operations, procedures and designs at
or on the Properties which do not conform to the statutory or regulatory
requirements of any Law (including land use regulations and ordinances)
intended to protect public health, welfare and the environment; (v) the failure
to have obtained permits, licenses, variances or other governmental
authorizations necessary for the legal use and/or operation of any equipment,
process or any activity at the Properties; or (vi) the operation and/or use of
any process or equipment in violation of any permit condition, schedule of
compliance, administrative or court order.
-4-
10
"ENVIRONMENTAL PERMITS" has the meaning set forth in Section
3.17(a) of this Agreement.
"EQUITABLE REMEDIES" has the meaning set forth in Section 3.5
of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"GOVERNMENTAL ENTITY" means any agency, bureau, commission,
court, department, official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state or local, domestic or
foreign.
"GUARANTEE" means, with respect to any Person, any guarantee
or other contingent liability (other than any endorsement for collection or
deposit in the ordinary course of business and performance bonds, indemnities
and similar obligations not guaranteeing or otherwise insuring payment of any
Debt or other financial obligation), direct or indirect, of such Person with
respect to any Debt or other obligation of another Person (including
obligations under leases), through an agreement or otherwise, including (a) any
other endorsement or discount with recourse or undertaking substantially
equivalent to or having economic effect similar to a guarantee in respect of
any such Debt or other obligations and (b) any agreement (i) to purchase, or to
advance or supply funds for the payment or purchase of, any such obligations,
(ii) to purchase, sell or lease property, products, materials or supplies, or
transportation or services, in respect of enabling such other Person to pay any
such obligation or to assure the owner thereof against loss regardless of the
delivery or nondelivery of the property, products, materials or supplies or
transportation or services or (iii) to make any loan, advance or capital
contribution to or other investment in, or to otherwise provide funds to or
for, such other Person in respect of enabling such Person to satisfy any
obligation (including any liability for a dividend, stock liquidation payment
or expense) or to assure a minimum equity, working capital or other balance
sheet condition in respect of any such obligation. The amount of any Guarantee
shall be equal to the outstanding amount of the obligations of such other
Person directly or indirectly guaranteed.
"HAZARDOUS MATERIALS" means any substance, matter, material,
waste, solid, liquid, gas, or pollutant, the generation, storage, disposal,
handling, recycling, Release (or threatened Release) or treatment of which is
regulated, prohibited, or limited under: (1) the Resource Conservation and
Recovery Act, as amended by the Hazardous and Solid Waste Amendments of 1984,
as now or hereafter amended ("RCRA") (42 U.S.C. Sections 6901 et seq.); (ii)
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act of 1986, as now or
hereafter amended ("CERCLA") (42 U.S.C. Sections 9601 et seq.); (iii) the Clean
Water Act, as now or hereafter
-5-
11
amended ("CWA") (33 U.S.C. Sections 1251 et seq.); (iv) the Toxic Substances
Control Act, as now or hereafter amended ("TSCA") (15 U.S.C. Sections 2601 et
seq.); (v) the Clean Air Act, as now or hereafter amended ("CAA") (42 U.S.C.
Sections 7401 et seq.) (RCRA, CERCLA, CWA, TSCA and CAA are collectively
referred to herein as the "FEDERAL ENVIRONMENTAL LAWS"); (vi) any local, state
or foreign law, statute, regulation, or ordinance analogous to any of the
Federal Environmental Laws; or (vii) any other federal, state, local, or
foreign law (including any common law), statute, regulation, or ordinance
regulating, prohibiting, or otherwise restricting the placement, Release,
threatened Release, generation, treatment, or disposal upon or into any
environmental media of any substance, pollutant, or waste which is now or
hereafter classified or considered to be hazardous or toxic to human health or
the environment. All of the laws, statutes, regulations and ordinances referred
to in subsections (vi) and (vii) above, together with the Federal Environmental
Laws, are collectively referred to herein as "ENVIRONMENTAL LAWS." The term
"HAZARDOUS MATERIALS" shall also include: (a) gasoline, diesel fuel, fuel oil,
motor oil, waste oil, and any other petroleum hydrocarbons, including any
additives or other by-products associated therewith; (b) "friable" asbestos (as
the term "friable" is defined under 40 C.F.R. Section 61.141) and friable
asbestos-containing materials in any form; (c) polychlorinated biphenyls; or
(d) any substance the presence of which on the Properties, (x) requires
reporting or remediation under any Environmental Law, (y) causes or threatens
to cause a nuisance on the Properties or poses or threatens to pose a hazard to
the health or safety of persons on the Properties, or (z) which, if it emanated
or migrated from the Properties, could constitute a trespass, nuisance or
health or safety hazard to persons on adjacent property.
"INDEMNIFIABLE CLAIM" means any Loss for or against which any
Person is entitled to indemnification under this Agreement.
"INDEMNIFIED PERSON" shall mean each Investor Indemnified
Person and each Seller Indemnified Party.
"INDEMNIFYING PARTY" has the meaning set forth in Section
11.3(a) of this Agreement.
"INITIAL REIT YEAR" has the meaning set forth in
Section 3.14(c) of this Agreement.
"INVESTMENT COMMITTEE" means the investment committee of the
Seller's Board of Trust Managers which after the Annual Meeting shall consist
of one Trust Manager designee of Investor, one Trust Manager designee of
Realco, one Trust Manager designee of MSAM and one independent Trust Manager.
"INVESTOR" means LaSalle Advisors Limited Partnership, a
registered investment advisor.
"INVESTOR INDEMNIFIED PERSON" has the meaning set forth in
Section 11.1 of this Agreement.
-6-
12
"LAW" means any constitutional provision, statute or other
law, rule, regulation or interpretation of any thereof and any Order of any
Governmental Entity (including Environmental Laws, including, without
limitation, the Americans with Disabilities Act).
"LOSS" means any claim, amount paid in settlement, cost,
damage (including, without limitation, consequential damage), disbursement,
expense (including legal fees and expenses), liability, loss, deficiency,
diminution in value or obligation.
"MATERIAL CONTRACT" means any Contract to which Seller, any
Subsidiary or any Seller Partnership is a party or by which any such Person or
any of their respective Properties are bound that currently is in effect and
(a) after December 31, 1996 obligates Seller, any Subsidiary or any Seller
Partnership to pay an amount equal to $100,000 or more, (b) is one of the group
of Tenant Leases that is anticipated by Seller to produce 66 2/3% of Seller's
gross income during the fiscal year ending December 31, 1997, such group of
Tenant Leases calculated beginning with the Tenant Lease that is anticipated to
produce the most gross income during such period and thereafter in descending
order of magnitude of gross income anticipated to be earned during such period
under each other Tenant Lease until such percentage of gross income is reached,
(c) is a Tenant Lease involving the lease of space in excess of 10,000 square
feet for any Property, (d) other than any Tenant Lease, has an unexpired term
as of December 31, 1996 in excess of five (5) years, (e) other than any Tenant
Lease, contains a covenant not to compete or otherwise significantly restricts
business activities of Seller, any Subsidiary or any Seller Partnership, (f)
provides for the extension of credit by Seller, any Subsidiary or any Seller
Partnership or a line of credit to Seller, any Subsidiary or any Seller
Partnership in excess of $50,000, (g) provides for a guaranty or indemnity by
Seller, any Subsidiary or any Seller Partnership, (h) grants a power of
attorney, agency or similar authority to another Person, (i) contains an option
to purchase or a right of first refusal relating to any of the Properties, (j)
relates to the sale or issuance of any equity securities of Seller or
securities exercisable for or convertible into any equity securities of Seller,
or (k) any other Contract that is not within the general descriptions of
clauses (a) through (j) (i.e., is not a Tenant Lease or within any of the other
general categories listed above) but is material to the business, financial
condition, assets, results of operations or prospects of Seller, Subsidiaries
or Seller Partnerships.
"MINIMUM EQUITY CAPITALIZATION" means $150 million as
calculated using the average closing price of the Common Shares on the New York
Stock Exchange for the 10 trading days immediately preceding the applicable
date of determination multiplied by the current number of issued and
outstanding Common Shares and Common Share equivalents; provided, however, it
shall not in any event include operating partnership units in excess of $50
million.
"MSAM" means Xxxxxx Xxxxxxx Asset Management, Inc., a Delaware
corporation.
"MSAM PURCHASE AGREEMENT" means that certain Common Share
Purchase Agreement dated as of June 20, 1997, by and among Seller, MSRE and
MSAM pursuant to which MSRE and MSAM, as agent and attorney-in-fact on behalf
of certain clients, have agreed to
-7-
13
purchase up to $20 million of Common Shares of Seller on terms and conditions
substantially similar to the terms and conditions contained herein.
"MSAM PURCHASERS" means the clients of MSAM listed on Exhibit
A to the MSAM Purchase Agreement.
"MSRE" means MS Real Estate Special Situations Inc., a
Delaware corporation.
"NOTIFICATION" means any summons, citation, directive, order,
claim, litigation, pleading, investigation, proceeding, judgment, letter or any
other written or oral communication from any Governmental Entity, any entity or
any individual, concerning any intentional or unintentional act or omission
which has resulted in or which may result in any Environmental Noncompliance or
Environmental Claim.
"ORDER" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"OTHER PECUNIARY OWNERS" means the other pecuniary owners for
whom the Investor is acting as agent for and on behalf of in connection with
the purchase of Common Shares of the Seller pursuant to Common Share Purchase
Agreements dated the date hereof similar to this Agreement and who, along with
the Pecuniary Owner, are purchasing Common Shares having an aggregate purchase
price of up to $15 million.
"PECUNIARY OWNER" means the client of Investor for whom
Investor is acting as Agent for and for the benefit of, in connection with the
purchase of the Common Shares pursuant to the Agreement.
"PERMIT" means any license, permit, franchise, certificate of
authority or order, or any waiver of the foregoing, required to be issued by
any Governmental Entity.
"PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, an unincorporated organization,
government or any department or agency thereof, estate, trust, association, or
private foundation within the meaning of Section 509(a) of the Code, or joint
stock company.
"PREEMPTIVE RIGHTS" has the meaning set forth in Section 6.8
of this Agreement.
"PREFERRED SHARES" means any class of capital stock of a
Person which is entitled to a preference or priority over any other class of
capital stock of such Person with respect to any distribution of such Person's
assets, whether with respect to dividends, or upon liquidation or dissolution,
or both.
"PROPERTIES" means the real property owned or leased by
Seller, Subsidiaries and Seller Partnerships listed on Schedule 3.13 hereto.
-8-
14
"PURCHASE PRICE" means, with respect to the Closing Date, the
aggregate price paid for the Common Shares purchased by Investor on the Closing
Date.
"REALCO" means USAA Real Estate Company, a Delaware
corporation.
"REALCO DEBT" has the meaning set forth in Section 3.2 of this
Agreement.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement among Seller, and Investor, as agent for and on behalf of the
Pecuniary Owner and certain Other Pecuniary Owners, to be executed
contemporaneously with the execution of this Agreement.
"REIT" has the meaning set forth in Section 3.14(b) of this
Agreement.
"RELEASE" means releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, ejecting, escaping, leaching,
disposing, seeping, infiltrating, draining or dumping of any Hazardous
Material. This term shall be interpreted to include both the present and past
tense, as appropriate.
"SCHEDULE" means any schedule attached to this Agreement.
"SEC FILINGS" has the meaning set forth in Section 3.4 of this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" means American Industrial Properties REIT, a Texas
real estate investment trust.
"SELLER BENEFIT PLANS" has the meaning set forth in Section
3.11 of this Agreement.
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in
Section 11.2 of this Agreement.
"SELLER PARTNERSHIPS" has the meaning set forth in Section 3.1
of this Agreement.
"SELLER PERMITS" has the meaning set forth in Section 3.7(b)
of this Agreement.
"SHARE PRICE" has the meaning set forth in Section 2.1 of this
Agreement.
"SHAREHOLDER APPROVAL" means the approval by Seller's
shareholders at the Annual Meeting of the proposal to approve the sale to
Investor of Common Shares having an aggregate
-9-
15
purchase price of up to $15 million, and the authorization of the issuance of
a sufficient number of Common Shares to allow such sale to occur.
"SHARES" has the meaning set forth in Section 2.1 of this
Agreement.
"SUBSIDIARIES" has the meaning set forth in Section 3.1 of
this Agreement.
"TAXES" has the meaning set forth in Section 3.14(a) of this
Agreement.
"TAX RETURN" has the meaning set forth in Section 3.14(b) of
this Agreement.
"TENANT LEASES" has the meaning set forth in Section 3.13(b)
of this Agreement.
"TRUST MANAGERS" means the Trust Managers of Seller.
"THRESHOLD EQUITY CAPITALIZATION" means equity capitalization
of $250 million, calculated in the same manner as Minimum Equity
Capitalization.
"UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.3(b) of this Agreement.
b. RULES OF CONSTRUCTION. This Agreement shall be
construed in accordance with the following rules of
construction:
(a) the terms defined in this Agreement include the plural as well as
the singular;
(b) all accounting terms not otherwise defined herein have the
meanings given such terms under GAAP;
(c) all references in the Agreement to designated "Sections" and
other subdivisions are to the designated Sections and other subdivisions of the
body of this Agreement;
(d) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms;
(e) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision;
(f) the words "includes" and "including" are not limiting; and
(g) knowledge of any Subsidiary or any Seller Partnership shall be
deemed to be knowledge of Seller.
-10-
16
SECTION 2. PURCHASE AND SALE
a. PURCHASE AND SALE OF THE COMMON SHARES. Subject
to the terms and conditions set forth herein,
Seller shall sell and issue to Investor, and
Investor shall purchase from Seller, up to an
aggregate of 2,210,204 Common Shares (the
"Shares") at a price of $2.45 per Common Share,
subject to adjustment as set forth in Section 5.5
(the "Share Price").
b. USE OF PROCEEDS. The proceeds of the purchase of
Shares hereunder shall be used by the Seller to
purchase real property as approved by the
Investment Committee.
c. CLOSING.
i. The Closing shall occur on or before July 11,
1997, (the "CLOSING DATE"), and the Investor
shall purchase the number of Shares specified in
Section 2.1.
ii. At the Closing, Seller shall deliver to the
Investor the certificates evidencing the Shares
purchased by the Investor on the applicable
Closing Date, registered in the name of the
Investor or its nominee. In addition, all other
actions shall be taken and all other documents
shall be delivered which are necessary to
consummate the purchase and sale of the Shares
purchased by the Investor on the applicable
Closing Date.
iii. At the Closing, the Investor shall pay and
deliver to Seller the Purchase Price for the
Shares being purchased by the Investor at the
Closing.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to, and agrees with, the Investor and
the Pecuniary Owner as follows:
a. ORGANIZATION AND RELATED MATTERS. Seller is duly
organized, validly existing and in good standing
under the laws of the State of Texas. Seller has
all necessary power and authority to execute,
deliver and perform this Agreement. Schedule 3.1
lists all Subsidiaries (the "SUBSIDIARIES") and
all Partnerships of Seller (the "SELLER
PARTNERSHIPS") and correctly sets forth Seller's
ownership interest therein, the jurisdiction in
which each Subsidiary and each Seller Partnership
is organized and each jurisdiction in which
Seller, each Subsidiary and each Seller
Partnership is and is required to be qualified or
licensed to do business as a foreign Person. Each
Subsidiary and each Seller Partnership is duly
organized, validly existing and, with
-11-
17
respect to each Subsidiary, in good standing
under the laws of the jurisdiction of its
incorporation or organization. Seller,
Subsidiaries and Seller Partnerships have all
necessary power (whether corporate, partnership
or other power, as applicable) and authority to
own their respective properties and assets and to
carry on their respective businesses as now
conducted. Seller, Subsidiaries and Seller
Partnerships are duly qualified or licensed to do
business as foreign Persons in good standing in
all jurisdictions in which the character or the
location of the assets owned or leased by any of
them or the nature of the business conducted by
any of them requires licensing or qualification,
except where the failure to be so qualified or
licensed is not and will not be material to their
respective businesses, financial condition,
assets, results of operations or prospects.
Schedule 3.1 correctly lists the current Trust
Managers, directors, general partners and
executive officers of Seller, Subsidiaries and
Seller Partnerships. True, correct and complete
copies of the Charter Documents and the charter
or organizational documents of Subsidiaries and
Seller Partnerships (including the declaration of
trust, articles or certificate of incorporation,
bylaws and partnership agreements, as applicable)
as in effect on the date hereof have been
delivered to the Investor. Seller is registered
and is a reporting company under the Exchange
Act. Neither any Subsidiary nor any Seller
Partnership is registered or is a reporting
company under the Exchange Act. Except as listed
on Schedule 3.1, Seller does not directly or
indirectly own or control any equity interest in
any Person.
b. CAPITAL STOCK; TITLE TO SHARES. The authorized
Capital Stock of Seller consists of 500,000,000
Common Shares, 10,000,000 of which are issued and
outstanding and 10,000,000 Preferred Shares, none
of which are issued and outstanding. Seller owns
all of the outstanding Capital Stock of
Subsidiaries free and clear of any Encumbrances,
equities and claims except as specified in
Schedule 3.2. Seller owns the equity interest in
each Seller Partnership free and clear of any
Encumbrances, equities and claims except as
specified in Schedule 3.2. No Common Shares or
Capital Stock of any Subsidiary are held in
treasury. Except as set forth in Schedule 3.2 or
as contemplated in this Agreement, there are no
outstanding Contracts or other rights to
subscribe for or purchase, or Contracts or other
obligations to issue or grant any rights to
acquire, any Common Shares, any Capital Stock of
any Subsidiary or any Seller Partnership or to
restructure or recapitalize Seller, any
Subsidiary or any Seller Partnership. Except as
set forth in Schedule 3.2, there are no
outstanding Contracts of Seller, any Subsidiary
or any Seller Partnership to repurchase, redeem
or otherwise acquire any of their respective
Common Shares or Capital Stock, as applicable. No
bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into
securities having general voting rights) of
Seller, any
-12-
18
Subsidiary or any Seller Partnership are issued
or outstanding other than the Seller's note in
the aggregate principal amount of $5,449,618 (the
"REALCO DEBT") held by Realco. There are no
voting trusts or other agreements or
understandings to which Seller, any Subsidiary or
any Seller Partnership is a party or is bound, or
to the knowledge of Seller, to which any other
Person is a party or is bound, with respect to
the voting of the Common Shares or the Capital
Stock of any Subsidiary or any Seller
Partnership. All issued and outstanding Common
Shares and Capital Stock of all Subsidiaries and
Seller Partnerships were duly authorized and
validly issued at the time of issuance and are
fully paid and nonassessable. Except as
contemplated by this Agreement, there are no
preemptive rights in respect of any Common Shares
or Capital Stock of any Subsidiary or any Seller
Partnership. Upon any issuance of Shares to the
Investor, such Shares will have been duly
authorized, validly issued and be validly
outstanding, fully paid and nonassessable, and
the issuance of such Shares will not be subject
to preemptive rights of any other shareholder of
Seller and such Shares will be issued in
compliance with all applicable federal and state
laws and stock trading requirements. Each Buyer
shall receive good and marketable title to all
Shares acquired by such Buyer pursuant to this
Agreement, free and clear of all Encumbrances
created by Seller, except for restrictions on the
transferability of the Shares set forth in the
Charter Documents or generally imposed on
securities under federal and state securities
laws. Such Shares will rank equally with all
other Common Shares of Seller with respect to
priority in payment of dividends and the
distribution of assets upon any liquidation of
Seller, and except for a class of preferred
shares of beneficial interest which the
shareholders approved at the Annual Meeting, none
of which shall be issued and outstanding as of
the First Closing Date, there are no shares of
any class of Capital Stock of Seller having any
priority in respect thereof. All of the
outstanding securities of Seller were issued in
compliance with all applicable federal and state
securities laws.
c. FINANCIAL STATEMENTS.
i. AUDITED FINANCIAL STATEMENTS. Seller has
delivered to the Investor the consolidated
balance sheets of Seller (which reflect the
financial position of all Subsidiaries and Seller
Partnerships), as of December 31, 1994, 1995 and
1996, and the respective related consolidated
statements of operations, cash flows and
shareholders' equity for the periods then ended
(collectively, the "AUDITED FINANCIAL
STATEMENTS"). The Audited Financial Statements
have been examined by the Auditors whose report
thereon is attached to such financial statements.
All Audited Financial Statements have been
prepared in conformity with GAAP applied on a
consistent basis (except for changes, if any,
disclosed therein). The Audited Financial
Statements
-13-
19
present fairly, in all material respects, the
consolidated financial condition and results of
operations of Seller, Subsidiaries and Seller
Partnerships as of their respective dates and
periods. Since December 31, 1996, there has been
no change in the significant accounting policies
or procedures of Seller, any Subsidiary or any
Seller Partnership. Seller has not received any
annual management letters from the Auditors since
March 5, 1997.
ii. UNAUDITED FINANCIAL STATEMENTS. Seller has
delivered to the Investor the consolidated
balance sheets of Seller (which reflect the
financial position of all Subsidiaries and Seller
Partnerships), as of March 31, 1997 and the
related consolidated statements of operations,
cash flows and shareholders' equity for the
period then ended (the "UNAUDITED FINANCIAL
STATEMENTS"). The Unaudited Financial Statements
have been prepared in conformity with GAAP
applied on a consistent basis (except for
changes, if any, disclosed therein). The
Unaudited Financial Statements present fairly, in
all material respects, the consolidated financial
condition and results of operations of Seller,
Subsidiaries and Seller Partnerships as of March
31, 1997.
iii. NO MATERIAL ADVERSE CHANGES. Since March 31,
1997, except as set forth in Schedule 3.3, or
specifically disclosed in any SEC Filings filed
since March 31, 1997 and prior to the date of
this Agreement (copies of which have been
provided to the Investor), Seller, Subsidiaries
and Seller Partnerships have conducted their
respective businesses only in the ordinary course
and in a manner consistent with past practice
and, whether or not in the ordinary course of
business, there has not been, occurred or arisen:
(1) any change in or event affecting the business
of Seller, Subsidiaries and Seller Partnerships
that has had a material adverse effect on such
business or any materially adverse change or
trend in the business, financial condition,
assets, results of operations or prospects of
Seller, Subsidiaries or Seller Partnerships, or
(2) any condition or action which would be
proscribed by (or require consent under) Section
5.3 had it existed, occurred or arisen after the
date of this Agreement, or
(3) any casualty, loss, damage or destruction of
any real property of Seller, any Subsidiary or
any Seller Partnership that has involved or may
involve a Loss (whether or not covered by
insurance) to Seller, any Subsidiary or any
Seller Partnership of more than $100,000
individually, or $300,000 in the aggregate.
-14-
20
iv. NO OTHER LIABILITIES OR CONTINGENCIES.
Neither Seller nor any Subsidiary nor any Seller
Partnership has any material liability of any
nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due,
probable of assertion or not, except liabilities
that (i) were incurred after March 31, 1997 in
the ordinary course of business in a manner
consistent with past practice and are not
material in amount, or (ii) are set forth in
Schedule 3.3 hereto.
d. SEC REPORTS. Seller has filed with the
Commission all forms, reports, statements,
including registration statements, and other
material documents, together with any amendments
required to be made with respect thereto, that
were required to be filed with the Commission
since December 31, 1994. Such forms, reports,
statements, including registration statements,
and other material documents required to be filed
with the Commission by Seller since December 31,
1994 are collectively referred to in this
Agreement as the "SEC FILINGS." Seller has made
available to the Investor all SEC Filings. As of
their respective dates, (x) each of the SEC
Filings, including the financial statements
contained therein, was true and complete in all
material respects, (y) each of the SEC Filings,
including the financial statements contained
therein, complied in all material respects with
the Securities Act and Exchange Act, as
applicable, and the rules and regulations
promulgated thereunder, and (z) none contained
any untrue statement of a material fact or
omitted to state a material fact required to be
stated therein or necessary to make the
statements therein, in light of the circumstances
under which they were made, not misleading.
e. AUTHORIZATION; NO CONFLICTS. Seller has
the requisite power and authority to enter into
this Agreement and the Registration Rights
Agreement and to carry out its obligations
hereunder and thereunder. Except for the share
ownership limitation contained therein, the
Charter Documents do not in any way prevent or
restrict the transactions contemplated hereby or
preclude the Investor acting as agent on behalf
of the Pecuniary Owner, or the Pecuniary Owner
from owning or holding the amount, value or class
of Common Shares to be purchased hereby. The
execution, delivery and performance of this
Agreement by Seller has been duly and validly
authorized by the Trust Managers and by all other
necessary action on the part of Seller, and no
other proceedings on the part of Seller
(including Trust Manager and shareholder
approval) are necessary to authorize this
Agreement or to consummate the transactions
contemplated hereby except the shareholder
consent needed to increase the number of
authorized Common Shares to allow the issuance
and sale of Shares on any Closing Date to occur.
This Agreement has been duly
-15-
21
executed and delivered by Seller and constitutes
the legally valid and binding obligation of
Seller, enforceable against Seller in accordance
with its terms, except as such enforceability may
be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws
and equitable principles relating to or limiting
creditors' rights generally (collectively,
"EQUITABLE REMEDIES"). Except as set forth in
Schedule 3.5, the execution, delivery and
performance of this Agreement by Seller and the
consummation by Seller of the transactions
contemplated hereby will not (i) conflict with or
result in the breach or violation of any
provisions of, or trigger any preferential rights
under, the Charter Documents or the charter or
organizational documents of Subsidiaries or
Seller Partnerships, (ii) result in a breach or
violation of, a default under, or the triggering
of any payment or other material obligations
pursuant to, or accelerate vesting under, any
Seller Benefit Plans or any grant or award
thereunder or any employment or consulting
agreement or arrangement of Seller, any
Subsidiary or any Seller Partnership, (iii)
violate, conflict with, result in a breach of any
provision of, constitute a default (or an event
which, with notice or lapse of time or both,
would constitute a default) under, result in the
termination or in a right of termination or
cancellation of, accelerate the performance
required by, result in the creation of any
Encumbrance upon any Properties under, result in
the triggering of any rights under, or result in
being declared void, voidable or without further
binding effect, any of the terms or provisions of
any Material Contract of Seller, any Subsidiary
or any Seller Partnership or (iv) violate any
Law. Schedule 3.5 lists all Permits and Approvals
required to be obtained by Seller, Subsidiaries
and Seller Partnerships to consummate the
transactions contemplated hereby. Except for
matters identified in Schedule 3.5 as requiring
that certain actions be taken by or with respect
to a third party or Governmental Entity, the
execution and delivery of this Agreement by
Seller and the consummation of the transactions
contemplated hereby will not require the consent,
authorization or approval or filing or
registration with, or the issuance of any Permit
by, any other third party or Governmental Entity
under the terms of any applicable Laws or
Material Contracts of Seller, Subsidiaries or
Seller Partnerships.
f. LEGAL PROCEEDINGS. Except as set forth
in Schedule 3.6, there is no Order or Action
pending, or to the knowledge of Seller
threatened, against or affecting Seller, any
Subsidiary, any Seller Partnership, any Trust
Manager in his capacity as a Trust Manager of
Seller or any of the Properties which (i)
questions the validity of this Agreement, the
Registration Rights Agreement or any action taken
or to be taken pursuant hereto or thereto, (ii)
may adversely affect the right, title or interest
of the Investor to the Shares or (iii)
individually or when aggregated with one or
-16-
22
more other Orders or Actions has, or if
determined adversely will have, a material
adverse effect on the business, financial
condition, assets, results of operations or
prospects of Seller, any Subsidiary or any Seller
Partnership or on Seller's ability to perform
this Agreement. To Seller's knowledge, Schedule
3.6 lists each Order and each Action that (i)
involves a claim or potential claim of aggregate
liability in excess of $50,000 against Seller,
any Subsidiary or any Seller Partnership that is
not covered by insurance, (ii) involves a claim
or potential claim of aggregate liability brought
by Seller, any Subsidiary or any Seller
Partnership against a tenant under any Tenant
Lease which Tenant Lease obligates such tenant to
pay rent to Seller, any Subsidiary or any Seller
Partnership during the year ending December 31,
1997 in an amount equal to or in excess of
$150,000, or (iii) that enjoins or seeks to
enjoin any activity by Seller, any Subsidiary or
any Seller Partnership. There is no matter as to
which Seller, any Subsidiary or any Seller
Partnership has received any notice, claim or
assertion in connection with which any such
Person has or may reasonably be expected to have
any right to be indemnified by Seller, any
Subsidiary or any Seller Partnership.
g. COMPLIANCE WITH LAW AND PERMITS.
i. Seller, Subsidiaries and Seller
Partnerships are organized and have conducted
their respective businesses in accordance with
applicable Laws, neither Seller nor any
Subsidiaries or Seller Partnerships has received
any notice of violation of any Laws which remains
uncorrected, and the respective forms, procedures
and practices of Seller, Subsidiaries and Seller
Partnerships are in compliance with all such
Laws, to the extent applicable, the violation of
which would have a material adverse effect on the
respective businesses, financial condition,
assets, results of operations or prospects of
Seller, Subsidiaries and Seller Partnerships.
ii. Except as set forth in Schedule 3.7,
Seller, Subsidiaries and Seller Partnerships hold
all permits, licenses, variances, exemptions,
authorizations, orders and approvals of all
Governmental Entities necessary for the lawful
conduct of their respective businesses (the
"SELLER PERMITS") and Seller, Subsidiaries and
Seller Partnerships are in compliance with the
terms of the Seller Permits relating to each such
Person, except where the failure to hold such
Seller Permits or be in compliance therewith
would not, individually or in the aggregate, have
a material adverse effect on the business,
financial condition, assets, results of
operations or prospects of Seller, Subsidiaries
or Seller Partnerships. Seller has made available
to the Investor correct and complete copies of
all Seller Permits. Except as set forth in
Schedule 3.7, to the knowledge of the Seller, no
investigation or
-17-
23
review by any Governmental Entity with respect to
the Seller Permits is pending or threatened.
h. DIVIDENDS AND OTHER DISTRIBUTIONS.
Except as set forth in Schedule 3.8, there has
been no dividend or other distribution of assets
or securities by Seller or Seller Partnerships
(other than Seller Partnerships in which Seller
owns 100% beneficial interest) whether consisting
of money, property or any other thing of value,
declared, issued or paid to or for the benefit of
Seller subsequent to December 31, 1996.
i. CERTAIN INTERESTS. Except as set forth
in Schedule 3.1 and Schedule 3.9, no Affiliate of
Seller, any Subsidiary or any Seller Partnership,
nor any of their respective officers, Trust
Managers, directors or partners, nor any
Associate of any such individual, has any
material interest in any property used in or
pertaining to the respective businesses of
Seller, any Subsidiary or any Seller Partnership.
Except as set forth in Schedule 3.1 and Schedule
3.9, no such Person is indebted or otherwise
obligated to Seller, any Subsidiary or any Seller
Partnership. Except as set forth in Schedule 3.9,
Seller, Subsidiaries and Seller Partnerships are
not indebted or otherwise obligated to any such
Person, except for amounts due under normal
arrangements applicable to all employees
generally as to salary or reimbursement of
ordinary business expenses not unusual in amount
or significance. Except as set forth in Schedule
3.1 and Schedule 3.9, there are no material
transactions between Seller, any Subsidiary or
any Seller Partnership and any Affiliate of
Seller, any Subsidiary or any Seller Partnership
or any Associate of any such Affiliate that have
continuing obligations of any party thereunder.
Except as set forth in Schedule 3.9, the
consummation of the transactions contemplated by
this Agreement will not (either alone, or upon
the occurrence of any act or event, or with the
lapse of time, or both) result in any
compensation or severance or other payment or
benefit arising or becoming due from Seller, any
Subsidiary or any Seller Partnership or any of
its assigns to any Person.
j. NO BROKERS OR FINDERS. No agent, broker,
finder, or investment or commercial banker, or
other Person or firm engaged by or acting on
behalf of Seller or any of its Affiliates in
connection with the negotiation, execution or
performance of this Agreement or the transactions
contemplated by this Agreement, is or will be
entitled to any brokerage or finder's or similar
fee or other commission as a result of this
Agreement or such transactions except for a fee
payable to Prudential Securities Incorporated.
-18-
24
k. EMPLOYEE BENEFIT PLANS. Schedule 3.11
lists all employee benefit plans and collective
bargaining, labor and employment agreements or
other similar benefit arrangements to which
either Seller, any Subsidiary, or any Seller
Partnership is a party or by which either Seller,
any Subsidiary, or any Seller Partnership is
bound (collectively, the "SELLER BENEFIT PLANS"),
including (i) any profit-sharing, deferred
compensation, bonus, stock option, stock
purchase, pension, retainer, consulting,
retirement, severance, welfare or incentive plan,
agreement or arrangement, (ii) any plan,
agreement or arrangement providing for "fringe
benefits" or perquisites to employees, officers,
directors, trust managers or agents, including
benefits relating to automobiles, clubs,
vacation, child care, parenting, sabbatical, sick
leave, medical, dental, hospitalization, life
insurance and other types of insurance, (iii) any
employment agreement not terminable on 30 days
(or less) written notice or (iv) any other
"employee benefit plan" within the meaning of
Section 3(3) of ERISA. True and complete copies
of the Seller Benefit Plans, current descriptive
booklets and summary plan descriptions of the
Seller Benefit Plans, any relevant trust
agreements or insurance policies or contracts
and, if applicable, the most recent annual return
on Form 5500 (or equivalent form) have been made
available to the Investor. To the extent
applicable, the Seller Benefit Plans comply, in
all material respects, with the requirements of
ERISA and the Code. Except as set forth in
Schedule 3.11, no Seller Benefit Plan is or is
intended to be a stock bonus, pension or
profit-sharing plan within the meaning of Section
401(a) of the Code. Neither any Seller Benefit
Plan nor Seller, any Subsidiary, or any Seller
Partnership has incurred any liability or penalty
under Section 4975 of the Code or Section 502(i)
of ERISA. Each Seller Benefit Plan has been
maintained and administered in all material
respects in compliance with its terms and with
ERISA and the Code to the extent applicable
thereto. Except as set forth in Schedule 3.11,
there are no pending, or to the knowledge of
Seller threatened, claims (other than pursuant to
the terms of any such plan) against or otherwise
involving any of the Seller Benefit Plans and no
Action has been brought against or with respect
to any Seller Benefit Plan, and neither Seller
nor any Subsidiary nor any Seller Partnership has
incurred any liability to any party with respect
to any Seller Benefit Plan. All contributions
required to be made to the Seller Benefit Plans
have been made or provided for. Except as set
forth in Schedule 3.11, neither Seller nor any
Subsidiary nor any Seller Partnership maintains
or contributes to any plan or arrangement which
provides or has any liability to provide life
insurance or medical or other employee welfare
benefits to any employee or former employee upon
his retirement or termination of employment and
neither Seller nor any Subsidiary nor any Seller
Partnership has represented, promised or
contracted (whether in oral or written form) to
any employee or former
-19-
25
employee that such benefits would be provided.
Except as set forth in Schedule 3.11, the
execution of, and performance of the transactions
contemplated by, this Agreement will not (either
alone or upon the occurrence of any additional or
subsequent event) constitute an event under any
Seller Benefit Plan or other policy, arrangement
or any trust or loan that will or may result in
any payment (whether of severance pay or
otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with
respect to any employee. No Seller Benefit Plan
is subject to Title IV of ERISA and neither
Seller nor any Subsidiary nor any Seller
Partnership has, within six years prior to the
date of this Agreement, contributed to or had any
obligation to contribute to any employee benefit
plan subject to Title IV of ERISA. For purposes
of this Section 3.11, (i) the term "Seller"
includes any entity required to be aggregated
with the Seller pursuant to Code Section 414(b),
(c), (m) or (o) and (ii) provisions of ERISA or
the Code include regulations prescribed under
such provisions.
l. LABOR MATTERS. Neither Seller nor any
Subsidiary nor any Seller Partnership is a party
to or bound by any collective bargaining or other
labor union contracts. There is no pending or, to
the knowledge of Seller, threatened labor
dispute, strike or work stoppage against Seller,
any Subsidiary, or any Seller Partnership.
Neither Seller nor any Subsidiary nor any Seller
Partnership, nor their respective representatives
or employees, has committed any unfair labor
practices in connection with the operation of the
respective businesses of Seller, each Subsidiary,
and each Seller Partnership, and there is no
pending or, to the knowledge of Seller,
threatened charge or complaint against Seller,
any Subsidiary, or any Seller Partnership by the
National Labor Relations Board or any comparable
state agency. Seller, Subsidiaries, and Seller
Partnerships are in compliance with all
applicable Laws respecting employment,
consulting, employment practices, wages, hours,
and terms and conditions of employment.
m. PROPERTIES.
i. Schedule 3.13 contains a complete and
correct list of all real property owned or leased
by Seller, each Subsidiary and each Seller
Partnership (collectively, the "PROPERTIES") as
of the date hereof. Except as set forth in
Schedule 3.13, Seller, Subsidiary or Seller
Partnership, as applicable, owns good, marketable
and indefeasible title to each Property,
including the land and all improvements, all
personalty and the Tenant Leases (as hereinafter
defined). Except as set forth in Schedule 3.13,
the Properties are free and clear of all
Encumbrances of any nature, except for (i) liens
for real property taxes or similar assessments
not yet due and
-20-
26
payable, (ii) easements for utilities servicing
the Properties and (iii) such Encumbrances as do
not materially detract from or interfere with the
present use of the Properties subject thereto or
affected thereby, or otherwise materially impair
the use or value of such Properties.
ii. Seller has delivered to the Investor a
true, correct and complete copy of a rent roll
with respect to each Property as of the date
hereof setting forth, among other matters, the
term (commencement or renewal date and expiration
date) of each lease with respect to the
Properties (collectively, the "TENANT LEASES"),
the square feet for each of the Tenant Leases,
the monthly base rental rates for each of the
Tenant Leases and the security deposits for each
of the Tenant Leases. Other than the Tenant
Leases, no party has been granted any license,
lease or other material right relating to the use
or possession of the Properties which is material
to the use or value of the Properties. Except as
set forth in Schedule 3.13, all of the Tenant
Leases are valid and subsisting and in full force
and effect with respect to Seller, Subsidiaries
and Seller Partnerships and, to Seller's
knowledge, with respect to any other party
thereto, and no tenant of the Properties is more
than 30 days delinquent on its rental as of April
30, 1997 except as set forth in Schedule 3.13. To
Seller's knowledge, no tenant of the Properties
has initiated or threatened bankruptcy since
January 1, 1997. No tenant of the Properties is
an Affiliate or Associate of Seller, any
Subsidiary or any Seller Partnership. Except as
set forth in Schedule 3.13, there are no
contracts or other material obligations
outstanding for the sale, exchange or transfer of
the Properties or any portion thereof. There are
no attachments, executions, assignments for the
benefit of creditors, receiverships,
conservatorship or voluntary or involuntary
proceedings in bankruptcy or pursuant to any
other debtor relief laws filed by, or pending
against, Seller, Subsidiaries, Seller
Partnerships or the Properties. Except as set
forth in Schedule 3.13, since January 1, 1997, no
tenants have terminated their leases prior to
expiration and, to Seller's knowledge, have no
intent to do so.
(c) Except as set forth in Schedule 3.13, there is no pending
condemnation or similar proceeding affecting the land, the improvements or the
personalty situated at the Properties or any portion thereof, and neither
Seller nor any Subsidiary nor any Seller Partnership has received any written
notice and has no knowledge that any such proceeding is contemplated.
(d) The continued ownership, operation, use and occupancy of the
land or the improvements thereon do not violate any zoning, building,
administrative or other law, ordinance, order or regulation or any restrictive
covenant applicable to the Properties, the violation of which would have a
material adverse effect on the business, financial condition, assets, results
of operations or prospects of Seller, Subsidiaries or Seller Partnerships, as
applicable, and no written notice of any
-21-
27
such violation has been received by Seller, any Subsidiary or any Seller
Partnership from any Governmental Entity.
(e) Seller, Subsidiaries or Seller Partnerships, as applicable,
currently has in place title, liability, casualty and other insurance coverage
with respect to the Properties in such amounts as are reasonable and customary
for properties similar to the Properties. Each of such policies is in full
force and effect, and all premiums due and payable thereunder have been, and on
any Closing Date will be, fully paid when due. No notice of cancellation has
been received, or to the knowledge of Seller threatened, with respect thereto.
(f) Except as set forth in Schedule 3.13, there is no Action
pending, or to the knowledge of Seller contemplated, by any Governmental Entity
or third party to levy any special assessments against the Properties that, if
successful, would have a material adverse effect on the business, financial
condition, assets, results of operations or prospects of Seller, any Subsidiary
or any Seller Partnership.
(g) To Seller's knowledge, each unsatisfied brokerage obligation
that is in excess of $25,000 with respect to the Properties is set forth on
Schedule 3.13.
(h) To Seller's knowledge and except as set forth on Schedule
3.13, no capital expenditures are contemplated by Seller to be incurred by
Seller, any Subsidiary or any Seller Partnership within twelve months after the
date of this Agreement in excess of $50,000 per Property with respect to any
Property.
(i) Except as set forth in Schedule 3.13, all management
contracts with respect to the Properties are terminable by Seller on 30 days
notice.
(j) To Seller's knowledge, except for customary easements for
access to building systems or utilities and except as set forth in Schedule
3.13, each Property is an independent unit which does not now rely on any
facilities (other than facilities of municipalities or public utilities)
located on any property that is not part of the Property for the furnishing to
the Property of any essential building systems or utilities (including drainage
facilities, catch basins and retention ponds) that if the owner of the Property
could not avail the use of which, would materially detract from the value of
the Property or materially interfere with the use of the Property.
3.14 TAX MATTERS.
(a) For purposes of this Agreement, "TAXES" means any federal
(including, without limitation, tax on its undistributed taxable income,
alternative minimum tax, tax on certain sale proceeds or other nonqualifying
income from foreclosure property or on income from prohibited transactions, and
any taxes imposed upon Seller, Subsidiaries or Seller Partnerships under
Section 857 or Section 4981 of the Code), state, county, local or foreign
taxes, charges, fees, levies, or other assessments, including, without
limitation, all net income, gross income, sales and use, ad valorem,
-22-
28
transfer, gains, profits, excise, franchise, real and personal property, gross
receipt, capital stock, business and occupation, disability, employment,
payroll, license, estimated, or withholding taxes or charges imposed by any
Governmental Entity, and includes any interest and penalties (civil or
criminal) on or additions to any such taxes.
(b) For purposes of this Agreement, "TAX RETURN" means a report,
return or other information required to be filed with or supplied to a
Governmental Entity with respect to Taxes including, without limitation, any
notices or information reports or returns required to be filed by Seller,
Subsidiaries or Seller Partnerships with respect to their respective
operations, income, assets and shareholders or partners in order to maintain
Seller's status as a real estate investment trust ("REIT") under the Code.
(c) Seller elected to be taxed as a REIT under Sections 856
through 860 of the Code effective for its taxable year ended December 31, 1985
(the "INITIAL REIT YEAR"). Seller, since the Initial REIT Year through the end
of the immediately preceding taxable year, has always qualified as a REIT under
the Code. At all times from and after the Initial REIT Year to the date hereof,
Seller has complied with, and through the Closing Date will comply with, all
applicable Code and regulatory requirements necessary to maintain its
qualification as a REIT under the Code and has otherwise operated, and through
the Closing Date will have otherwise operated, in the manner necessary to
maintain its qualification as a REIT under the Code. No dividend will be
required to be distributed before December 31, 1997 in order for Seller to
maintain its qualification as a REIT under the Code.
(d) Except as disclosed in Schedule 3.14, Seller, Subsidiaries
and Seller Partnerships have (i) filed all Tax Returns required to be filed by
applicable Law since December 31, 1990, and all such Tax Returns were in all
material respects (and, as to Tax Returns not filed as of the date hereof but
filed on or before the Closing Date, will be in all material respects) true,
complete and correct and filed on a timely basis and (ii) within the time and
in the manner prescribed by law, paid (and until the Closing Date will pay
within the time and in the manner prescribed by law) all material Taxes that
were or are due and payable.
(e) Except as set forth in Schedule 3.14, Seller, Subsidiaries
and Seller Partnerships have established (and until the Closing Date will
maintain) on their respective books and records reserves adequate to pay all
Taxes of Seller, Subsidiaries and Seller Partnerships not yet due and payable
in accordance with GAAP which are reflected in the Audited Financial Statements
and Unaudited Financial Statements to the extent required by GAAP.
(f) Except as disclosed in Schedule 3.14, as of the date hereof,
there are no, and, as of any Closing Date, there will be no, material Tax liens
upon the assets of Seller, Subsidiaries and Seller Partnerships, except liens
for Taxes not yet due.
(g) Except as disclosed in Schedule 3.14, Seller, Subsidiaries
and Seller Partnerships have complied (and until the Closing Date will comply)
in all material respects with the provisions
-23-
29
of the Code relating to the payment and withholding of Taxes, including the
withholding and reporting requirements under Code Sections 1441 through 1464,
3401 through 3406, and 6041 through 6049, as well as similar provisions under
any other laws, and have, within the time and in the manner prescribed by law,
withheld from employee wages and paid over to the proper governmental
authorities all material amounts required by applicable Law.
(h) Except as disclosed in Schedule 3.14, Seller, Subsidiaries
and Seller Partnerships have not executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with respect
to any Taxes or Tax Returns.
(i) No notice of any material deficiency for any Taxes has been
received by Seller, any Subsidiary or any Seller Partnership that has not been
resolved and paid in full or otherwise settled, no audits or other
administrative proceedings or court proceedings are presently pending or, to
Seller's knowledge, threatened with regard to any Taxes or Tax Returns of
Seller, Subsidiaries or Seller Partnerships, and no notice of any material
claim has been received by Seller, any Subsidiary or any Seller Partnership
from any authority in a jurisdiction where Seller, Subsidiaries or Seller
Partnerships do not file Tax Returns that Seller, any Subsidiary or any Seller
Partnership is or may be subject to Tax in that jurisdiction.
(j) Seller, Subsidiaries and Seller Partnerships have not
received a Tax Ruling or entered into a Closing Agreement with the Internal
Revenue Service that would have any continuing effect after the First Closing
Date.
(k) Seller has made available (or, with respect to all Tax
Returns filed after the date hereof, will make available) to the Investor
complete and accurate copies of all Tax Returns, and amendments thereto, filed
by Seller, any Subsidiary or any Seller Partnership for all taxable periods or
years ending on or prior to the First Closing Date.
(l) Neither Seller nor any Subsidiary nor any Seller Partnership
is required to include in income any adjustment pursuant to Code Section 481(a)
by reason of a voluntary change in federal income tax accounting method (other
than a change of federal income tax accounting method required as a result of a
change in law) initiated by Seller, and the Internal Revenue Service has not
proposed any such adjustment or change in accounting method.
(m) Seller has made available to the Investor all relevant
information with respect to the federal income tax net operating loss
carryovers of Seller as of December 31, 1996, based on the federal income Tax
Returns filed by Seller as of such date.
(n) For all taxable years from and including its Initial REIT
Year through the First Closing Date, (i) Seller has maintained permanent
records containing the information required to be maintained by Code Section
857(a)(2) and Treasury Regulation Sections 1.857-(8)(a), 1.857-8(c) and
1.857-8(e) and (ii) Seller has demanded the written statements from its
shareholders required
-24-
30
by Treasury Regulation Section 1.857-8(d) in accordance with Treasury
Regulation Section 1.857-8(e).
3.15 MATERIAL CONTRACTS. Schedule 3.15 sets forth an accurate
list of all Material Contracts of Seller, Subsidiaries and Seller Partnerships.
Seller has made available to the Investor complete and correct copies of all
Material Contracts. All Material Contracts are in full force and effect.
Except as set forth in Schedule 3.15, Seller, Subsidiaries and Seller
Partnerships are not in violation of or default in any material respect (nor is
there any waiver in effect of any event that would constitute a default but for
such waiver) under, and no event has occurred that (with notice or the lapse of
time or both) would constitute a violation of or default under, any Material
Contract. Except as set forth in Schedule 3.15, to the knowledge of Seller, no
other party to any Material Contract is in breach of the terms, provisions and
conditions of such Material Contract and no other party to any Material
Contract has notified Seller, any Subsidiary or any Seller Partnership that it
intends to terminate or modify a Material Contract.
3.16 INSURANCE. Schedule 3.16 sets forth a complete and correct
list of all insurance policies, except for title insurance policies, currently
in force insuring against risks of Seller, Subsidiaries and Seller
Partnerships. Seller, Subsidiaries and Seller Partnerships are in compliance
with the terms of such policies applicable to them and there are no claims by
Seller, any Subsidiary or any Seller Partnership under any such policy as to
which any insurance company is denying liability or defending under a
reservation of rights clause.
3.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth in the documentation provided to Seller
pursuant to Section 3.17(b) and in Schedule 3.17, there is no material
Environmental Noncompliance with respect to any Property and there are no
material Environmental Claims with respect to any Property or the Seller, any
Subsidiary or any Seller Partnership or, to the knowledge of Seller, any
tenants under any of the Tenant Leases. All material permits, consents,
licenses, certificates, approvals, registrations, and authorizations in
connection with environmental matters (collectively, "ENVIRONMENTAL PERMITS")
which are required by any Law have been obtained and are valid. The Properties
(and all uses thereof and operations conducted thereon) comply in all material
respects with all Environmental Permits. All operations on or at the
Properties conducted by Seller are and have been conducted in all material
respects in compliance with applicable Environmental Laws. Except as set forth
in the documentation provided to Seller pursuant to Section 3.17(b) and in
Schedule 3.17, Seller has not received any Notification from any Governmental
Entity seeking any information or alleging any violation of any Law regarding
Environmental Conditions. Except as set forth in the documentation provided to
Seller pursuant to Section 3.17(b) and in Schedule 3.17, Seller has not caused
or given its verbal or written authorization to cause, and has no knowledge of,
any Release of any Hazardous Materials on-site or off-site of the Properties in
violation of any Environmental Law.
(b) Seller has made available to Investor true, correct, and
complete copies of all written reports of any environmental assessment,
compliance or regulatory audit, inspection, or investigation
-25-
31
of the Properties in its possession, and Seller has not received any other
written report containing any evidence of Environmental Noncompliance.
(c) Except as set forth in the documentation provided to Seller
pursuant to Section 3.17(b) and in Schedule 3.17, there is not now, nor has
there been in the past, any "friable" asbestos (as the term "friable" is
defined under 40 C.F.R. Section 61.141) or friable asbestos containing
materials located on, incorporated in, or otherwise contained in the Properties
or any portion thereof, and there are not now, and have not in the past been,
any underground storage tanks located on the Properties or any portion thereof.
(d) Except as set forth in the documentation provided to Seller
pursuant to Section 3.17(b), and in Schedule 3.17, none of the tenants under
any Tenant Lease handle or store any Hazardous Material as a principal or
primary business.
3.18 TRUST RECORDS; ACCOUNTING RECORDS. The minute books of
Seller accurately reflect in all material respects all actions taken to the
date of this Agreement by the holders of Common Shares, the Trust Managers and
committees of the Trust Managers, except for those matters set forth in
Schedule 3.18 for which minutes of such actions have not yet been prepared or
approved. The share certificate books and records of Seller accurately reflect
the ownership of the Common Shares. Seller maintains accounting records which
fairly reflect, in all material respects, Seller's transactions.
3.19 NEW YORK STOCK EXCHANGE LISTING. The outstanding Common
Shares are listed on the New York Stock Exchange. The issuance or sale and
delivery of any Shares to the Investor pursuant to this Agreement will not
violate any listing requirements of the New York Stock Exchange for the listing
of Common Shares, including the Shares.
3.20 DISCLOSURE OF FACTS. There are no facts peculiar to Seller,
Subsidiaries or the Seller Partnerships that Seller has not disclosed to the
Investor that materially adversely affect, or insofar as Seller can reasonably
foresee, will materially adversely affect, the business, financial condition,
assets, results of operations or prospects of Seller, Subsidiaries or Seller
Partnerships.
3.21 PENSION-HELD REIT. For purposes of Section 856(h)(3) of the
Code, Seller hereby represents that at any time during the shorter of (i) the
two-year period ending immediately prior to the First Closing Date or (ii) the
period during which Seller was in existence, to the best of Seller's knowledge,
no "qualified trust" has held, directly or indirectly, more than 10% of the
interests in Seller.
3.22 SHAREHOLDER APPROVAL. The Seller's shareholders approved at
the Annual Meeting all of the proposals set forth in the Notice of Annual
Meeting of Shareholders and accompanying proxy statement dated May 12, 1997.
-26-
32
SECTION 4. REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants with respect to itself (except as
indicated) to, and agrees with, Seller as follows:
a. ORGANIZATION AND RELATED MATTERS. It is a limited
partnership duly organized and validly existing under the
laws of the state of its organization. It has all necessary
partnership power and partnership authority to carry on its
business as now being conducted. It has all necessary
partnership power and partnership authority to execute,
deliver and perform this Agreement and the transactions
contemplated hereby.
b. AUTHORIZATION. This Agreement has been duly
executed and delivered by it and constitutes the legally
valid and binding obligation of the Investor and the
Pecuniary Owner, enforceable in accordance with its terms,
except as such enforceability may be limited by Equitable
Remedies. The execution and delivery of this Agreement by
it and the consummation of the transactions contemplated
hereby will not require filing or registration with, or the
issuance of any Permit by, any other third party or
Governmental Entity under the terms of any applicable Law
or its material Contracts, other than any filing required
under the Exchange Act.
c. NO CONFLICTS. The execution, delivery and
performance of this Agreement by it will not violate the
provisions of, or constitute a breach or default (whether
upon lapse of time and/or the occurrence of any act or
event or otherwise) under, (a) its organizational
documents, pursuant to which it was organized and by which
it is governed, (b) any Law to which it is subject or (c)
any Contract to which it is a party that is material to the
financial condition, results of operations or conduct of
its business.
d. NO BROKERS OR FINDERS. No agent, broker, finder or
investment or commercial banker, or other Person or firms
engaged by or acting on its behalf or on behalf of any of
its Affiliates in connection with the negotiation,
execution or performance of this Agreement or the
transactions contemplated by this Agreement, is or will be
entitled to any broker's or finder's or similar fees or
other commissions as a result of this Agreement or such
transactions.
e. LEGAL PROCEEDINGS. There is no Order or Action
pending against or, to its knowledge, affecting it that
individually or when aggregated with one or more other
Actions has, or if determined adversely would have, a
material adverse effect on its business, properties, or
financial condition or on its ability to perform this
Agreement.
-27-
33
f. INVESTMENT REPRESENTATION. This Agreement is made
with the Investor in reliance upon such Investor's
representation to Seller, which by such Investor's
execution of this Agreement such Investor hereby confirms
that the Shares will be acquired by the Investor as agent
for and on behalf of the Pecuniary Owner, for the Pecuniary
Owner's own account, not as nominee or agent for any other
party, for investment purposes only and not with a view to
or for sale in connection with the distribution thereof. It
agrees to execute any further certificate or other document
representing such investment intent or as to any other
matter reasonably requested by Seller to assure compliance
with applicable securities laws.
g. LEGENDS; STOP-TRANSFER ORDERS.
i. The certificates for Shares will bear legends in
substantially the following form:
THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE AND, ACCORDINGLY,
MAY BE OFFERED, SOLD, TRANSFERRED OR PLEDGED ONLY IN A TRANSACTION
WHICH IS REGISTERED UNDER SUCH ACT AND UNDER SUCH LAWS OR IS EXEMPTED
FROM SUCH REGISTRATION REQUIREMENTS.
The foregoing legend shall be removed from any such certificate at the request
of the holder thereof at such time as the shares represented thereby are
registered under the Securities Act or become eligible for resale under Rule
144 promulgated under the Securities Act.
ii. The certificates for Shares may also bear any
legend required by any applicable state blue sky law.
iii. Any certificates for Shares will also bear a
legend relating to restrictions on transfer imposed
pursuant to the percentage ownership limitation contained
in the Charter Documents.
iv. Seller may impose appropriate stop-transfer
instructions relating to the restrictions set forth herein.
h. STATUS FOR REIT OWNERSHIP AND INCOME TESTS. At
the Closing, to the best of Investor's knowledge, the
purchase of the Common
-28-
34
Shares by the Pecuniary Owner will not result in a
"qualified trust" as defined in Code Section 856(h)(3)
holding more than 25% in value of the Seller's outstanding
Capital Stock. The Pecuniary Owner is not purchasing the
Common Shares, and will not hold any or all of the Common
Shares so purchased, through any arrangement or entity that
would be deemed, for federal income tax purposes, to be a
partnership between the Pecuniary Owner and any or all of
the Other Pecuniary Owners. The Common Shares that each
Pecuniary Owner owns will not be considered to be owned by
any individual (or entity treated as an individual under
Section 856(h) of the Code), who after application of the
stock ownership rules of Section 856(h) of the Code would
own more than 9.8% of the lesser of the number or value of
any outstanding class of Capital Stock.
i. AUTHORITY OF THE INVESTOR. The Investor is duly
authorized to enter into this Agreement and to consummate
the transactions contemplated hereby as agent for and on
behalf of the Pecuniary Owner.
SECTION 5. COVENANTS WITH RESPECT TO CONDUCT OF SELLER PRIOR TO
CLOSING
From the date of this Agreement up to and including the Closing Date,
Seller covenants and agrees to take such actions, or refrain from taking such
actions, as are set forth in this Section 5.
a. ACCESS. Seller shall, and shall cause the
Subsidiaries and Seller Partnerships to, authorize and
permit the Investor and its representatives (which term
shall be deemed to include its independent accountants and
counsel) to have reasonable access during normal business
hours, upon reasonable notice and in such manner as will
not unreasonably interfere with the conduct of business, to
all of the Properties, books, records, operating
instructions and procedures, Tax Returns and all other
information with respect to the businesses of Seller,
Subsidiaries and Seller Partnerships as the Investor may
from time to time reasonably request, and to make copies of
such books, records and other documents and to discuss the
business of Seller, Subsidiaries and Seller Partnerships
with the Investor and its partners and their respective
officers, employees, accountants and counsel, as the
Investor considers necessary or appropriate for the
purposes of familiarizing itself with the business of
Seller, obtaining any necessary Approvals of, or Permits
for, the transactions contemplated by this Agreement and
conducting an evaluation of the organization and business
of Seller. From the date of this Agreement up to and
including the Closing Date, Seller will permit, and cause
Subsidiaries and Seller Partnerships to permit, the
Investor and its officers, directors, agents, attorneys,
accountants, and representatives, to audit such books and
records, to meet
-29-
35
with tenants of the Properties, and to conduct such
investigations, tests, or inspections of the Properties as
Seller shall approve in Seller's sole discretion, including
intrusive sampling studies to ascertain whether or not
there are any Hazardous Materials on, in, or under the
Properties.
b. MATERIAL ADVERSE CHANGES; SEC FILINGS; REPORTS;
FINANCIAL STATEMENTS.
i. Seller shall promptly notify the Investor of any
event of which Seller obtains knowledge which has had or
might reasonably be expected to have a material adverse
effect on Seller's business or which if known as of the
date hereof would have been required to be disclosed to the
Investor.
ii. Seller will, and will cause the Subsidiaries and
Seller Partnerships to, furnish to the Investor as soon as
available copies of all SEC Filings, and all material
reports, renewals, filings, certificates, statements and
other documents filed with any Governmental Entity.
c. CONDUCT OF BUSINESS. Except as set forth in
Schedule 5.3 and as provided in Section 5.4, from the date
of this Agreement until the Closing Date, Seller agrees
with and for the benefit of Buyer that Seller shall not,
and Seller shall cause Subsidiaries and Seller Partnerships
not to, without the prior written consent of the Investor,
which consent may not unreasonably be withheld:
i. conduct the business of Seller, Subsidiaries and
Seller Partnerships in any manner except in the ordinary
course consistent with past practices; or
ii. purchase any real property without the consent of
the Investment Committee; or
iii. declare, issue, make or pay any dividend or other
distribution of assets, whether consisting of money, other
tangible or intangible personal property, real property or
other thing of value, to its shareholders, or split,
combine, dividend, distribute or reclassify any Common
Shares or any shares of its Capital Stock, as applicable,
except for dividends the record date of which is after the
First Closing Date; or
iv. issue, sell, redeem or acquire for value, or
agree to do so, any debt obligations (other than the
Prudential Line of Credit), Common Shares or Capital Stock;
or
-30-
36
v. incur or agree to incur any obligation or
liability (absolute or contingent) that individually calls
for payment by Seller, any Subsidiary or any Seller
Partnership of more than $50,000 individually or in the
aggregate except for (i) liabilities (other than
indebtedness for borrowed money) incurred in the ordinary
course of business consistent with past practices
(including, but not limited to, tenant improvements and
capital improvements to Properties), (ii) liabilities
arising out of, incurred in connection with, or related to
the consummation of the transactions contemplated by this
Agreement, (iii) payments to Realco under the Realco Debt
and (iv) purchases of real property in accordance with
Section 5.3(b); or
vi. merge (if Seller is not the surviving entity),
sell substantially all of its assets or enter into any
other contract involving any other form of business
combination or liquidate, wind-up or dissolve (or suffer
any liquidation or dissolution) or adopt any plan of
liquidation or dissolution; or
vii. change the number of Trust Managers or the Board
of Directors of any of the Subsidiaries, or admit any
additional partners to the Seller Partnerships; or
viii. amend the Charter Documents or the charter or
organizational documents of the Subsidiaries or Seller
Partnerships; or
ix. sell, lease, transfer or otherwise dispose of, or
mortgage, pledge or otherwise encumber, other than the
lease of any Property or space therein in the ordinary
course of business consistent with past practices, any of
the Properties; or
x. cancel, satisfy or prepay any debt, obligation,
liability or encumbrance, or waive any claim or right of
value of Seller, Subsidiaries or Seller Partnerships except
the extinguishment of debt under the Realco Debt through
the conversion of the Realco Debt to Common Shares; or
xi. (i) increase in any manner the compensation or
fringe benefits (including, but not limited to, severance
benefits) payable or to become payable by Seller,
Subsidiaries, or Seller Partnerships to any officer, Trust
Manager, director, partner, consultant or independent
contractor as salary or wages or under any bonus,
insurance, welfare, severance, deferred compensation,
pension, retirement, profit sharing, share option
(including, without limitation, the granting of any share
option or share appreciation right or performance or
restricted share award), share purchase or other
-31-
37
employee benefit plan, (ii) except as approved by the
Compensation Committee prior to the date of this Agreement
or except as approved by the Compensation Committee and
approved by a unanimous vote of the Seller's Board of Trust
Managers, increase in any manner the compensation or fringe
benefits (including, but not limited to, severance
benefits) payable or to become payable by Seller,
Subsidiaries or Seller Partnerships to any employee who is
not an officer, Trust Manager, director or partner of
Seller, Subsidiaries or Seller Partnerships as salary or
wages or under any bonus, insurance, welfare, severance,
deferred compensation, pension, retirement, profit sharing,
share option (including, without limitation, the granting
of any share option or share appreciation right or
performance or restricted share award), share purchase or
other employee benefit plan, except for such increase in
salary, bonuses or severance benefits to such employees in
the ordinary course of business consistent with past
practices and provided that all such increases in salary,
bonuses or severance benefits do not have a material
adverse effect on the business, assets, financial condition
or prospects of Seller, Subsidiaries or Seller
Partnerships, or (iii) enter into, adopt, amend in any
material respect (except as required by law) or terminate
any Seller Benefit Plan or any agreement, arrangement, plan
or policy between Seller, Subsidiaries or Seller
Partnerships, as applicable, and one or more of its Trust
Managers, directors, partners, officers, employees or
independent contractors; or
xii. make any tax election other than in connection
with maintaining Seller's qualification as a REIT or take
any action that would cause Seller not to qualify as a
REIT, or fail to take any reasonable action to preserve
Seller's qualification as a REIT; or
xiii. make any change in any significant accounting
principles or practices used by Seller, Subsidiaries or
Seller Partnerships, except as required by the Commission;
or
xiv. amend, modify or change the terms of any Material
Contract other than in the ordinary course of business
consistent with past practice and provided that such
amendment, modification or change does not have a material
adverse effect on the business, assets, financial condition
or prospects of Seller, Subsidiaries or Seller
Partnerships; or
xv. except as provided in Section 5.3(b), acquire any
Person (or interest therein) or any material amount of
assets, or make any loans, advances or capital
contributions to, or investments in, any Person; or
-32-
38
xvi. take any action that would, or fail to take any
action which failure would, result in any of Seller's
representations and warranties set forth in this Agreement
not being true; or
xvii. agree to or make any commitment to take any action
prohibited by this Section 5.3.
d. NOTIFICATION OF CERTAIN MATTERS. Seller shall give
prompt notice to the Investor, and the Investor shall give
prompt notice to Seller, of (a) the occurrence, or failure
to occur, of any event that causes any representation or
warranty contained in this Agreement to be untrue or
inaccurate at any time from the date of this Agreement to
the Closing Date and (b) any failure of the Investor or
Seller, as the case may be, to comply with or satisfy, in
any material respect, any covenant, condition or agreement
to be complied with or satisfied by it under this
Agreement.
e. ADJUSTMENT OF SHARE PRICE. The Share Price will
be subject to adjustment from time to time prior to the
Closing Date as follows:
(a) If Seller shall at any time prior to the Closing Date (i)
pay a dividend or make any other distribution payable in Common Shares to
holders of any class of Capital Stock of Seller, (ii) subdivide or reclassify
the outstanding Common Shares into a greater number of shares or (iii) combine
or reclassify the outstanding Common Shares into a smaller number of shares,
the Share Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification will be proportionately adjusted so that the Investor will be
entitled to receive upon purchase after such time the number of Common Shares
that the Investor would have owned or been entitled to receive had such
purchase occurred immediately prior to such time. An adjustment made pursuant
to this subsection (a) will become effective immediately after the record date
in the case of a dividend or other distribution and will become effective
immediately after the effective date of any such subdivision, combination,
reclassification or change, provided that, if such dividend or distribution is
not ultimately paid or made, the Share Price shall be readjusted to be equal to
the Share Price in effect immediately prior to such record date. Such
adjustment will be made successively whenever any event listed above occurs.
(b) If Seller shall at any time prior to the Closing Date issue
rights or warrants to all holders of Common Share entitling them (for a period
commencing no earlier than the record date for the determination of holders of
Common Shares entitled to receive such rights or warrants and expiring within
45 days after such record date) to subscribe for or purchase Common Shares at a
price per share less than the Current Market Price (as defined in subsection
(d) below) of Common Shares on such record date, the Share Price will be
adjusted effective as of immediately after such record date so that it shall
equal the price determined by multiplying the Share Price in effect immediately
prior thereto by a fraction, the numerator of which is the number of Common
Shares
-33-
39
outstanding on such record date plus the number of Common Shares that the
aggregate offering price of the Common Shares so offered for subscription or
purchase or purchased would purchase at the Current Market Price per Common
Share, and the denominator of which is the number of Common Shares outstanding
on such record date plus the number of additional Common Shares which may be
purchased upon the exercise of the rights or warrants issued, provided that,
if such issuance is not ultimately made, the Share Price shall be readjusted to
be equal to the Share Price in effect immediately prior to such record date.
Common Shares owned by or held for the account of Seller shall not be deemed
outstanding for the purpose of any such computation. Such adjustment will be
made successively whenever such rights or warrants are issued.
(c) If Seller shall at any time prior to the Closing Date
distribute to all holders of Common Shares any shares of any class of Capital
Stock other than Common Shares, evidences of indebtedness or other assets
(other than cash dividends or distributions out of retained earnings), or shall
distribute to holders of Common Shares rights or warrants to subscribe to
securities (other than those referred to in subsection (b) above), then in each
such case the Share Price will be adjusted so that it equals the price
determined by multiplying the Share Price in effect immediately prior to the
date of such distribution by a fraction, the numerator of which is the Current
Market Price per Common Share on the record date mentioned below less the then
fair market value (as determined by the Board of Trust Managers, whose
determinations shall be conclusive evidences of such fair market value) of said
shares, evidences of indebtedness, assets, rights or warrants or distributions
applicable to one Common Share, and the denominator of which is such Current
Market Price. Such adjustment will become effective immediately after the
record date for the determination of the holders of Common Shares entitled to
receive such distribution, provided that, if such issuance is not ultimately
made, the Share Price shall be readjusted to be equal to the Share Price in
effect immediately prior to such record date. Such adjustment will be made
successively whenever such a distribution is made.
(d) For the purpose of computation under subsections (b) and
(c) above, the "Current Market Price" per Common Share at any date will be
deemed to be the average of the daily closing price for the Common Shares on
the New York Stock Exchange for 20 consecutive trading days commencing 30
trading days before such date.
SECTION 6. ADDITIONAL CONTINUING COVENANTS AND AGREEMENTS
a. USE OF PROCEEDS. The proceeds from the sale of
the Shares to the Investor, net of any costs (including any
accounting, legal and fairness opinion costs and expenses)
associated with the transactions contemplated by this
Agreement, shall be applied by Seller to the purchase of
real property as approved by the Investment Committee in
accordance with Section 2.2.
-34-
40
b. APPOINTMENT OF TRUST MANAGER.
i. GENERAL. Effective immediately following the
Closing, Seller shall increase the number of its Trust
Managers from seven to eight, and Seller shall appoint one
individual designated by the Investor as Agent for and on
behalf of the Pecuniary Owner and the Other Pecuniary
Owners collectively to fill the vacancy caused by the
increase in the number of Trust Managers under this Section
6.2(a). Simultaneously with the designee of the Investor
becoming a Trust Manager of Seller, Seller and such
designee shall enter into an indemnification agreement
providing for indemnification of such designee identical in
form to the indemnification agreements entered into between
Seller and other Trust Managers. In addition, at the first
annual meeting and all subsequent annual meetings of
shareholders after the number of Trust Managers has been
increased to eight under this Section 6.2(a), until Seller
achieves the Threshold Equity Capitalization, Seller shall
nominate, and use its best efforts to have such person
elected (which efforts shall include, without limitation,
including the Investor's nominee in management's slate for
nomination and election and solicitation of proxies on
their behalf), one designee of the Investor (which may be a
different person than the person initially appointed as
Trust Manager pursuant to the first sentence of this
Section 6.2(a) if such initial designee shall have died,
resigned, been removed or declined to be nominated) as
Trust Manager. During such time as Seller shall have an
individual designated by the Investor serving as Trust
Manager pursuant to this Section 6.2(a), and except as
otherwise provided in Section 6.2(b) hereof, the number of
Trust Managers shall consist of not more than eight
persons, including the designee of the Investor. Such
designee of the Investor shall hold office until
resignation, removal, death or expiration of the term for
which he or she was appointed and any successive term for
which such representative is duly elected as a Trust
Manager by the shareholders of Seller. In the event of the
death, resignation or removal from office of the designee
of the Investor serving as a Trust Manager pursuant to the
first sentence of this Section 6.2(a), Seller agrees to
promptly appoint a replacement designee selected by the
Investor as Trust Manager prior to the date Trust Managers
are to be elected at the first annual meeting after the
number of Trust Managers has been increased to eight
pursuant to this Section 6.2(a).
ii. OBSERVATION RIGHTS. In the event that the
designee selected by the Investor to serve as Trust Manager
is not, for any reason, elected by Seller's shareholders,
the Investor shall have full observation rights with
respect to Seller's Trust Managers, including the right to
obtain full and timely notice of all meetings of the Trust
Managers and of each of its
-35-
41
committees, to obtain copies of all written and other
materials disseminated to Trust Managers and to designate a
person to attend in person or by telephone all meetings of
the Trust Managers or their committees. If the Investor
receives observation rights pursuant to the provisions of
this paragraph, the Investor and its designees in respect
of such rights shall each execute a confidentiality
agreement in form and substance reasonably satisfactory to
Seller.
iii. RESIGNATIONS. At such time as Seller achieves
Threshold Equity Capitalization, the Investor shall cause
its designee to not seek re-election at the next annual
meeting, or at Seller's option, to immediately resign.
iv. QUALIFICATIONS. Each of the representatives
designated by the Investor in accordance with this Section
6.2 shall be a Person selected by the Investor in its sole
discretion; provided, however, that any such person may not
have been involved in any of the events described in Item
401(f)(1)-(4) of Regulation S-K promulgated under the
Exchange Act.
v. COMMITTEES. At any time that the Investor shall
have exercised its rights under this Section 6.2 to
appoint a designee as Trust Manager, Seller shall appoint
the Investor's designee on each committee of the Trust
Managers, and each such committee shall contain no more
than four members until expiration of the latest term of
office of any designee of the Investor pursuant to Section
6.2(a) or 6.2(b).
c. ENVIRONMENTAL MATTERS. Seller will advise the
Investor promptly (a) upon obtaining knowledge that a
Release has occurred at or upon the Properties and/or (b)
upon receipt of a Notification pertaining to the
Properties.
d. STATUS FOR REIT OWNERSHIP AND INCOME TESTS.
Following the Closing Date, and at all subsequent times
during which the Investor or the Pecuniary Owner owns any
of the Shares, applying the stock ownership rules of
Section 856(h) of the Code, the representation set forth in
Section 4.8 will remain true and correct.
e. PROHIBITED TRANSACTIONS. Seller shall not effect
any business transactions, or agree to effect any business
transactions, with Affiliates, Trust Managers or employees
of Seller except in the ordinary course of business and
unless the consideration paid by Seller in any such
business transaction is fair value at market rates, or
approved by Seller's shareholders in accordance with
applicable state law.
-36-
42
f. SELLER/BUYER REGISTRATION RIGHTS AGREEMENT. On the
Closing Date, the Investor, as agent for and on behalf of
the Pecuniary Owner and certain Other Pecuniary Owners, and
Seller shall enter into a Registration Rights Agreement
substantially in the form of Exhibit A.
g. REIT QUALIFICATION. Seller shall take all actions
necessary to maintain Seller's qualification as a REIT and,
without the written consent of the Investor shall take no
action that would cause Seller not to qualify as a REIT or
fail to take any action that would preserve Seller's
qualification as a REIT. Seller covenants and agrees that
(i) it will duly and promptly notify the Investor upon
becoming aware that any "qualified trust" holds or is
expected to hold, directly or indirectly, more than 10% of
the interests in Seller, and (ii) it will provide the
Investor such information and/or verification as the
Investor shall reasonably request in order to verify
whether Seller constitutes a "pension-held REIT" as defined
under Section 856(h)(3)(C) of the Code.
h. PREEMPTIVE RIGHTS. In the event that Seller shall
at any time subsequent to the date of this Agreement issue
any Common Shares to any Person or Persons (other than (i)
Common Shares issued to Realco in connection with the
conversion of the Realco Debt to Common Shares, (ii) Common
Shares issued pursuant to an employee share option, share
purchase, share incentive or compensation plan or (iii)
Common Shares issued to any partners in Affiliates of
Realco in connection with the merger of such Affiliates
with and into Seller) (each such issuance, a "Subsequent
Offering")), the Investor shall have the right to purchase,
on the same terms and conditions as the other purchasers in
the Subsequent Offering, Common Shares in an amount not to
exceed, in the aggregate, such number of Common Shares as
is equal to the total number of Common Shares offered in
the Subsequent Offering times a fraction, the numerator of
which is the number of Common Shares then owned by the
Investor in the aggregate and the denominator of which is
the total number of Common Shares outstanding immediately
prior to such Subsequent Offering. Notwithstanding the
foregoing, with respect to each Subsequent Offering by
Seller in the amount of $10 million or more, the amount of
shares the Investor may purchase in the aggregate pursuant
to such Preemptive Rights shall be reduced by 5% of the
total Common Shares outstanding (on a fully-diluted basis)
after each such Subsequent Offering. The Investor's
Preemptive Rights will immediately terminate once Seller
achieves a Minimum Equity Capitalization. The Investor or
the Pecuniary Owner, as applicable, shall have the right to
assign the preemptive right to buy additional Common Shares
pursuant to this Section 6.8 to any of the Other
-37-
43
Pecuniary Owners or to any other client of the Investor who
can make the representation to Seller set forth in Section
4.8.
i. DEBT. Neither Seller, any Subsidiary or any Seller
Partnership shall, without the prior written consent of the
Investor (i) incur, create, assume, guarantee or in any way
become liable for, or permit to exist, any Debt prior to
such time as the Seller achieves a Minimum Equity
Capitalization, except to the extent the proceeds of such
Debt is to be used to acquire real property, and such
acquisition occurs within 90 days of the date such Debt is
incurred; or (ii) issue or have outstanding any Preferred
Shares, or any warrants, options, conversion rights or
other rights to subscribe for, purchase or acquire any
Preferred Shares, prior to such time as the Seller achieves
Minimum Equity Capitalization.
j. FURNISH DOCUMENTS. Seller shall furnish or cause
to be furnished to the Investor within five Business Days
after Seller is required to file the same with the
Commission , copies of the periodic information, documents
and other reports which Seller is required to file with the
Commission pursuant to Section 13(a) of the Exchange Act.
If Seller ceases to be required to file information,
documents and other reports pursuant to Section 13 of the
Exchange Act, it shall remain obligated to furnish the same
information, documents and reports otherwise required under
Section 13(a) of the Exchange Act to the Investor within
five Business Days after Seller would have been required to
file the same with the Commission; and
i. Seller shall furnish or cause to be furnished to
the Investor, within five Business Days after the
effective date thereof, copies of any amendment
or modification to its Charter Documents.
k. TAXES. Seller shall, and shall cause each
Subsidiary and Seller Partnership to, pay, when due, all
taxes, assessments and governmental charges or levies
imposed upon it and all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and any other
like person or entity which, if unpaid, might result in the
creation of a lien upon the income of Seller or its assets;
provided that items of the foregoing description need not
be paid while being contested in good faith and by
appropriate proceedings and adequate reserves with respect
thereto have been provided on the books of Seller, such
Subsidiary of such Seller Partnership, as the case may be.
-38-
44
l. ADDITIONAL INFORMATION Seller shall execute and
deliver or cause to be executed and delivered to the
Investor upon the Investor's reasonable request such other
and further instruments or documents as in the reasonable
judgment of the Investor and Seller are necessary to
conform, create, evidence, preserve or maintain the
Pecuniary Owner's rights in the Shares, and Seller shall do
all such additional acts, give such assurances and execute
such instruments as the Investor may reasonably require to
vest more completely in and assure to the Pecuniary Owner
its rights in the Shares.
m. MSRE AND MSAM CLOSING. If MSRE and MSAM, as agent
and attorney-in-fact on behalf of certain clients, do not
purchase additional Common Shares of Seller for an
aggregate purchase price of at least $4,500,000 within
seven days of the Closing Date, Seller shall rescind the
sale of Shares hereunder and promptly repay to the Investor
the full purchase price for the Shares purchased hereby.
SECTION 7. GENERAL CONDITIONS OF PURCHASE
The obligations of the parties to effect each Closing shall be subject
to the following conditions unless waived in writing by all parties:
a. NO ORDERS. No Law or Order shall have been
enacted, entered, issued, promulgated or enforced by any
Governmental Entity which prohibits or restricts the
transactions contemplated by this Agreement. No
Governmental Entity shall have notified any party to this
Agreement that consummation of the transactions
contemplated by this Agreement would constitute a violation
of any Law of any jurisdiction or that it intends to
commence proceedings to restrain or prohibit such
transactions or force divestiture or rescission, unless
such Governmental Entity shall have withdrawn such notice
and abandoned any such proceedings prior to the time which
otherwise would have been the applicable Closing Date.
b. APPROVALS. To the extent required by applicable
Law, all Permits and Approvals required to be obtained in
connection with each Closing from any Governmental Entity
or any consent from a third party material to Seller or its
business shall have been received or obtained on or prior
to the applicable Closing Date.
c. ABSENCE OF LITIGATION. No Action before any
Governmental Entity pertaining to the transactions
contemplated by this Agreement shall have been instituted
on or before the applicable Closing Date whether or not any
of the parties hereto or its Affiliates is a party.
-39-
45
d. NEW YORK STOCK EXCHANGE. The Shares shall have
been approved for listing, upon official notice of
issuance, on the New York Stock Exchange. Seller will use
its best efforts to maintain the listing of its Common
Shares on the New York Stock Exchange.
e. SHAREHOLDER APPROVAL. Seller shall have received
Shareholder Approval.
SECTION 8. CONDITIONS TO OBLIGATIONS OF THE INVESTOR
The obligations of the Investor, as agent for and on behalf of the
Pecuniary Owner, to effect the Closing shall be subject to the following
conditions except to the extent waived in writing by the Investor:
a. ACCURACY OF SELLER'S REPRESENTATIONS AND
WARRANTIES. All representations and warranties of Seller
set forth in this Agreement shall be true and correct in
all material respects on the applicable Closing Date as if
made on and as of such Closing Date.
b. PERFORMANCE BY SELLER. Seller shall have in all
material respects performed, satisfied and complied with
all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by
Seller on or before the applicable Closing Date, including
the covenants set forth in Section 5.
c. NO MATERIAL ADVERSE CHANGE. During the period
from December 31, 1996 to the applicable Closing Date, (i)
there shall not have been any material adverse change or
any development involving a material adverse change in the
condition (financial or otherwise) of Seller, any
Subsidiary or any Seller Partnership, taken as a whole, or
in the earnings, business, prospects or operations of
Seller, any Subsidiary or any Seller Partnership, taken as
a whole, and (ii) there shall not have occurred any
material adverse change in the financial markets in the
United States, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or
development involving a prospective change in national or
international political, financial or economic conditions,
in each case the effect of which is such as to, in the
judgment of the Investor, significantly impair the
marketability or value of the Shares, (iii) the trading in
any securities of Seller shall not have been suspended or
limited by the Commission or the New York Stock Exchange,
trading generally on the American Stock Exchange or the New
York Stock Exchange or in the
-40-
46
Nasdaq National Market shall not have been suspended or
limited, minimum or maximum prices for trading shall not
have been fixed, and maximum ranges for prices shall not
have been required, by any of said exchanges or by such
system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other
Governmental Entity, and (iv) a banking moratorium shall
not have been declared by Federal, Texas or New York
authorities.
d. CERTIFICATION BY SELLER. The Investor shall have
received a certificate, addressed to the Investor and dated
as of the applicable Closing Date, signed by the President
of Seller, certifying, in such detail as the Investor and
its counsel reasonably may request, that all of the
conditions specified in Section 8 have been fulfilled.
e. OPINION OF SELLER'S COUNSEL. The Investor shall
have received from counsel for Seller an opinion, addressed
to the Investor and dated as of the applicable Closing
Date, in form and substance reasonably satisfactory to the
Investor as to the matters set forth in Schedule 8.5.
f. SCHEDULES. Seller shall have delivered to the
Investor updated Schedules, if any, to this Agreement.
g. REALCO, MSRE AND MSAM CONSENT. Seller shall have
received all necessary consents or waivers from Realco,
MSRE and MSAM in connection with the matters contemplated
by this Agreement.
h. ADDITIONAL INFORMATION. Seller's Fourth Amended
and Restated Bylaws shall have been amended to provide for
a maximum of eight (8) Trust Managers.
i. CLOSING OF MSRE AND MSAM PURCHASE TRANSACTIONS.
Seller shall have closed on the sale of the Common Shares
to MSRE and MSAM, as agent and attorney-in-fact on behalf
of the MSAM Purchasers, pursuant o the MSAM Purchase
Agreement whereby Seller shall have received an aggregate
purchase price of at least $12,500,00 from such purchasers
from the issuance and sale of its Common Shares.
SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to effect each Closing shall be subject to
the following conditions, except to the extent waived in writing by Seller:
-41-
47
a. ACCURACY OF THE INVESTOR'S REPRESENTATIONS AND
WARRANTIES. All representations and warranties of the
Investor set forth in this Agreement shall be true and
correct in all material respects on the applicable Closing
Date as if made on and as of such Closing Date.
b. BUYERS' PERFORMANCE. The Investor shall have in
all material respects performed, satisfied and complied
with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with
by the Investor on or before the applicable Closing Date.
c. CERTIFICATION. Seller shall have received a
certificate, dated as of the applicable Closing Date,
signed by a Managing Director of the Investor, certifying,
in such detail as Seller and its counsel reasonably may
request, that the conditions specified in Section 9 have
been fulfilled.
d. OPINION OF COUNSEL. Seller shall have received
from counsel to the Investors an opinion, dated as of the
applicable Closing Date, in form and substance reasonably
satisfactory to Seller as to the matters set forth in
Schedule 9.4.
e. REIT STATUS. The purchase of Shares by the
Investor, as agent for and on behalf of the Pecuniary
Owner, will not cause Seller to lose its status as a REIT
under the Code.
SECTION 10. TERMINATION OF OBLIGATIONS; SURVIVAL
a. TERMINATION OF AGREEMENT. This Agreement and the
transactions contemplated by this Agreement may be
terminated at any time before the Closing Date, as follows
and in no other manner:
i. MUTUAL CONSENT. By mutual consent in writing of
the Investor and Seller.
ii. MISREPRESENTATION OR MATERIAL BREACH. By the
Investor or Seller with written notice to the other parties
if there has been a misrepresentation or material breach on
the part of Seller or the Investor, in their respective
representations, warranties and covenants set forth herein,
which, with respect to a breach of a covenant, if curable,
has not been cured within 10 business days after receipt of
notice from the Investor or Seller of the terminating
party's intention to terminate.
iii. ENVIRONMENTAL NONCOMPLIANCE. By the Investor in
the event of the discovery of any Release or other matter
prior to any Closing Date
-42-
48
which, if known to Seller as of the date of this Agreement,
would have constituted a breach of the representations and
warranties contained in Section 3.17.
iv. CLOSING. This Agreement shall terminate if the
Closing does not occur on or before July 11, 1997.
b. EFFECT OF TERMINATION. In the event that this
Agreement shall be terminated pursuant to Section 10.1 all
further obligations of the parties under this Agreement
shall terminate; provided that the obligations of the
parties contained in this Section 10.2, Section 11, and
Section 12 (other than Sections 12.3 and 12.8) shall
survive any such termination. A termination under Section
10.1 shall not relieve any party of any liability for a
breach of, or for any misrepresentation under, this
Agreement, or be deemed to constitute a waiver of any
available remedy (including specific performance if
available) for any such breach or misrepresentation.
c. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. (a) The representations and warranties contained
in or made pursuant to this Agreement shall expire on the
third anniversary of the Closing Date except that (a) the
representations and warranties contained in Section 3.2
shall continue forever (subject to all defenses of Seller
available under applicable Law, including the expiration of
the applicable statute of limitations period), (b) the
representations and warranties contained in Section 3.14
shall continue through the applicable statute of
limitations, (c) representations and warranties which are
intentionally misrepresented shall continue through the
later of the first anniversary of the Closing Date and one
year following the date of actual discovery of such
intentional misrepresentation, and (d) if a claim or notice
is given under Section 12 with respect to the breach of any
representation or warranty prior to the applicable
expiration date, such representation or warranty shall
continue indefinitely until such claim is finally resolved.
(b) All covenants and agreements of the parties hereto shall be
continuing and shall survive each Closing Date pursuant to the terms thereof.
(c) The provisions of Section 11.1 through Section 11.5 and
Section 12.12 shall survive and remain in full force and effect with respect to
the Investor notwithstanding any termination of the Investor's appointment as
agent on behalf of the Pecuniary Owner.
-43-
49
SECTION 11. INDEMNIFICATION
a. INDEMNIFICATION. In partial consideration of the
commitment of the Investors as agent for and on behalf of
the Pecuniary Owner hereunder, Seller agrees to indemnify
and hold harmless the Investor and the Pecuniary Owner and
any of their respective affiliates, directors, officers,
agents and employees and each other person, if any,
controlling the Investor or the Pecuniary Owner or any of
their respective affiliates (each an "Investor Indemnified
Person") from and against any Losses (or actions in respect
thereof) to which such Investor Indemnified Person may
become subject in connection with the matters which are the
subject of the commitment made hereunder (including any use
or proposed use of the proceeds from the sale of the Common
Shares) including without limitation any and all Losses of
the Investor Indemnified Person as a result of, or based
upon or arising out of, directly or indirectly any
inaccuracy in, breach or nonperformance of, any of the
representations, warranties, covenants or agreements made
by Seller in, or pursuant to this Agreement, and will
reimburse any Investor Indemnified Person for all
reasonable expenses (including the reasonable fees of
counsel) as they are incurred by any such Investor
Indemnified Person in connection with investigating,
preparing or defending any such action or claim pending or
threatened, whether or not such Investor Indemnified Person
is a party hereto. Seller shall not be responsible for any
losses, claims, damages, liabilities or expenses resulting
from such Investor Indemnified Person's gross negligence or
willful misconduct. Seller also agrees that no Investor
Indemnified Person shall have any liability (whether direct
or indirect, in contract or tort or otherwise) to Seller
for or in connection with this Agreement except for losses,
claims, damages, liabilities or expenses to the extent that
a court of competent jurisdiction or arbitration panel
shall have finally determined that such losses, claims,
damages, liabilities or expenses resulted from such
Investor Indemnified Persons's gross negligence or willful
misconduct. In the event that the foregoing indemnity is
unavailable or insufficient to hold Investor Indemnified
Person harmless, Seller shall contribute to amounts paid or
payable by such Investor Indemnified Person in respect of
such losses, claims, damages, liabilities and expenses in
such proportion as appropriately reflects the relative
benefits received by, and fault of Seller, on the one hand,
and the Investor and the Pecuniary Owner on the other hand,
in connection with the matters as to which such losses,
claims, damages, liabilities or expenses relate. The
agreement of Seller in this paragraph shall be in addition
to any other liability that Seller may otherwise have.
-44-
50
b. OBLIGATIONS OF THE INVESTOR AND THE PECUNIARY
OWNER. The Investor and the Pecuniary Owner, severally and
not jointly, agree to indemnify, defend and hold harmless
Seller and its Trust Managers, officers, employees, agents,
directors and Affiliates (collectively, the "SELLER
INDEMNIFIED PARTIES") from and against any and all Losses
of the Seller Indemnified Parties as a result of, or based
upon or arising out of, directly or indirectly, (a) any
material inaccuracy in, or material breach or material
nonperformance of, any of the representations, warranties,
covenants or agreements made by the Investor as agent for
and on behalf of the Pecuniary Owner in, or pursuant to,
this Agreement, or (b) any pending or threatened Action
brought by the Investor's or the Pecuniary Owner's
shareholders or creditors relating to, or arising out of or
in connection with, directly or indirectly, the
transactions contemplated under this Agreement; provided,
however, that the Investor or the Pecuniary Owner, as
applicable, shall not be obligated to indemnify, defend or
hold harmless any of the Seller Indemnified Parties for any
claims based solely on actions taken by any of the Seller
Indemnified Parties other than the performance of the
covenants and agreements to be undertaken by Seller
pursuant to the terms and conditions of this Agreement and
any other action authorized in writing by the Investor or
the Pecuniary Owner, as applicable. As a condition to the
rights of any of the Seller Indemnified Parties under this
Section 11, the Investor may require that any such Person
provide a written undertaking that such Person will repay
to the Investor or the Pecuniary Owner, as applicable, any
amount expended by the Investor or the Pecuniary Owner, as
applicable, to indemnify, defend or hold harmless such
Person in the event and to the extent a court determines
that such Investor's or Pecuniary Owner's indemnification
or defense of such Person is prohibited by applicable Law.
The agreement of the Investor and the Pecuniary Owner in
this paragraph shall be in addition to any other liability
that the Investor and the Pecuniary Owner may otherwise
have.
c. PROCEDURE.
i. NOTICE. Any party seeking indemnification with
respect to any Loss shall give notice to the party required
to provide indemnity hereunder (the "INDEMNIFYING PARTY")
on or before the date specified in Section 11.4.
ii. DEFENSE OF CLAIM. If any claim, demand or
liability is asserted by any third party against any
Indemnified Party, the Indemnifying Party shall have the
right, unless otherwise precluded by applicable law, to
conduct and control the defense, compromise or settlement
of any Action or threatened Action brought against the
Indemnified Party in respect of matters embraced by the
indemnity set forth in this Section 11. The
-45-
51
Indemnified Party shall have the right to employ counsel
separate from counsel employed by the Indemnifying Party in
connection with any such Action or threatened Action and to
participate in the defense thereof, but the fees and
expenses of such counsel employed by the Indemnified Party
shall be at the sole expense of the Indemnified Party
unless (i) the Indemnifying Party shall have elected not,
or, after reasonable written notice of any such Action or
threatened Action, shall have failed, to assume or
participate in the defense thereof, (ii) the employment
thereof has been specifically authorized by the
Indemnifying Party in writing, or (iii) the parties to any
such Action or threatened Action (including any impleaded
parties) include both the Indemnifying Party and the
Indemnified Party and the Indemnified Party shall have been
advised in writing by counsel for the Indemnified Party
that there may be one or more defenses available to the
Indemnified Party that are not available to the
Indemnifying Party or legal conflicts of interest pursuant
to applicable rules of professional conduct between the
Indemnifying Party and the Indemnified Party (in any which
case, the Indemnifying Party shall not have the right to
assume the defense of such Action on behalf of the
Indemnified Party), in either of which events referred to
in clauses (i), (ii) and (iii) the fees and expenses of
such counsel employed by the Indemnified Party shall be at
the expense of the Indemnifying Party. The Indemnifying
Party shall not, without the written consent of the
Indemnified Party, settle or compromise any such Action or
threatened Action or consent to the entry of any judgment
which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the Indemnified
Party a release from all liability in respect of such
Action or threatened Action. Unless the Indemnifying Party
shall have elected not, or shall have after reasonable
written notice of any such Action or threatened Action
failed, to assume or participate in the defense thereof,
the Indemnified Party may not settle or compromise any
Action or threatened Action without the written consent of
the Indemnifying Party. If, after reasonable written notice
of any such Action or threatened Action, the Indemnifying
Party neglects to defend the Indemnified Party, a recovery
against the latter suffered by it in good faith, is
conclusive in its favor against the Indemnifying Party;
provided, however, that no such conclusive presumption
shall be made if the Indemnifying Party has not received
reasonable written notice of the Action against the
Indemnified Party.
d. SURVIVAL. The indemnity set forth in this Section
11 shall survive each Closing or any termination of this
Agreement and shall remain in effect for a period of (a)
with respect to a breach of a representation or warranty,
for the period through which such representation or
warranty shall continue pursuant to Section 10.3 (including
such period of time through which such representation or
warranty shall be extended until resolution of a claim with
respect thereto) and (b) with respect to a breach of a
covenant or agreement or an Action referred to in Sections
11.1 or 11.2(b), forever.
-46-
52
e. NOTICE BY SELLER. Seller and the Investor agree
to notify in writing the other parties of any liabilities,
claims or misrepresentations, breaches or other matters
covered by this Section 11 upon discovery or receipt of
notice thereof (other than from such other parties),
whether before or after any Closing Date.
SECTION 12. GENERAL
a. AMENDMENTS; WAIVERS. This Agreement and any
Schedule or Exhibit attached hereto or referenced herein
may be amended only by agreement in writing of all parties.
No waiver of any provision nor consent to any exception to
the terms of this Agreement shall be effective unless in
writing and signed by the party to be bound and then only
to the specific purpose, extent and instance so provided.
b. SCHEDULES; EXHIBITS; INTEGRATION. Each Exhibit
and Schedule delivered pursuant to the terms of this
Agreement shall be in writing and shall constitute a part
of the Agreement. This Agreement, together with such
Exhibits and Schedules, constitutes the entire agreement
among the parties pertaining to the subject matter hereof
and supersedes all prior agreements and understandings of
the parties in connection therewith.
c. BEST EFFORTS; FURTHER ASSURANCES. Each party will
use its best efforts to cause all conditions to its
obligations to be timely satisfied and to perform and
fulfill all obligations on its part to be performed and
fulfilled under this Agreement. The parties shall cooperate
with each other in such actions and in securing requisite
Approvals. Each party shall execute and deliver such
further certificates, agreements and other documents and
take such other actions as the other party may reasonably
request to consummate or implement the transactions
contemplated hereby or to evidence such events or matters,
including the seeking of any necessary shareholder
approvals.
d. GOVERNING LAW. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF MARYLAND, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION
(WHETHER OF THE STATE OF MARYLAND OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
-47-
53
e. NO ASSIGNMENT. Except as otherwise specifically
provided herein, neither this Agreement nor any rights or
obligations under it are assignable by any party, except
that the Investor may assign the commitment of any
Pecuniary Owner to purchase Shares hereunder, and the
related rights and remedies of such Pecuniary Owner, to any
other client on behalf of whom it or any of its Affiliates
acts as investment advisor, whether or not such client is
initially the Pecuniary Owner hereunder and (ii) the
Pecuniary Owner may at any time subsequent to the date
hereof appoint a successor agent to act on its behalf in
connection with the matters contemplated herein.
f. HEADINGS. The descriptive headings of the Sections
and subsections of this Agreement are for convenience only
and do not constitute a part of this Agreement.
g. COUNTERPARTS. This Agreement and any other
agreement or document delivered pursuant hereto may be
executed in one or more counterparts and by different
parties in separate counterparts. All of such counterparts
shall constitute one and the same agreement or other
document and shall become effective when one or more
counterparts of this Agreement have been signed by each
party and delivered to the other parties.
h. PUBLICITY AND REPORTS. Seller and the Investor
shall coordinate all publicity relating to the transactions
contemplated by this Agreement and no party shall issue any
press release, publicity statement or other public notice
relating to this Agreement, or the transactions
contemplated by this Agreement, without obtaining the prior
consent of the other parties, except to the extent that
independent legal counsel to Seller or the Investor, as the
case may be, shall advise the other parties in writing that
a particular action is required by applicable Law (in which
event the party taking such action shall cooperate with the
other party in connection with any disclosure or publicity
resulting from such action).
i. CONFIDENTIALITY. All information disclosed by any
party (or its representatives) to the other party whether
before or after the date hereof, in connection with the
transactions contemplated by, or the discussions and
negotiations preceding, this Agreement to any other party
(or its representatives) shall be kept confidential by such
other party and its representatives and shall not be used
by any such Persons other than as contemplated by this
Agreement, except (a) to the extent that such information
(i) was known by the recipient when received, (ii) is or
hereafter becomes lawfully obtainable from other public
sources or (iii) is necessary or appropriate to be
disclosed to a Governmental Entity having jurisdiction over
the parties, (b) as may otherwise be required by Law to be
-48-
54
disclosed or (c) to the extent such duty as to
confidentiality is waived in writing by the other parties.
Notwithstanding the foregoing, the Investor shall be
entitled to disclose information relating to this Agreement
and the transactions contemplated hereby to any client on
behalf of whom it or any of its Affiliates acts as
investment advisor, in connection with a contemplated
investment by such client in Seller as described herein. If
this Agreement is terminated in accordance with its terms,
each party shall use all reasonable efforts to return upon
written request from the other parties all documents (and
reproductions thereof) received by it or its
representatives from such other parties (and, in the case
of reproductions, all such reproductions made by the
receiving party) that include information not within the
exceptions contained in the first sentence of this Section
12.9, unless the recipients provide assurances reasonably
satisfactory to the requesting party that such documents
have been destroyed.
j. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure to the benefit of each party, and
nothing in this Agreement, express or implied, is intended
to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
Nothing in this Agreement is intended to relieve or
discharge the obligation of any third Person to or to
confer any right of subrogation or action over or against
any party to this Agreement.
k. NOTICES. Any notice or other communication
hereunder must be given in writing and (a) either delivered
in person, (b) transmitted by telex, telefax or telecopy
mechanism, (c) mailed by first class mail, return receipt
requested, or (d) delivered by overnight mail or courier
service, as follows:
If to the Investor, addressed to:
LaSalle Advisors Limited Partnership
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxxxx Xxxxx, Esquire
Piper & Marbury L.L.P.
00 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
-49-
55
If to Seller, addressed to:
American Industrial Properties REIT
0000 Xxxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
Telecopy: (000)000-0000
or to such other address or to such other person as any party shall have last
designated by such notice to the other parties. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in this Section 12.11 and an
appropriate answer back is received, (ii) if given by mail, three days after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when actually
delivered at such address.
l. EXPENSES. Except as set forth in the next
sentence, each of the parties hereto shall pay its own
respective expenses incident to the negotiation,
preparation and performance of this Agreement and the
transactions contemplated hereby, including but not limited
to the fees, expenses and disbursements of its respective
financial advisers, accountants and counsel. Seller shall
reimburse the Investors for all legal fees incurred by the
Investor relating to the transactions contemplated by this
Agreement and the Registration Rights Agreement up to a
maximum of $25,000.
m. REMEDIES; WAIVER. All rights and remedies
existing under this Agreement and any related agreements or
documents are cumulative to and not exclusive of any rights
or remedies otherwise available under applicable Law. No
failure on the part of any party to exercise or delay in
exercising any right hereunder shall be deemed a waiver
thereof, nor shall any single or partial exercise preclude
any further or other exercise of such or any other right.
Each of the parties hereto shall be entitled to seek any
equitable remedy to the extent such remedy is available
under applicable Law.
n. REPRESENTATION BY COUNSEL; INTERPRETATION. Each
of the parties hereto acknowledges that each party to this
Agreement has been represented by counsel in connection
with this Agreement and the transactions contemplated by
this Agreement. Accordingly, any rule of Law or any legal
decision that would require interpretation of any claimed
ambiguities in this Agreement against the party that
drafted it has no application and is expressly waived. The
provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intent of the parties
hereto, and no rule of strict construction shall be applied
against any party to this Agreement.
-50-
56
o. SEVERABILITY. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under any
current or future law, and if the rights or obligations of
the parties under this Agreement would not be materially
and adversely affected thereby, such provision shall be
fully separable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable
provision had never comprised a part thereof, and the
remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance
therefrom. In lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically
as a part of this Agreement, a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible, and the parties
hereto request the court or any arbitrator to whom disputes
relating to this Agreement are submitted to reform the
otherwise illegal, invalid or unenforceable provision in
accordance with this Section 12.15.
p. ARBITRATION. In the event of a dispute hereunder
which cannot be resolved by the parties, such dispute shall
be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association
and judgment on the award rendered by the arbitration panel
may be entered in any court or tribunal of competent
jurisdiction. Any arbitration occurring under this Section
12.16 shall be held in Baltimore, Maryland in the first
instance, in Dallas, Texas in the second instance, and
continuing in that order with respect to each dispute
occurring hereunder.
q. AGENTS. (a) Seller acknowledges and agrees that
the Investor is acting as agent for and on behalf of the
Pecuniary Owner and that the Investor shall not have any
liability to Seller, and shall not be obligated to purchase
securities hereunder with respect to which the Pecuniary
Owner was obligated to but did not purchase.
(b) In the event that the Investor shall no longer act as agent for
and on behalf of the Pecuniary Owner in connection with the matters
contemplated by this Agreement, then (i) any agent(s) appointed by the
Pecuniary Owner as successor agent(s) to the Investor shall be entitled to, and
to exercise on behalf of the Pecuniary Owner, all of the rights and remedies
provided for herein with respect to the Investor and (ii) at any such time as
no successor agent(s) shall have been appointed by the Pecuniary Owner, the
Pecuniary Owner shall be entitled to exercise all of the rights and remedies
provided for herein in its individual capacity, including the right to obtain,
upon request, copies of all documents and notices as specified herein. In the
event that the Investor shall no longer act as agent on behalf of the Pecuniary
Owner hereunder, all consents or waivers of the Investor necessary to effect
any action hereunder shall be required to be given by any successor agent(s)
appointed by the Pecuniary Owner or, if no successor(s) has been appointed, by
the Pecuniary Owner, prior to the consummation of such action.
-51-
57
(c) Until such time as Seller shall have received a written notice
from the Pecuniary Owner that the Investor is no longer acting as the Pecuniary
Owner's agent hereunder, Seller shall be entitled to rely on any instructions
and any notices received from the Investor on behalf of the Pecuniary Owner as
if received from the Pecuniary Owner directly.
"INVESTOR"
LASALLE ADVISORS LIMITED PARTNERSHIP,
as Agent and for and on behalf of
the Pecuniary Owner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
"SELLER"
AMERICAN INDUSTRIAL PROPERTIES REIT
--------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
-52-
