<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
AMERICAN INDUSTRIAL PROPERTIES REIT
(Name of Issuer)
Shares of Beneficial Ownership, par value $0.10 per share
(Title of Class of Securities)
02679103000
(CUSIP Number)
Mr. T. Patrick Duncan
USAA Real Estate Company
8000 Robert F. McDermott Freeway
IH-10 West, Suite 600
San Antonio, Texas 78230-3884
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 19, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13G, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box: ___
Check the following box if a fee is being paid with the statement: X
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Page 2 of 22 Pages
SCHEDULE 13D
CUSIP No. 026791103000
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
USAA Real Estate Company ("Realco")
74-2237999
2. Check the Appropriate Box if a Member of a Group
(a) __
(b) X
3. SEC Use Only
4. Source of Funds
WC
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e):
6. Citizenship or Place of Organization
Delaware
7. Sole Voting Power
Number of Shares
Beneficially 3,182,206 Shares of Beneficial Trust
Owned by
Each 8. Shared Voting Power
Person
With 0
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Page 3 of 22 Pages
9. Sole Dispositive Power
3,182,206 Shares of Beneficial Interest
10. Shared Dispositive Power
-0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,182,206 Shares of Beneficial Interest owned directly by Realco
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
--
13. Percent of Class Represented by Amount in Row (11)
31.8%*
14. Type of Reporting Person
CO
- --------
*Assumes 9,075,400 Shares of Beneficial Interest of American Industrial
Properties REIT ("AIP") outstanding as of September 30, 1996, as represented by
AIP in its quarterly report on Form 10-Q, and includes the 924,600 additional
shares issued and sold by AIP to Realco on December 19, 1996.
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Page 4 of 22 Pages
SCHEDULE 13D
CUSIP No. 026791103000
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
USAA Capital Corporation ("USAA-CC")
2. Check the Appropriate Box if a Member of a Group
(a) __
(b) X
3. SEC Use Only
4. Source of Funds
Not applicable
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e):
6. Citizenship or Place of Organization
Delaware
7. Sole Voting Power
Number of Shares
Beneficially 3,182,206 Shares of Beneficial Interest
Owned by
Each 8. Shared Voting Power
Person
With -0-
9. Sole Dispositive Power
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Page 5 of 22 Pages
3,182,206 Shares of Beneficial Interest
10. Shared Dispositive Power
-0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,182,206 Shares of Beneficial Interest of AIP owned directly by Realco.
USAA-CC currently owns directly all of the outstanding shares of capital
stock of Realco.
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
--
13. Percent of Class Represented by Amount in Row (11)
31.8%**
14. Type of Reporting Person
CO
- --------
** Assumes 9,075,400 Shares of Beneficial Interest of AIP outstanding as
of September 30, 1996, as represented by AIP in its quarterly report on Form
10-Q, and includes the 924,600 additional shares issued and sold by AIP to
Realco on December 19, 1996.
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Page 6 of 22 Pages
SCHEDULE 13D
CUSIP No. 026791103000
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
United Services Automobile Association ("USAA")
2. Check the Appropriate Box if a Member of a Group
(a) __
(b) X
3. SEC Use Only
4. Source of Funds
Not applicable
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e):
6. Citizenship or Place of Organization
Texas
7. Sole Voting Power
Number of Shares
Beneficially 3,182,206 Shares of Beneficial Interest
Owned by
Each 8. Shared Voting Power
Person
With -0-
9. Sole Dispositive Power
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Page 7 of 22 Pages
3,182,206 Shares of Beneficial Interest
10. Shared Dispositive Power
-0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,182,206 Shares of Beneficial Interest of AIP owned directly by Realco.
USAA currently owns, indirectly, all of the outstanding shares of
capital stock of Realco.
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
--
13. Percent of Class Represented by Amount in Row (11)
31.8%***
14. Type of Reporting Person
00 - a reciprocal interinsurance exchange under the Texas Insurance Code
- --------
*** Assumes 9,075,400 Shares of Beneficial Interest of AIP outstanding
as of September 30, 1996, as represented by AIP in its quarterly report on Form
10-Q, includes the 924,600 additional shares issued and sold by AIP to Realco on
December 19, 1996.
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Page 8 of 22 Pages
ITEM 1. SECURITY AND ISSUER
This Statement on Schedule 13D relates to the beneficial
ownership of Shares of Beneficial Interest, par value $0.10 per share
("Shares"), of American Industrial Properties REIT, a Texas real estate
investment trust (the "Company" or "AIP"). The address of the Company's
principal executive offices is 6220 North Beltline Road, Suite 205, Irving,
Texas 75063-2656.
ITEM 2. IDENTITY AND BACKGROUND
(a) This Statement on Schedule 13D is being filed jointly by USAA
Real Estate Company, a Delaware corporation ("Realco"), USAA Capital
Corporation, a Delaware corporation ("USAA-CC"), and United Services Automobile
Association, a reciprocal interinsurance exchange under the Texas Insurance Code
("USAA").
(b) Realco is a diversified investor in real estate operating
companies and real estate, including commercial and industrial properties
operating or located in Texas and in other parts of the United States. The
address of the principal business and the principal office of Realco is 8000
Robert F. McDermott Freeway, IH-10 West, Suite 600, San Antonio, Texas
78230-3884.
(c) Information concerning (i) each executive officer and
director of Realco (ii) each controlling person of Realco (which consist solely
of USAA-CC and USAA) and (iii) each executive officer and director of USAA-CC
and USAA, which information is required to be disclosed in response to Item 2
and General Instruction C to Schedule 13D, is attached hereto as Appendix A.
USAA currently owns all of the outstanding shares of capital stock of USAA-CC.
USAA-CC currently owns directly all of the outstanding shares of capital stock
of Realco. There are no other persons ultimately in control of Realco, USAA-CC
or USAA.
(d) The business addresses of each of USAA and USAA-CC is USAA
Building, 9800 Fredericksburg, San Antonio, Texas 78288.
(e) During the last five years, neither Realco, USAA-CC, nor USAA
have, and to the best knowledge of Realco, USAA-CC and USAA, none of the
execution officers or directors of such entities listed on Appendix A hereto
have been, convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors).
(f) During the last five years, neither Realco, USAA-CC, nor USAA
have been, and to the best knowledge of such entities, none of the executive
officers or directors of such entities listed on Appendix A hereto have been, a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding is or was subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
As consideration for 3,182,206 Shares, Realco paid an aggregate
of $6,006,291.50 in cash and extinguished the principal amount of $2,744,755 on
a Promissory Note payable by American Industrial Properties REIT, Inc. ("AIP
Sub") to Realco. Realco used working capital funds in making these purchases.
Each of the transactions described in Item 4 below are incorporated herein by
reference.
ITEM 4. PURPOSE OF TRANSACTIONS
In connection with a Settlement Agreement dated as of November 25,
1996, filed with the United States District Court, N.D. Texas among AIP,
Pure World, Inc. ("Pure World") and certain other persons (the "Settlement
Agreement"), Realco entered into a Stock Purchase Agreement (the "Pure World
Agreement"), dated as of November 25, 1996, with Pure World, pursuant to which
Realco agreed to purchase from Pure World 907,000 Shares of Beneficial Interest
of AIP for an aggregate purchase price of $2,494,250. The closing of the Pure
World Agreement was conditioned on the final approval of the Settlement
Agreement. The 907,000 Shares were acquired by Realco on December 20, 1996. A
copy of the Pure World Agreement is included herein as Exhibit 10.1.
Realco also entered into a Stock Purchase Agreement (the "Tratt
Agreement"), dated as of November 25, 1996, with Jonathan Tratt, Stanley D.L.
Horwitz, David Bradley, Keith Sexton and C.J. Scott (the "Tratt Group"),
pursuant to which Realco agreed to purchase from the Tratt Group 352,506 Shares
for an aggregate purchase price of $969,391.50. The closing of the Tratt
Agreement was also conditioned on the final approval of the Settlement
Agreement. The 352,506 Shares were acquired from the Tratt Group on December 20,
1996. A copy of the Tratt Agreement is included herein as Exhibit 10.2.
As of December 13, 1996, Realco entered into a Share Purchase
Agreement with AIP (the "AIP Agreement"), pursuant to which Realco agreed to
purchase from AIP 924,000 Shares for an aggregate purchase price of $2,542,650.
The closing of the AIP Agreement was conditioned on the final approval of the
Settlement Agreement. The 924,000 Shares were issued by AIP and acquired by
Realco on December 19, 1996. A copy of the AIP Agreement is included herein as
Exhibit 10.3.
As of December 19, 1996, Realco entered into a Share Purchase
Agreement with AIP Sub, pursuant to which Realco agreed to purchase 998,100
Shares in exchange for the extinguishment of the principal amount of $2,744,755
on a Promissory Note payable by AIP Sub to Realco.
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Page 10 of 22 Pages
On the date of the filing of this Schedule 13D, Realco owned an
aggregate of 3,182,206 Shares.
In addition to the agreements described above, Realco entered
into a letter agreement with AIP (the "Debt Repurchase Agreement"), pursuant to
which AIP agreed to assist Realco in acquiring certain promissory notes of AIP
(the "Notes") payable to The Manufacturers Life Insurance Company ("MLI"). If
the Notes are acquired by Realco, Realco and AIP will amend the Notes (i) to
reduce the aggregate principal balance of the Notes as set forth therein, (ii)
to extend the maturity of the Notes to December 31, 2000, and (iii) to provide
for the convertibility of the Notes, subject to shareholder approval, at Realco
into Shares of AIP at a conversion price of $2.00 per Share if the conversion of
the Notes occurs prior to December 31, 1997 and $2.25 if the conversion of such
Notes occurs after such period but prior to December 31, 2000. Upon the
conversion of the Notes into Shares, AIP will be required to enter into a
registration rights agreement covering the resale of such Shares. In the event
Realco does not purchase the Notes from MLI, Realco at its option may advance to
AIP the funds necessary to repay the Notes, in which case AIP will be required
to repay Realco such funds on such terms consistent with the modifications to
the Notes set forth therein. A copy of the Debt Repurchase Agreement is included
herein as Exhibit 10.5.
The above-mentioned agreements have been or will be made for
investment purposes. Other than the transactions described herein and
contemplated by the agreements set forth as exhibits hereto, Realco, USAA-CC and
USAA currently have no other plans or proposals which relate to or would result
in the actions set forth in clauses (a) though (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The Company reported in its quarterly report on Form 10-Q
that it had issued and outstanding on September 30, 1996 an aggregate of
9,075,400 Shares. In connection with the AIP Agreement, AIP issued an additional
924,000 Shares. The number of Shares which are currently deemed to be
beneficially owned directly by Realco and indirectly by USAA-CC and USAA is
3,182,206 shares, or approximately 31.8% of the outstanding class of such
securities. Beneficial ownership of such Shares was acquired as described in
Item 4.
(b) The number of Shares as to which there is sole power to
direct the vote, shared power to vote or to direct the vote, sole power to
dispose or direct the disposition or shared power to dispose or direct the
disposition for Realco, USAA-CC and USAA is set forth in the cover pages, and
such information is incorporated herein by reference. To the knowledge of
Realco, USAA-CC and USAA, none of the other persons listed on Appendix A in
response to Item 2 beneficially own any Shares. Certain of those persons may
purchase Shares in the future for their own account and not pursuant to any
agreement, arrangement or understanding with Realco, USAA-CC or USAA with
respect to the voting or disposition of any such Shares. Realco, USAA-CC and
USAA disavow the existence of a group with any of such persons.
(c) There have been no reportable transactions with respect to
the Shares of AIP within the last 60 days by Realco, USAA-CC, USAA or any other
person listed on Appendix A in
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Page 11 of 22 Pages
response to Item 2 except for the acquisition by Realco, USAA-CC and USAA of
beneficial ownership of the Shares being reported on this Schedule 13D.
(d) To the knowledge of Realco, USAA-CC and USAA, no other person
is known to have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the Shares being reported on
this Schedule 13D.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
The responses to Items 2, 3 and 4, and the Pure World Agreement,
the Tratt Agreement, the AIP Agreement, the AIP Sub Agreement and the Debt
Repurchase Agreement filed as Exhibits hereto are incorporated herein by
reference.
ACQUISITIONS AND DISPOSITIONS OF SHARES OF AIP
Pursuant to the Pure World Agreement and the Tratt Agreement,
during the period beginning from the date of such Agreements and continuing to
and including the date that is the earlier of (a) 5 years after the date
thereof, (b) such time as Realco no longer owns at least 2% of the capital stock
of AIP, Pure World and the Tratt Group have agreed not to (i) acquire, offer to
acquire, or agree to acquire, directly or indirectly, by purchase or otherwise,
any securities or direct or indirect rights or options to acquire (through
purchase, exchange, conversion or otherwise) any securities or properties of
AIP, (ii) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) to vote (including by the execution of
actions by written consent) or seek to advise, encourage or influence any person
or entity with respect to the voting of any securities of AIP, (iii) form, join
or in any way participate in any "group" (within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934) with respect to any securities of AIP,
(iv) otherwise act, alone or in concert with others, to seek to control or
influence the management, board of trust managers or policies of AIP, (v)
initiate, propose or otherwise solicit stockholders for the approval of one or
more stockholder proposals (as described in the Securities Exchange Act of 1934)
seeking to acquire or affect control of AIP, or (vi) acquire any interest in any
claims, mortgages, notes or any other legal or financial obligations of AIP.
In connection with the AIP Agreement and the AIP Sub Agreement,
Realco and AIP also entered into Registration Rights Agreements, pursuant to
which Realco has certain rights to require AIP to register the Shares owned by
Realco for resale under the Securities Act of 1933, as amended. Under the
Registration Rights Agreements, Realco (and certain permitted transfers of
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Page 12 of 22 Pages
Realco) generally have the right to require AIP (i) to file a "shelf"
registration statement with respect to Shares held by such party that elects to
participate in such registration, which must be kept effective for a period of
three years following its initial effective date, (ii) at any time until
December 19, 2001, to file a registration statement registering the resale of
all or a portion of the Shares then held by Realco, up to a maximum of three
registration statements, and (iii) at any time until December 19, 2001, to
include (subject to certain exceptions) in any registration statement filed by
AIP (other than on Form S-4 or S-8) Shares then held by Realco. Copies of the
Registration Rights Agreements are included herein as Exhibits 10.6 and 10.7,
respectively.
CHANGES IN THE PRESENT BOARD OF TRUST MANAGERS OF AIP
Pursuant to the AIP Agreement, Realco has required AIP to
increase the number of Trust Managers from three to five, and Realco is entitled
to appoint two individuals designated by Realco to fill the vacancies caused by
the increase in the number of Trust Managers. Effective December 19, 1996, AIP
appointed two individuals, T. Patrick Duncan and Edward B. Kelley. at the
request of Realco to fill such vacancies. In addition, pursuant to the AIP
Agreement at the first annual meeting after the number of Trust Managers has
been increased to five, Realco will be entitled to nominate two individuals for
election as Trust Managers of Seller. Furthermore, pursuant to the AIP Agreement
at any time during a specified period commencing on the Closing Date, Realco
may, by notice in writing to AIP, require AIP to increase the number of Trust
Managers from five to seven and to appoint two individuals designated by Realco
to fill the vacancies caused by the increase in the number of Trust Managers.
Pursuant to the AIP Agreement, during the time AIP has
individuals designated or nominated as Trust Managers of AIP, the number of
Trust Managers of AIP may not consist of more than 5 persons, including the
persons designated or nominated by Realco; provided, whenever Realco has
required AIP to increase the number of Trust Managers from five to seven, the
number of Trust Managers of AIP may not consist of more than 7 persons,
including the persons designated or nominated by Realco. In the event of the
death, resignation or removal from office of an individual designated or
nominated by Realco, Realco will be entitled to appoint an individuals
designated by Realco as a replacement Trust Manager.
Pursuant to the AIP Agreement as long as one or more persons
designated or nominated by Realco serves as Trust Manager, AIP will be required
to appoint at least one of such persons on each committee of AIP's Trust
Managers, and each such committee may contain no more than three members.
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Page 13 of 22 Pages
ITEM 7. MATERIAL FILED AS EXHIBITS
The following are filed herewith as Exhibits to this Schedule
13D:
10.1 Stock Purchase Agreement, dated as of November 25, 1996,
by and among Pure World, Inc. and USAA Real Estate
Company.
10.2 Stock Purchase Agreement, dated as of November 25, 1996,
by and among Jonathan Tratt, Jonathan Tratt Purchase Money
Plan, Stanley D.L. Horwitz, David Bradley, Keith Sexton
and C. J. Scott.
10.3 Share Purchase Agreement, dated as of December 13, 1996,
by and among USAA Real Estate Company and American
Industrial Properties REIT.
10.4 Share Purchase Agreement, dated as of December 19, 1996,
by and among USAA Real Estate Company, American Industrial
Properties REIT, Inc. and American Industrial Properties
REIT.
10.5 Letter Agreement dated December 18, 1996 between American
Industrial Properties REIT and USAA Real Estate Company.
10.6 Registration Rights Agreement, dated as of December 19,
1996, by and among USAA Real Estate Company and American
Industrial Properties REIT.
10.7 Registration Rights Agreement, dated as of December 20,
1996, by and among USAA Real Estate Company, American
Industrial Properties REIT and American Industrial
Properties REIT, Inc.
10.8 Agreement for Joint Filing on Behalf of Each Reporting
Person.
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Page 14 of 22 Pages
SIGNATURE
After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: December 20, 1996
USAA REAL ESTATE COMPANY
By: /s/ T. PATRICK DUNCAN
---------------------------------------
Name: T. Patrick Duncan
Title: Senior Vice President - Operations
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Page 15 of 22 Pages
SIGNATURE
After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: December 20, 1996
USAA CAPITAL CORPORATION
Signature: /s/ MICHAEL D. WAGNER
----------------------------
Name: Michael D. Wagner
Title: Vice President
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Page 16 of 22 Pages
SIGNATURE
After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: December 20, 1996
UNITED SERVICES AUTOMOBILE
ASSOCIATION
Signature: /s/ MICHAEL D. WAGNER
-------------------------
Name: Michael D. Wagner
Title: Vice President
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Page 17 of 22 Pages
APPENDIX A
CERTAIN INFORMATION REGARDING DIRECTORS, EXECUTIVE OFFICERS
AND CONTROLLING PERSONS OF
USAA REAL ESTATE COMPANY
Certain of the Directors and Executive Officers set forth below serve
as Directors and Executive Officers in one or more of the following direct or
indirect subsidiary companies of United Services Automobile Association ("USAA")
as indicated below: (1) USAA; (2) USAA Casualty Insurance Company; (3) USAA
General Indemnity Company; (4) USAA Property & Casualty Agency, Inc.; (5) USAA
Insurance Agency, Inc.; (6) USAA Limited; (7) USAA Life Insurance Company; (8)
USAA Life General Agency, Inc.; (9) USAA Alliance Services, Inc.; (10) USAA
Capital Corporation; (11) USAA Funding Company; (12) USAA Property Holdings,
Inc.; (13) HTO, Inc.; (14) USAA Buying Services, Inc.; (15) Hausman Road Water
Supply Corporation; (16) USAA Capital Development, Inc.; (17) Institutional
Realty Investors, Inc.; (18) La Cantera Development Company; (19) Fiesta Texas
Showpark, Inc.; (20) La Cantera Hospitality, Inc.; (21) USAA Federal Savings
Bank; (22) USAA Credit Corporation; (23) USAA Credit Card Center, Inc.; (24)
USAA Relocation Services, Inc.; (25) USAA Investment Corporation; (26) USAA
Investment Management Company; (27) USAA Transfer Agency Company; (28) USAA
Traco Service GmbH; (29) USAA Investment Trust; (30) USAA Mutual Fund, Inc.;
(31) USAA Tax Exempt Fund, Inc.; (32) USAA State Tax-Free Trust; (33) USAA
Educational Foundation (The); (34) USAA Political Action Committee; (35) USAA
Employee Benefit Association; (36) USAA Real Estate Company; (37) USAA Real
Estate Equities, Inc.; (38) Alhambra Gables One, Inc.; (39) L. A. Wilshire One,
Inc.; (40) La Paz, Inc. (41) Las Colinas Management Company; (42) Quorum Real
Estate Services Corporation; (43) USAA Equity Advisors, Inc.; (44) USAA Health
Services, Inc.; (45) USAA Investors I, Inc.; (46) USAA Investors II, Inc.; (47)
USAA Properties Fund, Inc.; (48) USAA Properties II, Inc.; (49) USAA Properties
III, Inc.; (50) USAA Properties IV, Inc.; (51) USAA Real Estate - Midwest, Inc.
(52) USAA Real Estate Development Company; (53) USAA Real Estate Management
Company, (54) USAA County Mutual Insurance Company; (55) USAA Financial
Administration Company, (56) USAA Financial Planning Network, Inc., (57) Capital
Financial Resources Company, (58) USAA Financial Services Corporation, (59) USAA
Credit Card Bank (collectively, the Subsidiaries). Subsidiaries (1-35, 37,
54-59) have a business address of USAA Building, San Antonio, Texas 78288.
Subsidiaries (36, 38-53) have a business address of 8000 Robert F. McDermott
Freeway IH-10 West, Suite 600, San Antonio, Texas 78230-3884.
1. USAA REAL ESTATE COMPANY
<TABLE>
<CAPTION>
Name and Position Business Address Principal Occupation
----------------- ---------------- --------------------
<S> <C> <C>
STEPHANIE A. COLEMAN, Director 9311 San Pedro, Suite 140 Managing Partner of Temporary
San Antonio, Texas 78216 Associates
</TABLE>
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Page 18 of 22 Pages
<TABLE>
<CAPTION>
Name and Position Business Address Principal Occupation
----------------- ---------------- --------------------
<S> <C> <C>
LUIS DE LA GARZA, Director P.O. Box 500 Vice President-Corporate Relations
San Antonio, Texas 78292 Valero Energy Corporation
BRIG. GEN. KENNETH R. FLEENOR, 14715 Hermes Owner, KA Properties, Inc.
Director Selma, Texas 78154 Retired from Military
COL. ALBERT J. KIRSLING, Director 665 Weatherly Retired from Military
San Antonio, Texas 78216
BRIG. GEN. GEORGE K. SYKES, 7330 Ashton Place Retired from Military
Director San Antonio, Texas 78229
EDWARD B. KELLEY, President, 8000 Robert F. McDermott Frwy. Serves as President and CEO of USAA
CEO and Director IH-10 West, Suite 600 Real Estate Company and Subsidiaries
San Antonio, Texas 78230-3884 (18-20 and 37-53); and as Director of
USAA Real Estate Company and
Subsidiaries (13, 15, 18-20 and 37-53);
and as Chairman of the Board of
Directors of Subsidiaries (37-53); and as
Vice Chairman of Subsidiaries (13 and
15).
T. PATRICK DUNCAN, Senior Vice 8000 Robert F. McDermott Frwy. Serves as Senior Vice President of USAA
President and Director IH-10 West, Suite 600 Real Estate Company and Subsidiaries
San Antonio, Texas 78230-3884 (37-53) and as Director of USAA Real
Estate Company and Subsidiaries (37-53)
RANDAL R. SEEWALD, Vice President, 8000 Robert F. McDermott Frwy. Serves as Vice President of USAA Real
Assistant Vice President and Director IH-10 West, Suite 600 Estate Company and Subsidiaries (37-53)
San Antonio, Texas 78230-3884 and Assistant Vice President of
Subsidiaries (18-20) and Director of
Subsidiaries (38-53)
MARTHA J. BARROW, President, and 8000 Robert F. McDermott Frwy. Serves as President of Subsidiary (43)
Vice President IH-10 West, Suite 600 and as Vice President Vice of USAA Real
San Antonio, Texas 78230-3884 Estate Company and Subsidiaries (37-42
and 44-53)
S. WAYNE PEACOCK, Vice President 8000 Robert F. McDermott Frwy. Serves as Vice President of USAA Real
and Director IH-10 West, Suite 600 Estate Company and Subsidiaries (37-39,
San Antonio, Texas 78230-3884 42, 43 and 45-53) and Director of
Subsidiary (42)
RANDELL E. CARR, JR., Asst. Vice 8000 Robert F. McDermott Frwy. Serves as Assistant Vice President of
President IH-10 West, Suite 600 USAA Real Estate Company and
San Antonio, Texas 78230-3884 Subsidiaries (42 and 53)
</TABLE>
<PAGE> 19
Page 19 of 22 Pages
<TABLE>
<CAPTION>
Name and Position Business Address Principal Occupation
----------------- ---------------- --------------------
<S> <C> <C>
STEPHEN S. KING, Asst. Vice 8000 Robert F. McDermott Frwy. Serves as Assistant Vice President of
President IH-10 West, Suite 600 USAA Real Estate Company and
San Antonio, Texas 78230-3884 Subsidiaries (37, 39, 40, 45, 49 and 50)
MAJOR GEN. CHRIS O. DIVICH, 9311 San Pedro, Suite 600 Serves as Senior Vice President of
Director San Antonio, Texas 782167 Southwest Business Corporation
DAVID A. ROSALES, Asst. Vice 8000 Robert F. McDermott Frwy. Serves as Assistant Vice President of
President and Director IH-10 West, Suite 600 USAA Real Estate Company and
San Antonio, Texas 78230-3884 Subsidiaries (37-43 and 45-53)
SUSAN T. WALLACE, Asst. Vice 8000 Robert F. McDermott Frwy. Serves as Assistant Vice President of
President IH-10 West, Suite 600 USAA Real Estate Company and
San Antonio, Texas 78230-3884 Subsidiaries (37-39, 43 and 45-51)
DAVID M. HOLMES, Asst. Vice 8000 Robert F. McDermott Frwy. Serves as Assistant Vice President of
President IH-10 West, Suite 600 USAA Real Estate Company and
San Antonio, Texas 78230-3884 Subsidiaries (38, 39, 43 and 45-51)
</TABLE>
2. USAA CAPITAL CORPORATION
<TABLE>
<CAPTION>
Name and Position Business Address Present Occupation
----------------- ---------------- ------------------
<S> <C> <C>
ROBERT G. DAVIS, President USAA Building Serves as President of USAA Capital Corporation; and
San Antonio, Texas 78288 as Director of Subsidiaries (25-32, 53 and 56); and as
Chairman of the Board of Subsidiaries (25-32 and 53);
and as Vice Chairman of the Board of Subsidiary (56)
M. STASER HOLCOMB, Director, Vice USAA Building Serves as Director of USAA Capital Corporation and
Chairman, and Chairman San Antonio, Texas 78288 Subsidiaries (2, 3, 7, 11-13, 15-17, 21, 22-35, 54-59);
and as Chairman of the Board of Directors of
Subsidiaries (13, 15-17, 21, 23-32 and 56-59), and as
CEO and President of Subsidiaries (11, 13, 16, 17, 33
and 56); and as Vice Chair of the Board of USAA
Capital Corporation and Subsidiaries (33 and 11);
and as President of Subsidiary (15)
</TABLE>
<PAGE> 20
Page 20 of 22 Pages
<TABLE>
<S> <C> <C>
ROBERT T. HERRES, USAA Building Serves as Chairman/President/ CEO/COO/Attorney-in-
Chairman/President/CEO San Antonio, Texas 78288 Fact of Subsidiary (1) and as Director of USAA
COO/Attorney-in-Fact and Director Capital Corporation and Subsidiaries (1-3, 6, 7, 11,
18, 19, 20, 33 and 54); and as Chairman of the Board of
USAA Capital Corporation and Subsidiaries (7, 11, 18,
19, 20, 33 and 54); and as Chairman of Board and CEO of
Subsidiaries (2 and 3); and as Managing Director of
Subsidiary (6)
BRADFORD W. RICH, Director, Senior USAA Building Serves as Director of USAA Capital Corporation and
Vice President and Secretary San Antonio, Texas 78288 Subsidiaries (2, 3, 6, 7, 11-13, 16, 17, 25-28, 34 and
54); and as Chairman of the Officers of the Board of
Directors of Subsidiary (34); and as Senior Vice
President of USAA Capital Corporation and Subsidiaries
(1, 11, 12, 16 and 17); and as Vice President of
Subsidiaries (2, 3, 7 and 54); and as Treasurer of
Subsidiary (15); and as Secretary of USAA Capital
Corporation and Subsidiaries (1, 2, 3, 7, 11, 12 and
15-17 and 54).
JOSUE ROBLES, JR., Sr. Vice USAA Building Serves as Sr. Vice President-CFO/Controller, FS of
President-CFO/Controller, FS and San Antonio, Texas 78288 Subsidiary (1) and Director of USAA Capital
Director Corporation and Subsidiaries (2, 3, 7, 9-12, 14,
16-20, 26, 27, 34, 35 and 54); and as Vice
President-Treasurer of Subsidiaries (2, 3, 9, and 13);
and as Sr. Vice President-Controller of USAA Capital
Corporation and Subsidiaries (11, 12, 16, and 17); and
as Vice Chair of Board, VP-Treasurer of Subsidiaries
(35 and 54); and as Treasurer of Subsidiaries (33 & 34)
</TABLE>
3. UNITED SERVICES AUTOMOBILE ASSOCIATION
<TABLE>
<CAPTION>
Name and Position Business Address Present Occupation
----------------- ---------------- --------------------
<S> <C> <C>
ROBERT T. HERRES, Chairman/ USAA Building Serves as Chairman/President/CEO/COO/Attorney-in-
President/ CEO/COO Attorney-in- San Antonio, Texas 78288 Fact of USAA and Director of Subsidiaries (2, 3, 6, 7,
Fact and Director 10, 11, 18, 19, 20, 33 and 54); and as Chairman of
Board of Subsidiaries (7, 10, 11, 18, 19, 20, 33 and
54); and as Chairman of Board and CEO of Subsidiaries
(2 and 3) and as Managing Director of Subsidiary (6)
JOHN D. BUCKELEW, Director USAA Building Serves as Director of USAA
San Antonio, Texas 78288
DANIEL W. CHRISTMAN USAA Building Serves as Director of USAA
San Antonio, Texas 78288
</TABLE>
<PAGE> 21
Page 21 of 22 Pages
<TABLE>
<CAPTION>
Name and Position Business Address Present Occupation
----------------- ---------------- ------------------
<S> <C> <C>
DANIEL L. COOPER, Director USAA Building Serves as Director and Vice Chairman of the Board of
San Antonio, Texas 78288 USAA
STEPHEN B. CROKER, Director USAA Building Serves as Director of USAA
San Antonio, Texas 78288
LESLIE G. DENEND USAA Building Serves as Director of USAA
San Antonio, Texas 78288
FRED A. GORDEN, Director USAA Building Serves as Director of USAA
San Antonio, Texas 78288
MARCELITE J. HARRIS, Director USAA Building Serves as Director of USAA
San Antonio, Texas 78288
WILLIAM J. HYBL, Director USAA Building Serves as Director of USAA
San Antonio, Texas 78288
RICHARD D. MILLIGAN, Director USAA Building Serves as Director of USAA and Subsidiaries (18, 19
San Antonio, Texas 78288 & 20)
JOHN H. MOELLERING, Director USAA Building Serves as Director of USAA
San Antonio, Texas 78288
KENT H. WILLIAMS, Director USAA Building Serves as a Director and 2nd Vice Chairman of the
San Antonio, Texas 78288 Board of USAA
MYRNA H. WILLIAMSON, Director USAA Building Serves as a Director of USAA
San Antonio, Texas 78288
WILSON C. COONEY, Deputy USAA Building Serves as President-Property & Casualty Insurance,
Attorney-in-Fact, President-Property San Antonio, Texas 78288 P & C of USAA and as Director of Subsidiaries (2-6
& Casualty Insurance, P & C and and 54); and as Vice Chair of Board & President of
Director Subsidiaries (2, 3 and 54); and as Chairman of Board
of Subsidiaries (4 & 5)
BENJAMIN T. HACKER, Executive, USAA Building Serves as Executive Vice President - Chief
Vice President - Chief San Antonio, Texas 78288 Administrative Officer of USAA; and as Director of
Administrative Officer, AS Subsidiaries (2, 3, 5, 7, 14, 33, 34 and 54); and as
Vice President and Secretary of Subsidiaries (5 and 54)
JOHN R. COOK, Sr. Vice President - USAA Building Serves as Sr. Vice President-Chief Communications
Chief Communications Officer, San Antonio, Texas 78288 Officer, CCO of USAA and as Director of Subsidiary
CCO and Director (33)
</TABLE>
<PAGE> 22
Page 22 of 22 Pages
<TABLE>
<CAPTION>
Name and Position Business Address Present Occupation
----------------- ---------------- ------------------
<S> <C> <C>
MICHAEL J. C. ROTH, Vice Chair, USAA Building Serves as Vice Chair, CEO, and President of
CEO, President and Director San Antonio, Texas 78288 Subsidiaries (25-28) and as Director of Subsidiaries
(7, 25-32 and 35) and as President of Subsidiary (29)
and as Vice Chair & President of Subsidiaries (30-32)
JOSUE ROBLES, JR., Sr. Vice USAA Building Serves as Sr. Vice President-CFO/Controller, FS of
President-CFO/Controller, FS and San Antonio, Texas 78288 USAA and as Director of Subsidiaries (2, 3, 7, 9-12,
Director 14, 16-20, 26, 27, 34, 35 and 54); and as Vice
President-Treasurer of Subsidiaries (2, 3, 9, 13); and
as Sr. Vice President-Controller of Subsidiaries
(10-12, 16, 17); and as Vice Chair of Board,
VP-Treasurer of Subsidiaries (35 and 54); and as
Treasurer of Subsidiaries (33 & 34)
ED ROSANE, Vice Chair of Board, USAA Building Serves as Vice Chair, CEO, President of Subsidiary (7)
CEO, President and Director San Antonio, Texas 78288 and as Director of Subsidiary (7, 8, 11, and 35); and
as Chairman of the Board and President of Subsidiary
(8)
</TABLE>
<PAGE> 23
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
10.1 Stock Purchase Agreement, dated as of November 25, 1996, by
and among Pure World, Inc. and USAA Real Estate Company.
10.2 Stock Purchase Agreement, dated as of November 25, 1996, by
and among USAA Real Estate Company, Jonathan Tratt, Jonathan
Tratt Purchase Money Plan, Stanley D.L. Horwitz, David
Bradley, Keith Sexton and C. J. Scott.
10.3 Share Purchase Agreement, dated as of December 13, 1996, by
and among USAA Real Estate Company and American Industrial
Properties REIT.
10.4 Share Purchase Agreement, dated as of December 19, 1996, by
and among USAA Real Estate Company, American Industrial
Properties REIT, Inc. and American Industrial Properties REIT.
10.5 Letter Agreement dated December 18, 1996 between American
Industrial Properties REIT and USAA Real Estate Company.
10.6 Registration Rights Agreement, dated as of December 19, 1996,
by and among USAA Real Estate Company and American Industrial
Properties REIT.
10.7 Registration Rights Agreement, dated as of December 20, 1996,
by and among USAA Real Estate Company, American Industrial
Properties REIT and American Industrial Properties REIT, Inc.
10.8 Agreement for Joint Filing on Behalf of Each Reporting Person.
<PAGE> 1
Exhibit 10.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of November 25, 1996 (the
"Agreement"), is by and among the party or parties identified on Exhibit A
hereto (each a "Seller"), and USAA Real Estate Company, a Delaware corporation
("Purchaser").
RECITALS:
WHEREAS, Seller is the beneficial and record owner of the issued and
outstanding Shares of Beneficial Interest, par value $0.10 per share (the
"Shares"), of American Industrial Properties REIT, a Texas real estate
investment trust (the "Company"), identified on Exhibit A hereto; and
WHEREAS, after arms'-length negotiations between Seller and Purchaser, or
their respective representatives, in which the Company did not participate,
Seller desires to sell to Purchaser and Purchaser desires to receive from Seller
the Shares for the consideration and upon the terms and conditions set forth
herein.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, Seller and Purchaser agree as follows:
1. Purchase and Sale of Shares.
1.1 Purchase and Sale. Upon the terms and subject to the conditions
contained in this Agreement, Seller shall sell, transfer, assign and deliver to
Purchaser the Shares at the Closing, and Purchaser shall pay and deliver to
Seller the purchase price referred to below in Section 1.2. The Closing shall be
held at the offices of Andrews & Kurth L.L.P., 4200 Texas Commerce Tower,
Houston, Texas 77002 at 10:00 a.m., local time, on the third business day
following satisfaction of the conditions to Purchaser's obligations set forth in
Section 5.1.
1.2 Purchase Price. The consideration to be delivered to Seller as
payment for the Shares shall be $2.75 per Share (the "Purchase Price").
1.3 Delivery of Shares. Seller agrees to deliver to Purchaser at the
Closing the certificate or certificates representing the Shares together with
the duly executed stock power attached hereto as Exhibit B.
1.4 Payment of Purchase Price. Purchaser shall pay the Purchase
Price for the Shares at the Closing to Seller by wire transfer of immediately
available funds to an account designated by Seller.
1
<PAGE> 2
1.5 Closing. The closing of the purchase and sale of the Shares will
take place at 10:00 a.m. at the offices of Liddell, Sapp, Zivley, Hill & LaBoon,
L.L.P., in Dallas, Texas, contemporaneously or prior to the closing referred to
in the Settlement Agreement by and among Charles W. Wolcott and William H.
Bricker on the one hand and Pure World, Inc., Paul O. Koether and Robert Strougo
on the other hand (the "Closing").
2. Representations and Warranties of Seller. Seller represents and
warrants to and agrees with Purchaser as follows:
2.1 Authorization of Transaction. Seller has full right, power and
authority (i) to execute and deliver this Agreement, (ii) to sell, assign,
transfer and deliver the Shares to be sold by Seller hereunder, and (iii) to
perform its obligations hereunder. Seller has taken all corporate action, and
has obtained all consents, approvals, authorizations and orders, required for it
to execute, deliver and perform this Agreement. This Agreement constitutes the
valid and legally binding obligation of Seller, enforceable in accordance with
its terms.
2.2 Noncontravention. The execution and delivery of this Agreement,
the sale of the Shares to be sold by Seller hereunder and the consummation of
the transactions contemplated hereby, will not (i) violate any statute,
regulation, injunction, judgment, order, decree, ruling or other restriction of
any government, governmental agency or court having jurisdiction over Seller,
(ii) conflict with, result in a breach or violation of any of the terms or
provisions of or constitute a default under any agreement, contract, lease,
license, instrument or other arrangement to which Seller is a party or by which
Seller or any of its assets is bound, or (iii) result in a violation of the
provisions of the Certificate of Incorporation or Bylaws of Seller. Seller is
not a party to any shareholder, voting trust or similar agreement relating to
the Shares or any agreement which may affect the transfer of the Shares. Except
for this Agreement, there is no option, warrant, call or other right or other
agreement, arrangement or commitment obligating Seller to transfer or sell the
Shares.
2.3 Ownership. Seller holds of record and beneficially owns (as such
term is defined under the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, "beneficially owns" or "beneficial ownership")
the Shares, free and clear of any restrictions on transfer, security interests,
options, warrants, purchase rights, equities, claims, liens, encumbrances,
pledges and demands. Seller does not beneficially own any other securities of
the Company or any rights or options to acquire such beneficial ownership, and
none of the Shares were acquired after November 8, 1996.
2.4 Transfer of Title. Upon the delivery of the Shares and payment
therefor pursuant hereto, good and marketable title to such Shares, free and
clear of all adverse claims, liens, encumbrances, equities or other claims, will
pass to Purchaser.
2.5 Professional and Consulting Fees. Neither the Company (except in
connection with the Settlement) nor Purchaser will directly or indirectly incur
any liability or expense as a result of undertakings or agreements of Seller for
accounting, consulting or legal fees,
2
<PAGE> 3
brokerage or finder's fees or agent's commissions or other similar forms of
compensation in connection with this Agreement or any agreement or transaction
contemplated hereby or thereby.
2.6 Litigation. As of the date hereof, except for a lawsuit styled
American Industrial Properties REIT v. Pure World, Inc., et. al., No.
3:96-CV-0068-H, in the United States District Court for the Northern District of
Texas (the "Lawsuit"), there are no actions, suits, arbitrations or proceedings
pending or, to the best of Seller's knowledge, threatened, before any court or
governmental or regulatory authority or body to which Seller is or will be a
party challenging or affecting Seller's right or ability to execute or deliver
this Agreement or to consummate the sale of the Shares as contemplated by this
Agreement.
2.7 Acknowledgment. Seller acknowledges that (i) the foregoing
representations and warranties shall survive the Closing and (ii) Purchaser is
making no representations or warranties other than those expressly set forth in
Section 3.
3. Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller as follows:
3.1 Authorization of Transaction. Purchaser has full right, power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of Purchaser, enforceable in accordance with its terms.
3.2 Noncontravention. The execution and delivery of this Agreement,
and the consummation of the transactions contemplated hereby, will not (i)
violate any statute, regulation, injunction, judgment, order, decree, ruling or
other restriction of any government, governmental agency or court having
jurisdiction over Purchaser, (ii) conflict with, result in a breach or violation
of any of the terms or provisions of, constitute a default under any agreement,
contract, lease, license, instrument, or other arrangement to which Purchaser is
a party or by which Purchaser or any of its assets is bound, or (iii) result in
a violation of the provisions of the organizational documents of Purchaser.
3.3 Sophisticated Purchaser. Purchaser is a sophisticated investor
and has had the opportunity to make such investigation as it deems necessary to
purchase the Shares. Purchaser acknowledges that Seller is making no
representations or warranties other than those expressly set forth in Section 2.
4. Covenants of Seller.
4.1 Standstill Agreement. During the period beginning from the date
hereof and continuing to and including the date that is the earlier of (a) 5
years after the date hereof, (b) such time as Purchaser no longer owns at least
2% of the capital stock of the Company or (c) the date on which either Purchaser
or Seller delivers written notice to the other that the stock purchase
3
<PAGE> 4
contemplated by this Agreement will not be consummated because of the
non-occurrence of a condition precedent to the obligations of the party giving
notice, Seller agrees that Seller and affiliates of Seller will not, and Seller
will not cause any other person or entity to, (i) acquire, offer to acquire, or
agree to acquire, directly or indirectly, by purchase or otherwise, any
securities or direct or indirect rights or options to acquire (through purchase,
exchange, conversion or otherwise) any securities or properties of the Company,
(ii) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) to vote (including by the execution of
actions by written consent) or seek to advise, encourage or influence any person
or entity with respect to the voting of any securities of the Company, (iii)
form, join or in any way participate in any "group" (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934) with respect to any
securities of the Company, (iv) otherwise act, alone or in concert with others,
to seek to control or influence the management, board of trust managers or
policies of the Company, (v) initiate, propose or otherwise solicit stockholders
for the approval of one or more stockholder proposals (as described in the
Securities Exchange Act of 1934) seeking to acquire or affect control of the
Company, or (vi) acquire any interest in any claims, mortgages, notes or any
other legal or financial obligations of the Company. Seller agrees that the
Company, as a third party beneficiary, shall be entitled to specific enforcement
of, and injunctive relief to prevent any violation of, Section 4.1 hereof, in
addition to any other remedy or relief available at law or in equity.
5. Conditions to Obligations of Purchaser. The obligations of Purchaser to
purchase the Shares at the Closing shall be subject to the satisfaction of the
following conditions unless waived by Purchaser:
5.1 Settlement of Litigation. Any and all claims and litigation
currently pending or subsequently filed prior to the Closing, either in their
own name or in a derivative action, including without limitation the Lawsuit,
among either (i) the Company and the Seller or (ii) the Company and any other
beneficial owner of shares of capital stock of the Company, shall have been
settled and a binding order of the court or such other governmental regulatory
body or agency shall have been entered by December 31, 1996, so that no such
claims shall be pending as of the Closing.
5.2 Compliance by Seller. Purchaser shall be satisfied as to (i) the
accuracy of the representations and warranties of Seller at and as of the
Closing and (ii) the performance by Seller of all its obligations hereunder to
be performed at or prior to the Closing.
6. Conditions to Obligations of Seller. The obligations of Seller to sell
the Shares at the Closing shall be subject to the satisfaction of the following
condition unless waived by Seller:
6.1 Settlement of Litigation. Any and all claims and litigation
between the Company and Seller, including without limitation the Lawsuit, shall
have been settled and a binding order of the court or such other governmental
regulatory body or agency shall have been entered by December 31, 1996, so that
no such claims shall be pending as of the Closing.
4
<PAGE> 5
7. Indemnification.
7.1 Indemnification by Seller. Seller shall indemnify and hold
harmless Purchaser and its successors and assigns from and against any losses,
damages or expenses (including reasonable attorney's fees and expenses, such as
expert and accounting fees, and interest accrued on all such indemnified
amounts, computed at ten percent per annum) which are caused by or arise out of
(a) any breach or default in the performance by Seller of any covenant or
agreement of Seller contained in this Agreement, (b) any breach of warranty by
Seller or inaccurate or erroneous representation made by such Seller herein or
in any other instrument delivered by or on behalf of such Seller pursuant hereto
or (c) any and all actions, suits, proceedings, claims, demands or judgments
incident to or alleged to be incident to any of the foregoing.
7.2 Indemnification by Purchaser. Purchaser shall indemnify and hold
harmless the Seller and its successors and assigns from and against any losses,
damages or expenses (including reasonable attorney's fees and expenses, such as
expert and accounting fees, and interest accrued on all such indemnified
amounts, computed at ten percent per annum) caused by or arising out of (a) any
breach or default in the performance by Purchaser of any covenant or agreement
of Purchaser contained in this Agreement, (b) any breach of warranty by
Purchaser or inaccurate or erroneous representation made by Purchaser herein or
in any other instrument delivered by or on behalf of Purchaser pursuant hereto
or (c) any and all actions, suits, proceedings, claims, demands or judgments
incident to or alleged to be incident to any of the foregoing.
7.3 Procedure. In the event that, from and after the Closing, a
third party asserts any claim against Purchaser or Seller, as the case may be,
with respect to any matter which is covered by the indemnities contained in this
Agreement, the party against whom the claim is asserted (the "Indemnitee"),
shall give prompt written notice to the other party (the "Indemnitor"), and the
Indemnitor shall have the right, at its election, to take over the defense or
settlement of such claim at its own expense by giving prompt written notice to
the Indemnitee; provided, however, that (a) the Indemnitee shall at all times
have the right, at its option and expense, to participate fully therein and (b)
if the Indemnitor does not give such notice and does not proceed diligently to
defend the claim within 30 days after receipt of such notice of the claim, the
Indemnitee shall have the right, but not the obligation, to undertake the
defense of any such claim for the account of and at the risk of the Indemnitor
and the Indemnitor shall be bound by any defense or settlement that the
Indemnitee, may make as to such claim. The parties shall cooperate in defending
any such third party's claim, and the defending party shall have reasonable
access to the books and records and personnel in the possession or control of
the other party that are pertinent to the defense. The parties agree that the
Indemnitee may join the Indemnitor in any action, claim or proceeding brought by
a third party, as to which any right of indemnity granted to the Indemnitee
pursuant to this Agreement would or might apply, for the purpose of enforcing
such right of indemnity.
5
<PAGE> 6
8. Miscellaneous.
8.1 Notices. All notices or other communications given or made
hereunder shall be in writing and shall be deemed to be duly given when received
if delivered in person or by telex, facsimile, telegram or cable or mailed by
registered or certified mail, return receipt requested, postage prepaid to any
party at the address and to the addressee for such party set forth on the
signature page of this Agreement or such other address or addressee as the party
to whom notice is to be given furnishes in writing to the other party in the
manner set forth above.
8.2 Entire Agreement. This Agreement, including the Exhibits hereto,
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
and understandings, oral or written, between the parties hereto with respect to
such transactions.
8.3 Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws (and not the law of conflicts) of the
State of Texas applicable to contracts made and performed in the State of Texas.
8.4 Headings. The section, paragraph and other headings contained in
this Agreement are for reference purposes only and shall not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement.
8.5 Assignment. Neither this Agreement nor any interest herein or
right or obligation hereunder may be assigned by Purchaser or Seller in any
manner, by operation of law or otherwise, without the prior written consent of
the other party hereto except that Purchaser may assign this Agreement without
Seller's consent to any person (except the Company) which is wholly owned or
controlled, directly or indirectly, by Purchaser, if that person agrees in
writing to be bound by all of Purchaser's obligations hereunder; provided,
however, that no assignment of any kind shall release Purchaser from any
liabilities or obligations hereunder.
8.6 Successors Bound. Subject to the provisions of Section 8.5, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
8.7 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement, or the application
thereof to any person or under any circumstances, shall be invalid or
unenforceable to any extent under applicable law, and the extent of such
invalidity or unenforceability does not destroy the basis for the bargain
between the parties as expressed herein, then such provision shall be deemed
severed from this Agreement with respect to such person or such circumstance,
without invalidating the remainder of this Agreement or the application of such
provision to other persons or circumstances, and a new provision shall be
automatically substituted
6
<PAGE> 7
in lieu of the provision so severed which new provision shall be as similar in
terms to the invalid or unenforceable provision as may be possible.
8.8 Remedies. Seller acknowledges that the Company and Purchaser
would not have an adequate remedy at law for money damages in the event that
Section 4.1 were not performed in accordance with its terms and therefore agree
that the Company, as a third party beneficiary, and Purchaser shall be entitled
to specific enforcement of, and injunctive relief to prevent any violation of,
Section 4.1 hereof, in addition to any other remedy or relief available at law
or in equity.
8.9 Expenses. Seller and Buyer shall each pay their own expenses
(including, without limitation, counsel and accounting fees and expenses)
incident to the preparation and carrying out of this Agreement and the sale of
the Shares contemplated hereby.
8.10 Amendment. This Agreement may be amended only by an instrument
in writing executed by all the parties hereto.
8.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute the
same instrument.
7
<PAGE> 8
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be signed as of the date first above written.
PURCHASER
USAA Real Estate Company
By:___________________________________________
Name: T. Patrick Duncan
Title: Senior Vice President - Operations
Address: 8000 Robert F. McDermott Freeway
IH-10 West, Suite 600
San Antonio, Texas 78230
Fax: (210) 498-6214
8
<PAGE> 9
SELLER
JONATHAN TRATT
_______________________________________
Jonathan Tratt
Address: c/o Industrial Brokerage, Inc.
2425 E. Camelback, Suite 950
Phoenix, AZ 85016
Fax: (602) 381-2592
JONATHAN TRATT MONEY PURCHASE PLAN
_______________________________________
Jonathan Tratt, Trustee
Address: c/o Industrial Brokerage, Inc.
2425 E. Camelback, Suite 950
Phoenix, AZ 85016
Fax: (602) 381-2592
STANLEY D. L. HORWITZ
_______________________________________
Stanley D. L. Horwitz
Address: c/o Industrial Brokerage, Inc.
2425 E. Camelback, Suite 950
Phoenix, AZ 85016
Fax: (602) 381-2592
9
<PAGE> 10
DAVID BRADLEY
_______________________________________
David Bradley
Address: c/o Industrial Brokerage, Inc.
2425 E. Camelback, Suite 950
Phoenix, AZ 85016
Fax: (602) 381-2592
KEITH SEXTON
_______________________________________
Keith Sexton
Address: c/o Industrial Brokerage, Inc.
2425 E. Camelback, Suite 950
Phoenix, AZ 85016
Fax: (602) 381-2592
C.J. SCOTT
_______________________________________
C.J. Scott
Address: c/o Industrial Brokerage, Inc.
2425 E. Camelback, Suite 950
Phoenix, AZ 85016
Fax: (602) 381-2592
10
<PAGE> 11
EXHIBIT A
SHARE OWNERSHIP
<TABLE>
<CAPTION>
Record Holder No. Shares Certificate No.
- ------------- ---------- ---------------
<S> <C>
Jonathan Tratt ....................... 15,000
Jonathan Tratt Money Purchase Plan .... 35,000
Stanley D. L. Horwitz.................. 247,506
David Bradley.......................... 10,000
Keith Sexton........................... 35,000
C. J. Scott ........................... 10,000
-------
Total..................... 352,506
=======
</TABLE>
<PAGE> 12
EXHIBIT A
STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto ____________________, the Shares of Beneficial Interest, par
value $0.10 per share, of American Industrial Properties REIT (the "Company")
represented by Certificate No. ___ registered on the books of said Company, and
does hereby irrevocably constitute and appoint ________________________ as
attorney to transfer the foregoing on the books of said Company, with full power
of substitution in the premises, hereby ratifying and confirming all that said
attorney shall lawfully do by virtue hereof. Dated: _________________, 1996.
__________________________________*
By:________________________________
Name:
Title:
Signature Guaranteed By:
_______________________________ [STAMP]
Print Name of Guarantor
By:_________________________________
Name:_______________________________
Title:______________________________
* The signature to this assignment must correspond with the name as written
on the face of the certificate in every particular without alteration or
enlargement or any change whatever.
<PAGE> 1
EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of November 25, 1996 (the
"Agreement"), is by and among Pure World, Inc., a Delaware corporation
("Seller") and USAA Real Estate Company, a Delaware corporation ("Purchaser").
RECITALS:
WHEREAS, Seller is the beneficial and record owner of 907,000 issued and
outstanding Shares of Beneficial Interest, par value $0.10 per share (the
"Shares"), of American Industrial Properties REIT, a Texas real estate
investment trust (the "Company"); and
WHEREAS, Seller and the Company have been engaged in proxy contests, other
disputes, and a lawsuit styled American Industrial Properties REIT v. Pure
World, Inc., et. al., No. 3:96-CV- 0068-H, in the United States District Court
for the Northern District of Texas (the "Lawsuit"); and
WHEREAS, Seller and the Company have reached an agreement to resolve their
disputes and the Lawsuit (the "Settlement"), and the Company has required as a
condition to the Settlement that Seller sell its Shares to Purchaser for such
consideration and on other terms and conditions as to which Seller and Purchaser
may agree; and
WHEREAS, after arms'-length negotiations between Seller and Purchaser, or
their respective representatives, in which the Company did not participate,
Seller desires to sell to Purchaser and Purchaser desires to receive from Seller
the Shares for the consideration and upon the terms and conditions set forth
herein.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, Seller and Purchaser agree as follows:
1. Purchase and Sale of Shares.
1.1 Purchase and Sale. Upon the terms and subject to the conditions
contained in this Agreement, Seller shall sell, transfer, assign and deliver to
Purchaser the Shares at the Closing, and Purchaser shall pay and deliver to
Seller the purchase price referred to below in Section 1.2. The Closing shall be
held at the offices of Andrews & Kurth L.L.P., 4200 Texas Commerce Tower,
Houston, Texas 77002 at 10:00 a.m., local time, on the third business day
following satisfaction of the conditions to Purchaser's obligations set forth in
Section 5.1.
1.2 Purchase Price. The consideration to be delivered to Seller as
payment for the Shares shall be $2.75 per Share (the "Purchase Price").
<PAGE> 2
1.3 Delivery of Shares. Seller agrees to deliver to Purchaser at the
Closing the certificate or certificates representing the Shares together with
the duly executed stock power attached hereto as Exhibit A.
1.4 Payment of Purchase Price. Purchaser shall pay the Purchase
Price for the Shares at the Closing to Seller by wire transfer of immediately
available funds to an account designated by Seller.
2. Representations and Warranties of Seller. Seller represents and
warrants to and agrees with Purchaser as follows:
2.1 Authorization of Transaction. Seller has full right, power and
authority (i) to execute and deliver this Agreement, (ii) to sell, assign,
transfer and deliver the Shares to be sold by Seller hereunder, and (iii) to
perform its obligations hereunder. Seller has taken all corporate action, and
has obtained all consents, approvals, authorizations and orders, required for it
to execute, deliver and perform this Agreement. This Agreement constitutes the
valid and legally binding obligation of Seller, enforceable in accordance with
its terms.
2.2 Noncontravention. The execution and delivery of this Agreement,
the sale of the Shares to be sold by Seller hereunder and the consummation of
the transactions contemplated hereby, will not (i) violate any statute,
regulation, injunction, judgment, order, decree, ruling or other restriction of
any government, governmental agency or court having jurisdiction over Seller,
(ii) conflict with, result in a breach or violation of any of the terms or
provisions of or constitute a default under any agreement, contract, lease,
license, instrument or other arrangement to which Seller is a party or by which
Seller or any of its assets is bound, or (iii) result in a violation of the
provisions of the Certificate of Incorporation or Bylaws of Seller. Seller is
not a party to any shareholder, voting trust or similar agreement relating to
the Shares or any agreement which may affect the transfer of the Shares. Except
for this Agreement, there is no option, warrant, call or other right or other
agreement, arrangement or commitment obligating Seller to transfer or sell the
Shares.
2.3 Ownership. Seller holds of record and beneficially owns (as such
term is defined under the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, "beneficially owns" or "beneficial ownership")
the Shares, free and clear of any restrictions on transfer, security interests,
options, warrants, purchase rights, equities, claims, liens, encumbrances,
pledges and demands. Seller does not beneficially own any other securities of
the Company or any rights or options to acquire such beneficial ownership, and
none of the Shares were acquired after November 8, 1996.
2.4 Transfer of Title. Upon the delivery of the Shares and payment
therefor pursuant hereto, good and marketable title to such Shares, free and
clear of all adverse claims, liens, encumbrances, equities or other claims, will
pass to Purchaser.
2
<PAGE> 3
2.5 Professional and Consulting Fees. Neither the Company (except in
connection with the Settlement) nor Purchaser will directly or indirectly incur
any liability or expense as a result of undertakings or agreements of Seller for
accounting, consulting or legal fees, brokerage or finder's fees or agent's
commissions or other similar forms of compensation in connection with this
Agreement or any agreement or transaction contemplated hereby or thereby.
2.6 Litigation. As of the date hereof, except for the Lawsuit there
are no actions, suits, arbitrations or proceedings pending or, to the best of
Seller's knowledge, threatened, before any court or governmental or regulatory
authority or body to which Seller is or will be a party challenging or affecting
Seller's right or ability to execute or deliver this Agreement or to consummate
the sale of the Shares as contemplated by this Agreement.
2.7 Acknowledgment. Seller acknowledges that (i) the foregoing
representations and warranties shall survive the Closing and (ii) Purchaser is
making no representations or warranties other than those expressly set forth in
Section 3.
3. Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller as follows:
3.1 Authorization of Transaction. Purchaser has full right, power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of Purchaser, enforceable in accordance with its terms.
3.2 Noncontravention. The execution and delivery of this Agreement,
and the consummation of the transactions contemplated hereby, will not (i)
violate any statute, regulation, injunction, judgment, order, decree, ruling or
other restriction of any government, governmental agency or court having
jurisdiction over Purchaser, (ii) conflict with, result in a breach or violation
of any of the terms or provisions of, constitute a default under any agreement,
contract, lease, license, instrument, or other arrangement to which Purchaser is
a party or by which Purchaser or any of its assets is bound, or (iii) result in
a violation of the provisions of the organizational documents of Purchaser.
3.3 Sophisticated Purchaser. Purchaser is a sophisticated investor
and has had the opportunity to make such investigation as it deems necessary to
purchase the Shares. Purchaser acknowledges that Seller is making no
representations or warranties other than those expressly set forth in Section 2.
4. Covenants of Seller.
4.1 Standstill Agreement. During the period beginning from the date
hereof and continuing to and including the date that is the earlier of (a) 5
years after the date hereof, (b) such
3
<PAGE> 4
time as Purchaser no longer owns at least 2% of the capital stock of the Company
or (c) the date on which either Purchaser or Seller delivers written notice to
the other that the stock purchase contemplated by this Agreement will not be
consummated because of the non-occurrence of a condition precedent to the
obligations of the party giving notice, Seller agrees that neither Seller nor
any affiliate of Seller or nor any entity owned or controlled by them or under
common ownership or control with any of them will (i) acquire, offer to acquire,
or agree to acquire, directly or indirectly, by purchase or otherwise, any
securities or direct or indirect rights or options to acquire (through purchase,
exchange, conversion or otherwise) any securities or properties of the Company,
(ii) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) to vote (including by the execution of
actions by written consent) or seek to advise, encourage or influence any person
or entity with respect to the voting of any securities of the Company, (iii)
form, join or in any way participate in any "group" (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934) with respect to any
securities of the Company, (iv) otherwise act, alone or in concert with others,
to seek to control or influence the management, board of trust managers or
policies of the Company, (v) initiate, propose or otherwise solicit stockholders
for the approval of one or more stockholder proposals (as described in the
Securities Exchange Act of 1934) seeking to acquire or affect control of the
Company, or (vi) acquire any interest in any claims, mortgages, notes or any
other legal or financial obligations of the Company.
5. Conditions to Obligations of Purchaser. The obligations of Purchaser to
purchase the Shares at the Closing shall be subject to the satisfaction of the
following conditions unless waived by Purchaser:
5.1 Settlement of Litigation. Any and all claims and litigation
currently pending or subsequently filed prior to the Closing, either in their
own name or in a derivative action, including without limitation the Lawsuit,
among either (i) the Company and the Seller or (ii) the Company and any other
beneficial owner of shares of capital stock of the Company, shall have been
settled and a binding order of the court or such other governmental regulatory
body or agency shall have been entered by December 31, 1996, so that no such
claims shall be pending as of the Closing.
5.2 Compliance by Seller. Purchaser shall be satisfied as to (i) the
accuracy of the representations and warranties of Seller at and as of the
Closing and (ii) the performance by Seller of all its obligations hereunder to
be performed at or prior to the Closing.
6. Conditions to Obligations of Seller. The obligations of Seller to sell
the Shares at the Closing shall be subject to the satisfaction of the following
condition unless waived by Seller:
6.1 Settlement of Litigation. Any and all claims and litigation
between the Company and Seller, including without limitation the Lawsuit, shall
have been settled and a binding order of the court or such other governmental
regulatory body or agency shall have been entered by December 31, 1996, so that
no such claims shall be pending as of the Closing.
4
<PAGE> 5
7. Indemnification.
7.1 Indemnification by Seller. Seller shall indemnify and hold
harmless Purchaser and its successors and assigns from and against any losses,
damages or expenses (including reasonable attorney's fees and expenses, such as
expert and accounting fees, and interest accrued on all such indemnified
amounts, computed at ten percent per annum) which are caused by or arise out of
(a) any breach or default in the performance by Seller of any covenant or
agreement of Seller contained in this Agreement, (b) any breach of warranty by
Seller or inaccurate or erroneous representation made by such Seller herein or
in any other instrument delivered by or on behalf of such Seller pursuant hereto
or (c) any and all actions, suits, proceedings, claims, demands or judgments
incident to or alleged to be incident to any of the foregoing.
7.2 Indemnification by Purchaser. Purchaser shall indemnify and hold
harmless the Seller and its successors and assigns from and against any losses,
damages or expenses (including reasonable attorney's fees and expenses, such as
expert and accounting fees, and interest accrued on all such indemnified
amounts, computed at ten percent per annum) caused by or arising out of (a) any
breach or default in the performance by Purchaser of any covenant or agreement
of Purchaser contained in this Agreement, (b) any breach of warranty by
Purchaser or inaccurate or erroneous representation made by Purchaser herein or
in any other instrument delivered by or on behalf of Purchaser pursuant hereto
or (c) any and all actions, suits, proceedings, claims, demands or judgments
incident to or alleged to be incident to any of the foregoing.
7.3 Procedure. In the event that, from and after the Closing, a
third party asserts any claim against Purchaser or Seller, as the case may be,
with respect to any matter which is covered by the indemnities contained in this
Agreement, the party against whom the claim is asserted (the "Indemnitee"),
shall give prompt written notice to the other party (the "Indemnitor"), and the
Indemnitor shall have the right, at its election, to take over the defense or
settlement of such claim at its own expense by giving prompt written notice to
the Indemnitee; provided, however, that (a) the Indemnitee shall at all times
have the right, at its option and expense, to participate fully therein and (b)
if the Indemnitor does not give such notice and does not proceed diligently to
defend the claim within 30 days after receipt of such notice of the claim, the
Indemnitee shall have the right, but not the obligation, to undertake the
defense of any such claim for the account of and at the risk of the Indemnitor
and the Indemnitor shall be bound by any defense or settlement that the
Indemnitee, may make as to such claim. The parties shall cooperate in defending
any such third party's claim, and the defending party shall have reasonable
access to the books and records and personnel in the possession or control of
the other party that are pertinent to the defense. The parties agree that the
Indemnitee may join the Indemnitor in any action, claim or proceeding brought by
a third party, as to which any right of indemnity granted to the Indemnitee
pursuant to this Agreement would or might apply, for the purpose of enforcing
such right of indemnity.
5
<PAGE> 6
8. Miscellaneous.
8.1 Notices. All notices or other communications given or made
hereunder shall be in writing and shall be deemed to be duly given when received
if delivered in person or by telex, facsimile, telegram or cable or mailed by
registered or certified mail, return receipt requested, postage prepaid to any
party at the address and to the addressee for such party set forth on the
signature page of this Agreement or such other address or addressee as the party
to whom notice is to be given furnishes in writing to the other party in the
manner set forth above.
8.2 Entire Agreement. This Agreement, including the Exhibits hereto,
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
and understandings, oral or written, between the parties hereto with respect to
such transactions.
8.3 Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws (and not the law of conflicts) of the
State of Texas applicable to contracts made and performed in the State of Texas.
8.4 Headings. The section, paragraph and other headings contained in
this Agreement are for reference purposes only and shall not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement.
8.5 Assignment. Neither this Agreement nor any interest herein or
right or obligation hereunder may be assigned by Purchaser or Seller in any
manner, by operation of law or otherwise, without the prior written consent of
the other party hereto except that Purchaser may assign this Agreement without
Seller's consent to any person (except the Company) which is wholly owned or
controlled, directly or indirectly, by Purchaser, if that person agrees in
writing to be bound by all of Purchaser's obligations hereunder; provided,
however, that no assignment of any kind shall release Purchaser from any
liabilities or obligations hereunder.
8.6 Successors Bound. Subject to the provisions of Section 8.5, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
8.7 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement, or the application
thereof to any person or under any circumstances, shall be invalid or
unenforceable to any extent under applicable law, and the extent of such
invalidity or unenforceability does not destroy the basis for the bargain
between the parties as expressed herein, then such provision shall be deemed
severed from this Agreement with respect to such person or such circumstance,
without invalidating the remainder of this Agreement or the application of such
provision to other persons or circumstances, and a new provision shall be
automatically substituted
6
<PAGE> 7
in lieu of the provision so severed which new provision shall be as similar in
terms to the invalid or unenforceable provision as may be possible.
8.8 Remedies. Seller acknowledges that Purchaser would not have an
adequate remedy at law for money damages in the event that Section 4.1 were not
performed in accordance with its terms and therefore agree that Purchaser shall
be entitled to specific enforcement of, and injunctive relief to prevent any
violation of, Section 4.1 hereof, in addition to any other remedy or relief
available at law or in equity.
8.9 Expenses. Seller and Buyer shall each pay their own expenses
(including, without limitation, counsel and accounting fees and expenses)
incident to the preparation and carrying out of this Agreement and the sale of
the Shares contemplated hereby.
8.10 Amendment. This Agreement may be amended only by an instrument
in writing executed by all the parties hereto.
8.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute the
same instrument.
7
<PAGE> 8
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be signed as of the date first above written.
PURCHASER SELLER
USAA Real Estate Company Pure World, Inc.
By:________________________________ By:_____________________________
Name: T. Patrick Duncan Name: Paul O. Koether
Title: Senior Vice President - Operations Title: Chairman
Address: 8000 Robert F. McDermott Freeway Address: P.O. Box 97,
IH-10 West, Suite 600 Far Hills, NJ 07931
San Antonio, Texas 78230
Fax: (210) 498-6214 Fax: (908) 766-4160
8
<PAGE> 9
EXHIBIT A
STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto ____________________, the Shares of Beneficial Interest, par
value $0.10 per share, of American Industrial Properties REIT (the "Company")
represented by Certificate No. ___ registered on the books of said Company, and
does hereby irrevocably constitute and appoint ________________________ as
attorney to transfer the foregoing on the books of said Company, with full power
of substitution in the premises, hereby ratifying and confirming all that said
attorney shall lawfully do by virtue hereof. Dated: _________________, 1996.
__________________________________*
Witness:
By:________________________________
________________________________ Name:
Title:
* The signature to this assignment must correspond with the name as written
on the face of the certificate in every particular without alteration or
enlargement or any change whatever.
9
<PAGE> 1
EXHIBIT 10.3
SHARE PURCHASE AGREEMENT
dated as of December 13, 1996
Between
AMERICAN INDUSTRIAL PROPERTIES REIT
and
USAA REAL ESTATE COMPANY
<PAGE> 2
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION.............................-1-
1.1 Definitions......................................................-1-
1.2 Rules of Construction............................................-8-
SECTION 2. PURCHASE AND SALE...............................................-8-
2.1 Purchase and Sale of the Shares..................................-8-
2.2 Purchase Price; Payment.........................................-8-
2.3 The Closing......................................................-8-
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.........................-9-
3.1 Organization and Related Matters.................................-9-
3.2 Capital Stock; Title to Shares...................................-9-
3.3 Financial Statements............................................-10-
3.4 SEC Reports.....................................................-11-
3.5 Authorization; No Conflicts.....................................-12-
3.6 Legal Proceedings...............................................-12-
3.7 Compliance with Law and Permits.................................-13-
3.8 Dividends and Other Distributions...............................-13-
3.9 Certain Interests...............................................-13-
3.10 No Brokers or Finders...........................................-14-
3.11 Employee Benefit Plans..........................................-14-
3.12 Labor Matters...................................................-15-
3.13 Properties......................................................-15-
3.14 Tax Matters.....................................................-17-
3.15 Material Contracts..............................................-19-
3.16 Insurance.......................................................-20-
3.17 Environmental Matters...........................................-20-
3.18 Trust Records; Accounting Records...............................-21-
3.19 New York Stock Exchange Listing.................................-21-
3.20 Disclosure of Facts.............................................-21-
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.........................-21-
4.1 Organization and Related Matters................................-21-
4.2 Authorization...................................................-21-
4.3 No Conflicts....................................................-22-
4.4 No Brokers or Finders...........................................-22-
4.5 Legal Proceedings...............................................-22-
4.6 Investment Representation.......................................-22-
4.7 Legends; Stop-Transfer Orders...................................-22-
4.8 Status for REIT Ownership and Income Tests......................-23-
-i-
<PAGE> 3
SECTION 5. COVENANTS WITH RESPECT TO CONDUCT OF SELLER PRIOR TO
CLOSING...............................................................-23-
5.1 Access..........................................................-23-
5.2 Material Adverse Changes; SEC Filings; Reports; Financial
Statements......................................................-23-
5.3 Conduct of Business.............................................-24-
5.4 Prohibition of Solicitation.....................................-26-
5.5 Notification of Certain Matters.................................-27-
5.6 Permits and Approvals...........................................-27-
SECTION 6. ADDITIONAL CONTINUING COVENANTS AND AGREEMENTS..................-28-
6.1 Use of Proceeds.................................................-28-
6.2 Appointment of Trust Managers...................................-28-
6.3 Environmental Matters...........................................-29-
6.4 Status for REIT Ownership and Income Tests......................-29-
6.5 Prohibited Transactions.........................................-29-
6.6 Seller/Buyer Registration Rights Agreement......................-29-
6.7 REIT Qualification..............................................-29-
6.8 Services by Buyer...............................................-29-
SECTION 7. GENERAL CONDITIONS OF PURCHASE..................................-30-
7.1 No Orders.......................................................-30-
7.2 Approvals.......................................................-30-
7.3 Absence of Litigation...........................................-30-
7.4 New York Stock Exchange.........................................-30-
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER..............................-30-
8.1 Settlement Agreement............................................-30-
8.2 Accuracy of Seller's Representations and Warranties.............-30-
8.3 Performance by Seller...........................................-30-
8.4 No Material Adverse Change......................................-31-
8.5 Certification by Seller.........................................-31-
8.6 Opinion of Seller's Counsel.....................................-31-
8.7 No Other Business Combination Transaction.......................-31-
SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER.............................-31-
9.1 Settlement Agreement............................................-31-
9.2 Accuracy of Buyer's Representations and Warranties..............-32-
9.3 Buyer's Performance.............................................-32-
9.4 Certification by Buyer..........................................-32-
9.5 Opinion of Buyer's Counsel......................................-32-
SECTION 10. TERMINATION OF OBLIGATIONS; SURVIVAL...........................-32-
10.1 Termination of Agreement........................................-32-
-ii-
<PAGE> 4
10.2 Effect of Termination...........................................-33-
10.3 Survival of Representations and Warranties......................-33-
SECTION 11. INDEMNIFICATION...............................................-33-
11.1 Obligations of Seller...........................................-33-
11.2 Obligations of Buyer............................................-34-
11.3 Procedure.......................................................-34-
11.4 Survival........................................................-35-
11.5 Notice by Seller................................................-35-
SECTION 12. GENERAL.......................................................-35-
12.1 Amendments; Waivers.............................................-35-
12.2 Schedules; Exhibits; Integration................................-35-
12.3 Best Efforts; Further Assurances................................-36-
12.4 Governing Law...................................................-36-
12.5 No Assignment...................................................-36-
12.6 Headings........................................................-36-
12.7 Counterparts....................................................-36-
12.8 Publicity and Reports...........................................-36-
12.9 Confidentiality.................................................-36-
12.10 Parties in Interest.............................................-37-
12.11 Notices.........................................................-37-
12.12 Expenses........................................................-38-
12.13 Remedies; Waiver................................................-38-
12.14 Representation By Counsel; Interpretation.......................-38-
12.15 Severability....................................................-38-
-iii-
<PAGE> 5
EXHIBITS
EXHIBIT A Settlement Agreement
EXHIBIT B Registration Rights Agreement
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 8.6 List of Opinions of Seller's Counsel
SCHEDULE 9.5 List of Opinions of Buyer's Counsel
-iv-
<PAGE> 6
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of December 13, 1996, by and between AMERICAN INDUSTRIAL PROPERTIES REIT, a
Texas real estate investment trust ("SELLER"), and USAA REAL ESTATE COMPANY, a
Delaware corporation ("BUYER").
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 Buyer, and Buyer desires to purchase from
Seller, a certain number of Seller's Common Shares (as defined herein) upon the
terms and subject to the conditions set forth in this Agreement.
C. The proceeds from the sale of Seller's Common 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
1.1 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 Share Purchase Agreement, by and between
Seller and Buyer, as amended from time to time pursuant to the terms of this
Agreement, together with all Exhibits and all Schedules attached hereto.
"ALTERNATIVE PROPOSAL" has the meaning set forth in Section 5.4(a)
of this Agreement.
-1-
<PAGE> 7
"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.
"BUYER" means USAA Real Estate Company, a Delaware corporation, or
permitted assigns.
"BUYER INDEMNIFIED PARTIES" has the meaning set forth in Section
11.1 of this Agreement.
"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 or other equity interests,
or any other rights, warrants or options to acquire any of the foregoing
securities.
"CHARTER DOCUMENTS" means Seller's Second 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 the 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.
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"COMMON SHARES" means common shares of beneficial interest, par
value $.10 per share, of Seller.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section
5.4(b) of this Agreement.
"CONTRACT" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
whether or not in writing.
"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;
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<PAGE> 9
(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.
"ENVIRONMENTAL PERMITS" has the meaning set forth in Section 3.17(a)
of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EVEREN" means EVEREN Securities, Inc.
"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.
"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 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
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"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 PARTY" means
the party entitled to indemnity hereunder and their successors, assigns, and
heirs; and "INDEMNIFYING PARTY" means the Person obligated to provide
indemnification hereunder and its successors and assigns.
"INITIAL REIT YEAR" has the meaning set forth in Section 3.14(c) of
this Agreement.
"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, 1995 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, 1995 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
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<PAGE> 11
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.
"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.
"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 association, a corporation, an individual, a
partnership, a joint venture, a limited liability company, a trust or any other
entity or organization, including a Governmental Entity.
"PROPERTIES" means the real property owned or leased by Seller,
Subsidiaries and Seller Partnerships listed on Schedule 3.13 hereto.
"PURCHASE PRICE" has the meaning set forth in Section 2.2 of this
Agreement.
"PURE WORLD LITIGATION" means that case pending in the United States
District Court for the Northern District of Texas Dallas Division, Civil No.
3:96-CV-0068-H, involving Seller, Pure World, Inc., Robert Strougo, et. al.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement between Buyer and Seller to be executed contemporaneously with the
Closing.
"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" means the Securities and Exchange Commission or any successor
entity.
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"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.
"SETTLEMENT AGREEMENT" shall mean the settlement agreement by and
among Seller, Charles W. Wolcott and William H. Bricker on the one hand and Pure
World, Inc., Paul O. Koether and Robert Strougo on the other hand attached
hereto as Exhibit A.
"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.
"UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.3(b) of this Agreement.
"USAA GROUP" means United Services Automobile Association, a
reciprocal interinsurance exchange under the Texas Insurance Code ("USAA"), and,
as designated by USAA from time to time, any entity in which USAA directly or
indirectly owns 100% of the issued and outstanding equity securities.
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1.2 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.
SECTION 2. PURCHASE AND SALE
2.1 PURCHASE AND SALE OF THE SHARES. Subject to the terms and conditions
set forth herein, on the Closing Date, Seller shall issue to Buyer, and Buyer
shall purchase from Seller, an aggregate of 924,600 Common Shares (the
"SHARES").
2.2 PURCHASE PRICE; PAYMENT. The cash purchase price for each Common Share
shall be $2.75 per Common Share, and the aggregate cash purchase price for the
Shares (the "PURCHASE PRICE") shall be Two Million Five Hundred Forty-Two
Thousand Six Hundred Fifty Dollars ($2,542,650), payable on the Closing Date by
wire transfer of immediately available funds to an account designated by Seller.
2.3 THE CLOSING.
(a) The closing of the purchase and sale of the Shares (the "CLOSING")
will take place at 10:00 a.m. at the offices of Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P., counsel to Seller, on the same day or within one (1) business
day of final approval of the settlement of the Pure World Litigation by the
court overseeing such settlement (the "CLOSING DATE").
(b) At the Closing, Seller shall deliver to Buyer the certificate or
certificates evidencing the Shares. In addition, all other actions shall be
taken and all other documents shall be delivered
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which are necessary to consummate the purchase and sale of the Shares, other
than such actions and documents as are to be taken or delivered at another date,
as specifically provided in this Agreement.
(c) At the Closing, Buyer shall pay and deliver to Seller the Purchase
Price in the manner set forth in Section 2.2 above.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to, and agrees with, Buyer as follows:
3.1 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
Seller Partnerships (the "SELLER PARTNERSHIPS") of Seller 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 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 Buyer. 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.
3.2 CAPITAL STOCK; TITLE TO SHARES. The authorized Capital Stock of Seller
consists of 10,000,000 Common Shares of which 9,075,400 Common Shares 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
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<PAGE> 15
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 Subsidiary or any Seller
Partnership are issued or outstanding. 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. There are no preemptive rights in
respect of any Common Shares or Capital Stock of any Subsidiary or any Seller
Partnership. Upon the issuance of the Shares to Buyer at the Closing, the Shares
will have been validly issued and be validly outstanding, fully paid and
nonassessable, and the issuance of such Shares is not and will not be subject to
preemptive rights of any other shareholder of Seller. Buyer shall receive good
and marketable title to the Shares, free and clear of all Encumbrances, 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 there are no shares of any class of Capital Stock
of Seller having any priority in respect thereof.
3.3 FINANCIAL STATEMENTS.
(a) AUDITED FINANCIAL STATEMENTS. Seller has delivered to Buyer the
consolidated balance sheets of Seller (which reflect the financial position of
all Subsidiaries and Seller Partnerships), as of December 31, 1993, 1994 and
1995, and the respective related consolidated statements of operations, cash
flows and stockholders' 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 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, 1995, 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 29, 1996.
(b) UNAUDITED FINANCIAL STATEMENTS. Seller has delivered to Buyer the
consolidated balance sheets of Seller (which reflect the financial position of
all Subsidiaries and Seller Partnerships), as of March 31, June 30 and September
30, 1996, and the respective related
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consolidated statements of operations, cash flows and stockholders' equity for
the periods then ended (collectively, the "UNAUDITED FINANCIAL STATEMENTS"). All
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 their respective dates and periods.
(c) NO MATERIAL ADVERSE CHANGES. Since September 30, 1996, except as set
forth in Schedule 3.3, specifically contemplated by this Agreement, specifically
disclosed in any SEC Filings filed since September 30, 1996 and prior to the
date of this Agreement (copies of which have been provided to Buyer), and except
the settlement of the Pure World Litigation, 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:
(i) 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
(ii) 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
(iii) 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.
(d) 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 September 30, 1996 in the ordinary course of business in a manner
consistent with past practice and are not material in amount or which involve
the Pure World Litigation, or (ii) are set forth in Schedule 3.3 hereto.
3.4 SEC REPORTS. Seller has filed with the SEC 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 SEC since December 31, 1993. Such forms, reports,
statements, including registration statements, and other material documents
required to be filed with the SEC by Seller since December 31, 1993 are
collectively referred to in this Agreement as the "SEC FILINGS." Seller has made
available to Buyer all SEC Filings. As of their respective dates, (x) each of
the SEC Filings, including the financial
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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.
3.5 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. 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. This Agreement has been duly 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. 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 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 of 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.
3.6 LEGAL PROCEEDINGS. Except as set forth in Schedule 3.6 and except with
respect to the Pure World Litigation, 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, the Settlement Agreement or any
action taken or to
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<PAGE> 18
be taken pursuant hereto or thereto, or (ii) individually or when aggregated
with one or 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, 1996 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.
3.7 COMPLIANCE WITH LAW AND PERMITS.
(a) 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.
(b) 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 Buyer 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 review by any Governmental Entity
with respect to the Seller Permits is pending or threatened.
3.8 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 the date of the Audited Financial Statements.
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3.9 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.
3.10 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 EVEREN.
3.11 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 Buyer. 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
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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 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.
3.12 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.
3.13 PROPERTIES.
(a) 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"). Except as set forth in Schedule 3.13, Seller,
Subsidiary or Seller Partnership, as applicable, owns good and
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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 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.
(b) Seller has delivered to Buyer a true, correct and complete copy of a
rent roll with respect to each Property 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 October 31,
1996 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, 1996. 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, 1996, 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 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
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and effect, and all premiums due and payable thereunder have been, and on the
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.
(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, 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
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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, 1996 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 the 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 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.
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(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 Closing Date.
(k) Seller has made available (or, with respect to all Tax Returns filed
after the date hereof, will make available) to Buyer 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 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 Buyer all relevant information with
respect to the federal income tax net operating loss carryovers of Seller as of
December 31, 1995, 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 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 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 Buyer 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
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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 Buyer true, correct, and complete copies
of all written reports of any environmental assessment, compliance or regulatory
audit, inspection, or investigation 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,
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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 sale and delivery of the Shares to
Buyer pursuant to this Agreement along with the subsequent sale and delivery of
any other Common Shares to Buyer 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 Buyer
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.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to, and agrees with, Seller as follows:
4.1 ORGANIZATION AND RELATED MATTERS. Buyer is a corporation duly
organized and validly existing under the laws of the State of Delaware. Buyer
has all necessary corporate power and corporate authority to carry on its
business as now being conducted. Buyer has all necessary corporate power and
corporate authority to execute, deliver and perform this Agreement and the
transactions contemplated hereby. USAA beneficially owns, and at Closing will
beneficially own, directly or indirectly, all of the capital stock of Buyer.
4.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement by Buyer has been duly and validly authorized by Buyer and by all
other necessary corporate action on the part of Buyer and no other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement or
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Buyer and constitutes the legally valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
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relating to or limiting creditors' rights generally. The execution and delivery
of this Agreement by Buyer 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 material Contracts of Buyer, other than any filing required
under the Exchange Act.
4.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement by Buyer 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) Buyer's certificate of incorporation and bylaws, pursuant
to which Buyer was organized and by which Buyer is governed, (b) any Law to
which Buyer is subject or (c) any Contract to which Buyer is a party that is
material to the financial condition, results of operations or conduct of the
business of Buyer.
4.4 NO BROKERS OR FINDERS. No agent, broker, finder or investment or
commercial banker, or other Person or firms engaged by or acting on behalf of
Buyer or their respective 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.
4.5 LEGAL PROCEEDINGS. There is no Order or Action pending against or, to
the knowledge of Buyer, affecting Buyer that individually or when aggregated
with one or more other Actions has, or if determined adversely would have, a
material adverse effect on the business, properties, or financial condition of
Buyer or on Buyer's ability to perform this Agreement.
4.6 INVESTMENT REPRESENTATION. Buyer is acquiring the Shares from Seller
for Buyer's own account, for investment purposes only and not with a view to or
for sale in connection with the distribution thereof. Buyer agrees to execute
any further certificate or other document representing Buyer's investment intent
or as to any other matter reasonably requested by Seller to assure compliance
with applicable securities laws.
4.7 LEGENDS; STOP-TRANSFER ORDERS.
(a) All certificates for the Shares may bear legends in substantially the
following form:
"THE SECURITIES 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 SUCH
LAWS OR IS EXEMPT FROM SUCH REGISTRATION REQUIREMENT."
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(b) The certificates for Shares may also bear any legend required by any
applicable state blue sky law.
(c) The certificates for the Shares will also bear a legend relating to
restrictions on transfer imposed pursuant to the percentage ownership limitation
contained in the Charter Documents.
(d) Seller may impose appropriate stop-transfer instructions relating to
the restrictions set forth herein.
4.8 STATUS FOR REIT OWNERSHIP AND INCOME TESTS. At the Closing, applying
the stock ownership rules of Code Section 856(h), Buyer will be treated as a
corporation, and the Shares that it owns will be treated as owned
proportionately by Buyer's policyholders (its "shareholders" for this purpose).
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.
5.1 ACCESS. Seller shall, and shall cause the Subsidiaries and Seller
Partnerships to, authorize and permit Buyer 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 Buyer 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 Buyer
and its partners and their respective officers, employees, accountants and
counsel, as Buyer 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, Buyer and its
partners, and their respective officers, directors, agents, attorneys,
accountants, and representatives, to audit such books and records, to meet 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.
5.2 MATERIAL ADVERSE CHANGES; SEC FILINGS; REPORTS; FINANCIAL STATEMENTS.
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(a) Seller shall promptly notify Buyer 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 Buyer.
(b) Seller will, and will cause the Subsidiaries and Seller Partnerships
to, furnish to Buyer as soon as available copies of all SEC Filings, reports,
renewals, filings, certificates, statements and other documents filed with any
Governmental Entity.
5.3 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 December 24,
1996, 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 Buyer, which consent may not unreasonably be withheld:
(a) conduct the business of Seller, Subsidiaries and Seller Partnerships
in any manner except in the ordinary course consistent with past practices; or
(b) purchase any real property; or
(c) 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 Closing Date; or
(d) issue, sell, redeem or acquire for value, or agree to do so, any debt
obligations, Common Shares or Capital Stock; or
(e) 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) and (ii)
liabilities arising out of, incurred in connection with, or related to the
consummation of the transactions contemplated by this Agreement; or
(f) merge, 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
(g) 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
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(h) amend the Charter Documents or the charter or organizational documents
of the Subsidiaries or Seller Partnerships; or
(i) 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
(j) cancel, satisfy or prepay any debt, obligation, liability or
encumbrance, or waive any claim or right of value of Seller, Subsidiaries or
Seller Partnerships; or
(k) (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, stock option (including, without limitation, the
granting of any stock option or stock appreciation right or performance or
restricted stock award), stock purchase or other employee benefit plan, (ii)
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, stock option (including,
without limitation, the granting of any stock option or stock appreciation right
or performance or restricted stock award) stock 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
(l) 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
(m) make any change in any significant accounting principles or practices
used by Seller, Subsidiaries or Seller Partnerships, except as required by the
SEC; or
(n) 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
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(o) 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
(p) incur any indebtedness for borrowed money or assume, endorse (other
than endorsements of negotiable instruments in the ordinary course of business),
guarantee or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the liabilities or obligations of any Person; or
(q) 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
(r) agree to or make any commitment to take any action prohibited by this
Section 5.3.
5.4 PROHIBITION OF SOLICITATION.
(a) GENERAL PROHIBITION. Seller shall not, and it shall direct and use its
best efforts to cause its officers, Trust Managers, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it) to not, directly or indirectly, initiate, solicit
or encourage (including by way of furnishing information or assistance), or take
any other action to facilitate, the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its shareholders)
with respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
Common Shares of Seller (any such proposal or offer being hereinafter referred
to as an "ALTERNATIVE PROPOSAL") or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any Person relating to an Alternative Proposal, or otherwise facilitate any
effort or attempt to make or implement an Alternative Proposal. Except as
disclosed to Buyer in writing prior to the date of this Agreement, Seller
represents and warrants to Buyer that there are no existing activities,
discussions or negotiations with any Person with respect to an Alternative
Proposal. Seller hereby agrees to notify Buyer immediately if any inquiries or
proposals are received by, any information is requested from, or any
negotiations or discussions are sought to be initiated or continued with Seller
with respect to an Alternative Proposal.
(b) UNSOLICITED OFFERS. Nothing contained in Section 5.4(a) shall prohibit
the Trust Managers from: (i) furnishing information to or entering into
discussions or negotiations with any Person that makes an unsolicited bona fide
Alternative Proposal if, and only to the extent that, (1) prior to furnishing
such information to, or entering into discussions or negotiations with, such
Person, Seller provides written notice to Buyer to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such Person, (2) prior to furnishing such information to, or entering into
discussions or negotiations with, such Person, Seller receives from such Person
an executed confidentiality agreement in customary form on terms not less
favorable in any material respect to Seller than the terms of the letter
agreement, dated July 12, 1996 by and between Buyer and Seller (the
"CONFIDENTIALITY AGREEMENT"), (3) Seller keeps Buyer informed of the status of
any such discussions or negotiations and (4) Seller shall not disclose the terms
of this Agreement and other information
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with respect to transactions among Seller and Buyer except as permitted under
Section 12.9 hereto; and (ii) to the extent applicable, complying with Rule 14e-
2 promulgated under the Exchange Act with regard to an Alternative Proposal.
Nothing in this Section 5.4 shall permit Seller to terminate this Agreement or
affect any other obligation of Seller under this Agreement.
(c) BUYER'S CONTINUING RIGHTS. Seller shall be permitted to enter into a
binding agreement relating to an Alternative Proposal only if the Trust Managers
determine, after considering the advice of its legal counsel, that the failure
to consummate such a transaction might reasonably be expected to subject the
Trust Managers to liability for breach of their fiduciary duties to Seller's
shareholders. The terms of any Alternative Proposal to which Seller is a party
in which Seller is the surviving entity shall provide that Buyer shall have the
right, at its election, to purchase the Shares upon payment of the Purchase
Price prior to consummation of any such transaction. In the event that Seller
shall not be the surviving entity of such transaction, upon consummation of such
transaction Seller shall cause such third party to assume the obligations of
Seller under this Agreement and Buyer shall have the right, at its election, to
acquire, upon payment of the Purchase Price, such securities or other property
as it would have been entitled to receive upon exchange of the Shares if Buyer
had purchased the Shares immediately prior to the consummation of such
transaction.
(d) REIMBURSEMENT OF EXPENSES. If for any reason, regardless of fault, the
Shares are not sold by Seller to Buyer, Seller shall reimburse Buyer for all
out-of-pocket expenses incurred by Buyer in connection with the transactions
contemplated by this Agreement upon the submission by Buyer to Seller of
documentation evidencing the incurrence of such expenses.
5.5 NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt notice to
Buyer, and Buyer 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 Buyer 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.
5.6 PERMITS AND APPROVALS.
(a) Seller and Buyer each agree to cooperate and use their best efforts to
obtain (and will immediately prepare all registrations, filings and
applications, requests and notices preliminary to all) Approvals and Permits
that may be necessary or which may be reasonably requested by Seller or Buyer to
consummate the transactions contemplated by this Agreement.
(b) To the extent that the Approval of a third party with respect to any
Material Contract is required in connection with the transactions contemplated
by this Agreement, Seller shall use its best efforts to obtain such Approval
prior to the Closing Date.
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SECTION 6. ADDITIONAL CONTINUING COVENANTS AND AGREEMENTS
6.1 USE OF PROCEEDS. The proceeds from the sale of the Shares to Buyer,
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 expenses provided for in the Settlement Agreement and
general reserves.
6.2 APPOINTMENT OF TRUST MANAGERS.
(a) Effective as of the Closing Date, Seller shall increase the number of
its Trust Managers from three (3) to five (5), and Seller shall appoint two (2)
individuals designated by Buyer to fill the vacancies caused by the increase in
the number of Trust Managers under this Section 6.2(a). In addition, at the
first annual meeting and all subsequent annual meetings of shareholders after
the number of Trust Managers has been increased to five (5) under this Section
6.2(a), Seller shall nominate, and use its best efforts to have such persons
elected (which efforts shall include, without limitation, including Buyer's
nominees in management's slate for nomination and election and solicitation of
proxies on their behalf), two (2) designees of Buyer (which may be different
persons than the persons initially appointed as Trust Managers pursuant to the
first sentence of this Section 6.2(a) if such initial designees shall have died,
resigned, been removed or declined to be nominated) as Trust Managers. During
such time as Seller shall have individuals designated by Buyer serving as Trust
Managers 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 five (5) persons, including the designees of Buyer. Such designees of Buyer
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 a designee of
Buyer serving as a Trust Manager pursuant to the first sentence of this Section
6.2(a), the Buyer shall be entitled to appoint a replacement designee 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 five (5)
pursuant to this Section 6.2(a).
(b) ADDITIONAL APPOINTMENTS. In addition to Buyer's rights under Section
6.2(a), at any time during the three (3) year period commencing on the Closing
Date, Buyer may, by notice in writing to Seller, require Seller to increase the
number of Trust Managers from five (5) to seven (7) and to appoint two (2)
individuals designated by Buyer in such written notice to fill such resulting
vacancies. In addition, including Buyer's rights under Section 6.2(a), at the
first annual meeting and all subsequent annual meetings of shareholders after
notice by Buyer pursuant to the first sentence of this Section 6.2(b), Seller
shall nominate four (4) designees of Buyer (which may be different persons than
those persons initially appointed as Trust Managers pursuant to such first
sentence if such initial designees shall have died, resigned, been removed or
declined to be nominated) as Trust Managers. During such time as Seller shall
have designees of Buyer serving as Trust Managers pursuant to this Section
6.2(b), the Trust Managers shall consist of not more than seven (7) persons,
including designees of Buyer. Such designees of Buyer shall hold office until
resignation, removal, death or
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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 a designee of Buyer serving as a Trust Manager pursuant to the first
sentence of this Section 6.2(b), the Buyer shall be entitled to appoint a
replacement designee as Trust Manager.
(c) QUALIFICATIONS. Each of the representatives designated by Buyer in
accordance with this Section 6.2 shall be a Person selected by Buyer in its sole
discretion; provided, however, that any such person may not have been involved
in any of the events described in Item 401(d)(1)- (4) of Regulation S-K
promulgated under the Exchange Act.
(d) COMMITTEES. At any time that Buyer shall have exercised its rights
under this Section 6.2 to appoint a designee as Trust Manager, Seller shall
appoint at least one of Buyer's designees on each committee of the Trust
Managers, and each such committee shall contain no more than three (3) members
until expiration of the latest term of office of any designee of Buyer pursuant
to Section 6.2(a) or 6.2(b).
6.3 ENVIRONMENTAL MATTERS. Seller will advise Buyer 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.
6.4 STATUS FOR REIT OWNERSHIP AND INCOME TESTS. Following the Closing, and
at all subsequent times during which Buyer owns any of the Shares, applying the
stock ownership rules of Code Section 856(h), Buyer will be treated as a
corporation, and the Shares that it owns will be treated as owned
proportionately by Buyer's policyholders (its "shareholders" for this purpose).
6.5 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.
6.6 SELLER/BUYER REGISTRATION RIGHTS AGREEMENT. Contemporaneously with the
Closing, Buyer and Seller shall enter into a Registration Rights Agreement
substantially in the form of Exhibit B.
6.7 REIT QUALIFICATION. Seller shall take all actions necessary to
maintain Seller's qualification as a REIT and, without the written consent of
Buyer, 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.
6.8 SERVICES BY BUYER. To the extent permitted by law and the Charter
Documents, Buyer shall have the right to provide management and leasing services
to Seller at fair market rates.
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SECTION 7. GENERAL CONDITIONS OF PURCHASE
The obligations of the parties to effect the Closing shall be subject to
the following conditions unless waived in writing by all parties:
7.1 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 Closing Date.
7.2 APPROVALS. To the extent required by applicable Law, all Permits and
Approvals required to be obtained in connection with the 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 Closing Date.
7.3 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 Closing Date whether or not Buyer or its Affiliates
is a party.
7.4 NEW YORK STOCK EXCHANGE. The Shares shall have been approved for
listing, upon official notice of issuance, on the New York Stock Exchange.
Seller shall have received a letter or other assurance from the New York Stock
Exchange confirming that approval by Seller's shareholders of the issuance of
the Shares is not required under the rules of 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.
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to effect the Closing shall be subject to the
following conditions except to the extent waived in writing by Buyer:
8.1 SETTLEMENT AGREEMENT. The final settlement of the Pure World
Litigation by the court overseeing such settlement shall have occurred on or
before the Closing Date.
8.2 ACCURACY OF SELLER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Seller set forth in this Agreement shall be
true and correct at the Closing Date as if made on and as of the Closing Date.
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8.3 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 Closing Date, including the covenants set forth in Section 5.
8.4 NO MATERIAL ADVERSE CHANGE. During the period from the date of the
Audited Financial Statements to the Closing Date, (i) there shall not have been
any material adverse change in the business, assets, prospects, financial
condition or the results of operations of Seller, and Seller shall not have
sustained any material Loss or damage to its assets (including those of
Subsidiaries and Seller Partnerships), except for Losses covered by insurance,
that adversely affects its ability to conduct a material part of its business
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 Buyer, significantly impair the marketability or value of the
Shares, (iii) the trading in any securities of the Company 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 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.
8.5 CERTIFICATION BY SELLER. Buyer shall have received a certificate,
dated as of the Closing Date, signed by the President of Seller, certifying, in
such detail as Buyer and its counsel reasonably may request, that the conditions
specified in Section 8.1, Section 8.2, Section 8.3, and Section 8.4 have been
fulfilled.
8.6 OPINION OF SELLER'S COUNSEL. Buyer shall have received from counsel
for Seller an opinion, dated as of the Closing Date, in form and substance
reasonably satisfactory to Buyer as to the matters set forth in Schedule 8.6.
8.7 NO OTHER BUSINESS COMBINATION TRANSACTION. Seller shall not have
entered into an agreement relating to an Alternative Proposal and its Trust
Managers shall not have recommended an Alternative Proposal.
SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to effect the Closing shall be subject to the
following conditions, except to the extent waived in writing by Seller:
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9.1 SETTLEMENT AGREEMENT. The final settlement of the Pure World
Litigation by the court overseeing such settlement shall have occurred on or
before the Closing Date.
9.2 ACCURACY OF BUYER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Buyer set forth in this Agreement shall be
true and correct at the Closing Date as if made on and as of the Closing Date.
9.3 BUYER'S PERFORMANCE. Buyer 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 Buyer
on or before the Closing Date.
9.4 CERTIFICATION BY BUYER. Seller shall have received a certificate,
dated as of the Closing Date, signed by the President or a Vice President of
Buyer, certifying, in such detail as Seller and its counsel reasonably may
request, that the conditions specified in Section 9.2 and Section 9.3 have been
fulfilled.
9.5 OPINION OF BUYER'S COUNSEL. Seller shall have received from counsel to
Buyer an opinion, dated as of the Closing Date, in form and substance reasonably
satisfactory to Seller as to the matters set forth in Schedule 9.5.
SECTION 10. TERMINATION OF OBLIGATIONS; SURVIVAL
10.1 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:
(a) MUTUAL CONSENT. By mutual consent in writing of Buyer and Seller.
(b) CONDITIONS TO BUYER'S PERFORMANCE NOT MET. By Buyer with written
notice to Seller if the Closing Date has not occurred on or before December 31,
1996. Notwithstanding the foregoing, Buyer may not exercise any right to
terminate this Agreement pursuant to this paragraph if Buyer has breached in any
material respect its covenants or agreements set forth in this Agreement in any
manner that shall have proximately contributed to the failure of the Closing
Date to occur on or before December 31, 1996.
(c) CONDITIONS TO SELLER'S PERFORMANCE NOT MET. By Seller with written
notice to Buyer if the Closing Date has not occurred on or before December 31,
1996. Notwithstanding the foregoing, Seller may not exercise any right to
terminate this Agreement pursuant to this paragraph if Seller has breached in
any material respect its covenants or agreements set forth in this Agreement in
any manner that shall have proximately contributed to the failure of the Closing
Date to occur on or before December 31, 1996.
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(d) MISREPRESENTATION OR MATERIAL BREACH. By Buyer or Seller with written
notice to the other party if there has been a misrepresentation or material
breach on the part of Seller or Buyer, respectively, 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 ten business
days after receipt of notice from Buyer or Seller of the terminating party's
intention to terminate.
(e) ENVIRONMENTAL NONCOMPLIANCE. By Buyer in the event of the discovery of
any Release or other matter prior to the Closing Date 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.
10.2 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.
10.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in or made pursuant to this Agreement shall expire on the
third anniversary of the Closing 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 11 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. All
covenants and agreements of the parties hereto shall be continuing and shall
survive the Closing Date pursuant to the terms thereof.
SECTION 11. INDEMNIFICATION
11.1 OBLIGATIONS OF SELLER. Seller agrees to indemnify, defend and hold
harmless Buyer and its officers, employees, agents, directors and Affiliates
(collectively, the "BUYER INDEMNIFIED PARTIES") from and against any and all
Losses of the Buyer Indemnified Parties (as incurred) as a result of, or based
upon, relating to or arising out of, directly or indirectly, the transactions
contemplated hereby or by the Registration Rights Agreement, including, without
limitation, as a consequence of (a) any inaccuracy in, or breach or
nonperformance of, any of the representations, warranties, covenants or
agreements made by Seller in, or pursuant to, this Agreement, or (b) any pending
or threatened Action brought by Seller's shareholders or creditors or any other
Person other than the Buyer Indemnified Parties or their creditors relating to,
or arising out of or in connection with,
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<PAGE> 39
directly or indirectly, the transactions contemplated under this Agreement;
provided, however, that Seller shall not be obligated to indemnify, defend or
hold harmless any of the Buyer Indemnified Parties for any claims based solely
on actions taken by any of the Buyer Indemnified Parties other than the
performance of the covenants and agreements to be undertaken by Buyer pursuant
to the terms and conditions of this Agreement and any other action authorized in
writing by Seller. As a condition to the rights of any of the Buyer Indemnified
Parties under this Section 11, Seller may require that any such Person provide a
written undertaking that such Person will repay to Seller any amount expended by
Seller to indemnify, defend or hold harmless such Person in the event and to the
extent a court determines that Seller's indemnification or defense of such
Person is prohibited by applicable Law.
11.2 OBLIGATIONS OF BUYER. Buyer agrees 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 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 Buyer in, or pursuant to, this
Agreement, or (b) any pending or threatened Action brought by Buyer's
policyholders or creditors relating to, or arising out of or in connection with,
directly or indirectly, the transactions contemplated under this Agreement;
provided, however, that Buyer 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 Buyer. As a condition to the rights of any of the Seller Indemnified
Parties under this Section 11, Buyer may require that any such Person provide a
written undertaking that such Person will repay to Buyer any amount expended by
Buyer to indemnify, defend or hold harmless such Person in the event and to the
extent a court determines that Buyer's indemnification or defense of such Person
is prohibited by applicable Law.
11.3 PROCEDURE.
(a) 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.
(b) 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 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
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<PAGE> 40
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.
11.4 SURVIVAL. The indemnity set forth in this Section 11 shall survive
the Closing or 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 clause (b) of Sections 11.1 or 11.2, forever.
11.5 NOTICE BY SELLER. Seller and Buyer agree to notify in writing the
other party 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 party), whether before or after Closing.
SECTION 12. GENERAL
12.1 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.
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<PAGE> 41
12.2 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.
12.3 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.
12.4 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 TEXAS, WITHOUT GIVING EFFECT
TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION (WHETHER OF THE STATE OF TEXAS
OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF TEXAS.
12.5 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 Buyer may assign its rights hereunder (including but not
limited to its rights under Section 11) to any member of the USAA Group. Buyer
shall remain liable to Seller for the payment of the Purchase Price and other
obligations of Buyer hereunder notwithstanding a permitted assignment.
12.6 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.
12.7 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 party.
12.8 PUBLICITY AND REPORTS. Seller and Buyer 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 party, except to the extent
that independent legal counsel to Seller or Buyer, as the case may be, shall
advise Seller or Buyer in writing that a particular action is required by
applicable Law (in which event the party taking such
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<PAGE> 42
action shall cooperate with the other party in connection with any disclosure or
publicity resulting from such action).
12.9 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) may otherwise be required by Law to be disclosed or (c) to the
extent such duty as to confidentiality is waived in writing by the other party.
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 party
all documents (and reproductions thereof) received by it or its representatives
from such other party (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.
12.10 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.
12.11 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 Buyer, addressed to:
USAA Real Estate Company
8000 Robert F. McDermott Freeway
IH-10 West, Suite 600
San Antonio, Texas 78230-3884
Attention: David M. Holmes
Randal R. Seewald, Esq.
Telephone: (210) 498-0626
Telecopy: (210) 498-6214
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<PAGE> 43
If to Seller, addressed to:
American Industrial Properties REIT
6220 North Beltline Road, Suite 205
Irving, Texas 75063-2656
Attention: Mr. Charles W. Wolcott
President and Chief Executive Officer
Telephone: (972) 550-6053
Telecopy: (972) 550-6037
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.
12.12 EXPENSES. Seller and Buyer shall pay their 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 their respective financial advisers, accountants
and counsel.
12.13 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.
Buyer and Seller shall be entitled to seek any equitable remedy to the extent
such remedy is available under applicable Law.
12.14 REPRESENTATION BY COUNSEL; INTERPRETATION. Seller and Buyer each
acknowledge 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 Buyer and Seller, and no rule of strict construction shall be applied against
any party to this Agreement.
12.15 SEVERABILITY. If any provision of this Agreement is determined to be
invalid, illegal or unenforceable by any Governmental Entity, the remaining
provisions of this Agreement to the extent permitted by Law shall remain in full
force and effect to the extent permitted by Law, and the parties hereby to the
same extent waive any provision of Law that renders any provision hereof
prohibited or unenforceable in any respect.
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<PAGE> 44
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officers as of the day and year first
above written.
"BUYER"
USAA REAL ESTATE COMPANY
By:_____________________________________
T. Patrick Duncan
Senior Vice President - Operations
"SELLER"
AMERICAN INDUSTRIAL PROPERTIES REIT
By:_____________________________________
Charles W. Wolcott
President and Chief Executive Officer
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<PAGE> 1
EXHIBIT 10.4
SHARE PURCHASE AGREEMENT
dated as of December 20, 1996
Among
AMERICAN INDUSTRIAL PROPERTIES REIT, INC.,
AMERICAN INDUSTRIAL PROPERTIES REIT
and
USAA REAL ESTATE COMPANY
<PAGE> 2
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION.............................-1-
1.1 Definitions......................................................-1-
1.2 Rules of Construction............................................-8-
SECTION 2. PURCHASE AND SALE...............................................-8-
2.1 Purchase and Sale of the Shares..................................-8-
2.2 Purchase Price; Payment.........................................-9-
2.3 The Closing......................................................-9-
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND TRUST...............-9-
3.1 Organization and Related Matters.................................-9-
3.2 Capital Stock; Title to Shares..................................-10-
3.3 Financial Statements............................................-11-
3.4 SEC Reports.....................................................-12-
3.5 Authorization; No Conflicts.....................................-12-
3.6 Legal Proceedings...............................................-13-
3.7 Compliance with Law and Permits.................................-14-
3.8 Dividends and Other Distributions...............................-14-
3.9 Certain Interests...............................................-14-
3.10 No Brokers or Finders...........................................-15-
3.11 Employee Benefit Plans..........................................-15-
3.12 Labor Matters...................................................-16-
3.13 Properties......................................................-16-
3.14 Tax Matters.....................................................-18-
3.15 Material Contracts..............................................-20-
3.16 Insurance.......................................................-20-
3.17 Environmental Matters...........................................-21-
3.18 Trust Records; Accounting Records...............................-21-
3.19 New York Stock Exchange Listing.................................-22-
3.20 Disclosure of Facts.............................................-22-
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.........................-22-
4.1 Organization and Related Matters................................-22-
4.2 Authorization...................................................-22-
4.3 No Conflicts....................................................-22-
4.4 No Brokers or Finders...........................................-23-
4.5 Legal Proceedings...............................................-23-
4.6 Investment Representation.......................................-23-
4.7 Legends; Stop-Transfer Orders...................................-23-
4.8 Status for REIT Ownership and Income Tests......................-23-
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<PAGE> 3
SECTION 5. COVENANTS WITH RESPECT TO CONDUCT OF SELLER PRIOR TO
CLOSING.........................................................-23-
5.1 Access..........................................................-23-
5.2 Material Adverse Changes; SEC Filings; Reports; Financial
Statements......................................................-24-
5.3 Conduct of Business.............................................-24-
5.4 Prohibition of Solicitation.....................................-26-
5.5 Notification of Certain Matters.................................-28-
5.6 Permits and Approvals...........................................-28-
SECTION 6. ADDITIONAL CONTINUING COVENANTS AND AGREEMENTS..................-28-
6.1 Use of Proceeds.................................................-28-
6.2 Environmental Matters...........................................-28-
6.3 Status for REIT Ownership and Income Tests......................-28-
6.4 Prohibited Transactions.........................................-28-
6.5 Registration Rights Agreement...................................-29-
6.6 REIT Qualification..............................................-29-
6.7 Services by Buyer...............................................-29-
SECTION 7. GENERAL CONDITIONS OF PURCHASE..................................-29-
7.1 No Orders.......................................................-29-
7.2 Approvals.......................................................-29-
7.3 Absence of Litigation...........................................-29-
7.4 New York Stock Exchange.........................................-29-
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER..............................-30-
8.1 Settlement Agreement............................................-30-
8.2 Accuracy of Representations and Warranties......................-30-
8.3 Performance by Seller and the Trust.............................-30-
8.4 No Material Adverse Change......................................-30-
8.5 Certification by Seller and the Trust...........................-30-
8.6 Opinion of Seller and the Trust's Counsel.......................-31-
8.7 No Other Business Combination Transaction.......................-31-
SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER AND THE TRUST...............-31-
9.1 Settlement Agreement............................................-31-
9.2 Accuracy of Buyer's Representations and Warranties..............-31-
9.3 Buyer's Performance.............................................-31-
9.4 Certification by Buyer..........................................-31-
9.5 Opinion of Buyer's Counsel......................................-31-
SECTION 10. TERMINATION OF OBLIGATIONS; SURVIVAL...........................-31-
10.1 Termination of Agreement........................................-31-
10.2 Effect of Termination...........................................-32-
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<PAGE> 4
10.3 Survival of Representations and Warranties......................-32-
SECTION 11. INDEMNIFICATION...............................................-33-
11.1 Obligations of Seller and the Trust.............................-33-
11.2 Obligations of Buyer............................................-33-
11.3 Procedure.......................................................-34-
11.4 Survival........................................................-34-
11.5 Notice by Seller and the Trust..................................-35-
SECTION 12. GENERAL.......................................................-35-
12.1 Amendments; Waivers.............................................-35-
12.2 Schedules; Exhibits; Integration................................-35-
12.3 Best Efforts; Further Assurances................................-35-
12.4 Governing Law...................................................-35-
12.5 No Assignment...................................................-35-
12.6 Headings........................................................-36-
12.7 Counterparts....................................................-36-
12.8 Publicity and Reports...........................................-36-
12.9 Confidentiality.................................................-36-
12.10 Parties in Interest.............................................-36-
12.11 Notices.........................................................-37-
12.12 Expenses........................................................-37-
12.13 Remedies; Waiver................................................-37-
12.14 Representation By Counsel; Interpretation.......................-38-
12.15 Severability....................................................-38-
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<PAGE> 5
EXHIBITS
EXHIBIT A Settlement Agreement
EXHIBIT B Registration Rights Agreement
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 Trust 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 8.6 List of Opinions of Seller and the Trust's Counsel
SCHEDULE 9.5 List of Opinions of Buyer's Counsel
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<PAGE> 6
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of December 20, 1996, by and among AMERICAN INDUSTRIAL PROPERTIES REIT, INC.,
a Maryland corporation ("SELLER"), AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas
real estate investment trust ("TRUST"), and USAA REAL ESTATE COMPANY, a Delaware
corporation ("BUYER").
R E C I T A L S
A. Seller is a wholly-owned subsidiary of the Trust.
B. The Trust qualifies and operates as a real estate investment trust for
federal income tax purposes.
C. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, a certain number of Common Shares (as defined herein) owned by Seller
upon the terms and subject to the conditions set forth in this Agreement.
D. The proceeds from the sale of the Common Shares owned by Seller 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
1.1 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 Share Purchase Agreement, by and among
Seller, the Trust and Buyer, as amended from time to time pursuant to the terms
of this Agreement, together with all Exhibits and all Schedules attached hereto.
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<PAGE> 7
"ALTERNATIVE PROPOSAL" has the meaning set forth in Section 5.4(a)
of this Agreement.
"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 the Trust.
"BUYER" means USAA Real Estate Company, a Delaware corporation, or
permitted assigns.
"BUYER INDEMNIFIED PARTIES" has the meaning set forth in Section
11.1 of this Agreement.
"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 or other equity interests,
or any other rights, warrants or options to acquire any of the foregoing
securities.
"CHARTER DOCUMENTS" means the Trust's Second 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 the date specified in Section 2.3(a) of this
Agreement.
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<PAGE> 8
"CODE" means the Internal Revenue Code of 1986, as amended, and, as
applicable, the regulations promulgated thereunder.
"COMMON SHARES" means common shares of beneficial interest, par
value $.10 per share, of the Trust.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section
5.4(b) of this Agreement.
"CONTRACT" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
whether or not in writing.
"DECEMBER 13 AGREEMENT" has the meaning set forth in Section 3.5 of
this Agreement.
"DEMAND NOTE" has the meaning set forth in Section 2.2 of this
Agreement.
"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.
-3-
<PAGE> 9
"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 the Trust, Subsidiaries or a Trust 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.
"ENVIRONMENTAL PERMITS" has the meaning set forth in Section 3.17(a)
of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EVEREN" means EVEREN Securities, Inc.
"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.
"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 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
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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 PARTY" means
the party entitled to indemnity hereunder and their successors, assigns, and
heirs; and "INDEMNIFYING PARTY" means the Person obligated to provide
indemnification hereunder and its successors and assigns.
"INITIAL REIT YEAR" has the meaning set forth in Section 3.14(c) of
this Agreement.
"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 the Trust, any
Subsidiary or any Trust 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, 1995 obligates the Trust, any Subsidiary or any Trust
Partnership to pay an amount equal to $100,000 or more, (b) is one of the group
of Tenant Leases that is anticipated by the Trust to produce 66 2/3% of the
Trust'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
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<PAGE> 11
Lease, has an unexpired term as of December 31, 1995 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 the Trust, any
Subsidiary or any Trust Partnership, (f) provides for the extension of credit by
the Trust, any Subsidiary or any Trust Partnership or a line of credit to the
Trust, any Subsidiary or any Trust Partnership in excess of $50,000, (g)
provides for a guaranty or indemnity by the Trust, any Subsidiary or any Trust
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 the Trust or securities exercisable for or convertible into
any equity securities of the Trust, 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
the Trust, Subsidiaries or Trust Partnerships.
"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.
"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 association, a corporation, an individual, a
partnership, a joint venture, a limited liability company, a trust or any other
entity or organization, including a Governmental Entity.
"PROPERTIES" means the real property owned or leased the Trust,
Subsidiaries and Trust Partnerships listed on Schedule 3.13 hereto.
"PURCHASE PRICE" has the meaning set forth in Section 2.2 of this
Agreement.
"PURE WORLD LITIGATION" means that case pending in the United States
District Court for the Northern District of Texas Dallas Division, Civil No.
3:96-CV-0068-H, involving the Trust, Pure World, Inc., Robert Strougo, et. al.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement between Buyer and the Trust to be executed contemporaneously with the
Closing.
"REIT" has the meaning set forth in Section 3.14(b) of this
Agreement.
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"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" means the Securities and Exchange Commission or any successor
entity.
"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, Inc., a Maryland
corporation and a wholly-owned subsidiary of the Trust.
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section
11.2 of this Agreement.
"SELLING SHAREHOLDER AGREEMENTS" has the meaning set forth in
Section 3.5 of this Agreement.
"SETTLEMENT AGREEMENT" shall mean the settlement agreement by and
among the Trust, Charles W. Wolcott and William H. Bricker on the one hand and
Pure World, Inc., Paul O. Koether and Robert Strougo on the other hand attached
hereto as Exhibit A.
"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. All references herein to Subsidiaries shall include Seller.
"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" means American Industrial Properties REIT, a Texas real
estate investment trust.
"TRUST BENEFIT PLANS" has the meaning set forth in Section 3.11 of
this Agreement.
"TRUST MANAGERS" means the Trust Managers of the Trust.
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<PAGE> 13
"TRUST PARTNERSHIPS" has the meaning set forth in Section 3.1 of
this Agreement.
"TRUST PERMITS" has the meaning set forth in Section 3.7(b) of this
Agreement.
"UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.3(b) of this Agreement.
"USAA GROUP" means United Services Automobile Association, a
reciprocal interinsurance exchange under the Texas Insurance Code ("USAA"), and,
as designated by USAA from time to time, any entity in which USAA directly or
indirectly owns 100% of the issued and outstanding equity securities.
1.2 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 Trust Partnership shall be deemed
to be knowledge of Seller and the Trust.
SECTION 2. PURCHASE AND SALE
2.1 PURCHASE AND SALE OF THE SHARES. Subject to the terms and conditions
set forth herein, on the Closing Date, Seller shall sell to Buyer, and Buyer
shall purchase from Seller, an aggregate of 998,100 Common Shares (the
"SHARES").
2.2 PURCHASE PRICE; PAYMENT. The aggregate purchase price for the Shares
(the "PURCHASE PRICE") is payable on the Closing Date by the cancellation of all
principal and interest
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outstanding under the Promissory Note dated November 25, 1996 in the principal
amount of $2,769,775 between the Trust and Buyer (the "DEMAND NOTE").
2.3 THE CLOSING.
(a) The closing of the purchase and sale of the Shares (the "CLOSING")
will take place at 10:00 a.m. at the offices of Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P., counsel to Seller and the Trust, within one (1) or two (2)
business days of final approval of the settlement of the Pure World Litigation
by the court overseeing such settlement (the "CLOSING DATE").
(b) At the Closing, Seller shall deliver to Buyer the certificate or
certificates evidencing the Shares. 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, other than such actions and
documents as are to be taken or delivered at another date, as specifically
provided in this Agreement.
(c) At the Closing, Buyer shall pay and deliver to Seller the Purchase
Price in the manner set forth in Section 2.2 above.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND TRUST
Seller and the Trust, jointly and severally, represent and warrant to, and
agree with, Buyer as follows:
3.1 ORGANIZATION AND RELATED MATTERS. Seller is duly organized, validly
existing and in good standing under the laws of the State of Maryland. Seller
has all necessary corporate power and corporate authority to execute, deliver
and perform this Agreement. The Trust is duly organized, validly existing and in
good standing under the laws of the State of Texas. The Trust has all necessary
power and authority to execute, deliver and perform this Agreement. Schedule 3.1
lists all Subsidiaries (the "SUBSIDIARIES," which term includes Seller) and all
Trust Partnerships (the "TRUST PARTNERSHIPS") of the Trust and correctly sets
forth the Trust's ownership interest therein, the jurisdiction in which each
Subsidiary and each Trust Partnership is organized and each jurisdiction in
which the Trust, each Subsidiary and each Trust Partnership is and is required
to be qualified or licensed to do business as a foreign Person. Each Subsidiary
and each Trust Partnership is duly organized, validly existing and, with respect
to each Subsidiary, in good standing under the laws of the jurisdiction of its
incorporation or organization. The Trust, Subsidiaries and Trust 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. The Trust, Subsidiaries
and Trust 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
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<PAGE> 15
executive officers of the Trust, Subsidiaries and Trust Partnerships. True,
correct and complete copies of the Charter Documents and the charter or
organizational documents of Subsidiaries and Trust 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 Buyer. The Trust is registered and is a reporting company under the
Exchange Act. Neither any Subsidiary nor any Trust Partnership is registered or
is a reporting company under the Exchange Act. Except as listed on Schedule 3.1,
the Trust does not directly or indirectly own or control any equity interest in
any Person.
3.2 CAPITAL STOCK; TITLE TO SHARES. The authorized Capital Stock of the
Trust consists of 10,000,000 Common Shares of which 10,000,000 Common Shares are
issued and outstanding. The Trust 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. The Trust owns the equity interest in each Trust
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 Trust
Partnership or to restructure or recapitalize the Trust, any Subsidiary or any
Trust Partnership. Except as set forth in Schedule 3.2, there are no outstanding
Contracts of the Trust, any Subsidiary or any Trust 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 the Trust, any Subsidiary or any Trust Partnership are issued or
outstanding. There are no voting trusts or other agreements or understandings to
which the Trust, any Subsidiary or any Trust Partnership is a party or is bound,
or to the knowledge of the Trust and 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 Trust Partnership. All issued and
outstanding Common Shares and Capital Stock of all Subsidiaries and Trust
Partnerships were duly authorized and validly issued at the time of issuance and
are fully paid and nonassessable. There are no preemptive rights in respect of
any Common Shares or Capital Stock of any Subsidiary or any Trust Partnership.
Upon the sale of the Shares to Buyer at the Closing, the Shares will have been
validly issued and be validly outstanding, fully paid and nonassessable, and the
sale of such Shares is not and will not be subject to preemptive rights of any
other shareholder of the Trust. Buyer shall receive good and marketable title to
the Shares, free and clear of all Encumbrances, 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 the Trust with respect to priority
in payment of dividends and the distribution of assets upon any liquidation of
the Trust, and there are no shares of any class of Capital Stock of the Trust
having any priority in respect thereof.
3.3 FINANCIAL STATEMENTS.
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(a) AUDITED FINANCIAL STATEMENTS. The Trust has delivered to Buyer the
consolidated balance sheets of the Trust (which reflect the financial position
of all Subsidiaries and Trust Partnerships), as of December 31, 1993, 1994 and
1995, and the respective related consolidated statements of operations, cash
flows and stockholders' 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 present fairly, in all material
respects, the consolidated financial condition and results of operations of the
Trust, Subsidiaries and Trust Partnerships as of their respective dates and
periods. Since December 31, 1995, there has been no change in the significant
accounting policies or procedures of the Trust, any Subsidiary or any Trust
Partnership. The Trust has not received any annual management letters from the
Auditors since March 29, 1996.
(b) UNAUDITED FINANCIAL STATEMENTS. The Trust has delivered to Buyer the
consolidated balance sheets of the Trust (which reflect the financial position
of all Subsidiaries and Trust Partnerships), as of March 31, June 30 and
September 30, 1996, and the respective related consolidated statements of
operations, cash flows and stockholders' equity for the periods then ended
(collectively, the "UNAUDITED FINANCIAL STATEMENTS"). All 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 the Trust, Subsidiaries and Trust
Partnerships as of their respective dates and periods.
(c) NO MATERIAL ADVERSE CHANGES. Since September 30, 1996, except as set
forth in Schedule 3.3, specifically contemplated by this Agreement, specifically
disclosed in any SEC Filings filed since September 30, 1996 and prior to the
date of this Agreement (copies of which have been provided to Buyer), and except
the settlement of the Pure World Litigation, the Trust, Subsidiaries and Trust
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:
(i) any change in or event affecting the business of the Trust,
Subsidiaries and Trust 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 the Trust, Subsidiaries or Trust Partnerships, or
(ii) 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
(iii) any casualty, loss, damage or destruction of any real
property of the Trust, any Subsidiary or any Trust Partnership that has
involved or may involve a Loss (whether or not
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<PAGE> 17
covered by insurance) to the Trust, any Subsidiary or any Trust
Partnership of more than $100,000 individually, or $300,000 in the
aggregate.
(d) NO OTHER LIABILITIES OR CONTINGENCIES. Neither the Trust nor any
Subsidiary nor any Trust 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 September 30, 1996 in the ordinary course of business in a manner
consistent with past practice and are not material in amount or which involve
the Pure World Litigation, or (ii) are set forth in Schedule 3.3 hereto.
3.4 SEC REPORTS. The Trust has filed with the SEC 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 SEC since December 31, 1993. Such forms, reports,
statements, including registration statements, and other material documents
required to be filed with the SEC by the Trust since December 31, 1993 are
collectively referred to in this Agreement as the "SEC FILINGS." The Trust has
made available to Buyer 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.
3.5 AUTHORIZATION; NO CONFLICTS. Seller has the requisite corporate power
and corporate authority to enter into this Agreement and to carry out its
obligations hereunder. The Trust 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. The execution, delivery and performance of
this Agreement by Seller has been duly and validly authorized by its Board of
Directors and by all other necessary action on the part of Seller, and no other
proceedings on the part of Seller (including shareholder approval) are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by the Trust
has been duly and validly authorized by the Trust Managers and by all other
necessary action on the part of the Trust, and no other proceedings on the part
of the Trust (including shareholder approval) are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly 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. This Agreement
has been duly executed and delivered by the Trust and constitutes the legally
valid and binding obligation of the Trust, enforceable against the Trust 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. Except
as set forth in Schedule
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3.5, the execution, delivery and performance of this Agreement by Seller and the
Trust and the consummation by Seller and the Trust of the transactions
contemplated hereby, by the Share Purchase Agreement between the Trust and
Buyer, dated as of December 13, 1996 (the "DECEMBER 13 AGREEMENT") and by the
share purchase agreements dated as of November 25, 1996 between Buyer and (i)
Pure World, Inc. and (ii) Jonathan Tratt, Stanley D. L. Horwitz, Keith Sexton
and C. J. Scott (the "SELLING SHAREHOLDER AGREEMENTS") will not (i) conflict
with or result in the breach of any provisions of, or trigger any preferential
rights under, the Charter Documents or the charter or organizational documents
of Subsidiaries or Trust 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 Trust Benefit Plans or any grant
or award thereunder or any employment or consulting agreement or arrangement of
the Trust, any Subsidiary or any Trust 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 the Trust,
any Subsidiary or any Trust Partnership or (iv) violate any Law. Schedule 3.5
lists all Permits and Approvals required to be obtained by Seller, the Trust,
Subsidiaries and Trust Partnerships to consummate the transactions contemplated
hereby and by the December 13 Agreement. 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 Trust and the consummation of the transactions contemplated
hereby and by the December 13 Agreement will not require the consent,
authorization or approval of 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, the Trust, Subsidiaries or
Trust Partnerships.
3.6 LEGAL PROCEEDINGS. Except as set forth in Schedule 3.6 and except with
respect to the Pure World Litigation, there is no Order or Action pending, or to
the knowledge of Seller or the Trust threatened, against or affecting the Trust,
any Subsidiary, any Trust Partnership, any Trust Manager in his capacity as a
trust manager of the Trust or any of the Properties which (i) questions the
validity of this Agreement, the Registration Rights Agreement, the Settlement
Agreement or any action taken or to be taken pursuant hereto or thereto, or (ii)
individually or when aggregated with one or 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 the Trust,
any Subsidiary or any Trust Partnership or on the Trust's ability to perform
this Agreement. To Seller's and the Trust'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 the Trust, any Subsidiary or any Trust
Partnership that is not covered by insurance, (ii) involves a claim or potential
claim of aggregate liability brought by the Trust, any Subsidiary or any Trust
Partnership against a tenant under any Tenant Lease which Tenant Lease obligates
such tenant to pay rent to the Trust, any Subsidiary or any Trust Partnership
during the year ending December 31, 1996 in an amount equal to or in excess of
$150,000, or (iii) that enjoins or seeks to enjoin any activity by the Trust,
any Subsidiary or any Trust
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<PAGE> 19
Partnership. There is no matter as to which the Trust, any Subsidiary or any
Trust 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 the Trust, any Subsidiary or any Trust Partnership.
3.7 COMPLIANCE WITH LAW AND PERMITS.
(a) The Trust, Subsidiaries and Trust Partnerships are organized and have
conducted their respective businesses in accordance with applicable Laws,
neither the Trust nor any Subsidiaries or Trust Partnerships has received any
notice of violation of any Laws which remains uncorrected, and the respective
forms, procedures and practices of the Trust, Subsidiaries and Trust
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
the Trust, Subsidiaries and Trust Partnerships.
(b) Except as set forth in Schedule 3.7, the Trust, Subsidiaries and Trust
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 "THE TRUST PERMITS") and the Trust,
Subsidiaries and Trust Partnerships are in compliance with the terms of the
Trust Permits relating to each such Person, except where the failure to hold
such Trust 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 the Trust, Subsidiaries
or Trust Partnerships. The Trust has made available to Buyer correct and
complete copies of all Trust Permits. Except as set forth in Schedule 3.7, to
the knowledge of the Seller and the Trust, no investigation or review by any
Governmental Entity with respect to the Trust Permits is pending or threatened.
3.8 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
the Trust or Trust Partnerships (other than Trust Partnerships in which the
Trust 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 the
Trust subsequent to the date of the Audited Financial Statements.
3.9 CERTAIN INTERESTS. Except as set forth in Schedule 3.1 and Schedule
3.9, no Affiliate of the Trust, any Subsidiary or any Trust 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 the Trust, any Subsidiary or
any Trust Partnership. Except as set forth in Schedule 3.1 and Schedule 3.9, no
such Person is indebted or otherwise obligated to the Trust, any Subsidiary or
any Trust Partnership. Except as set forth in Schedule 3.9, the Trust,
Subsidiaries and Trust 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
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between the Trust, any Subsidiary or any Trust Partnership and any Affiliate of
the Trust, any Subsidiary or any Trust 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 the Trust,
any Subsidiary or any Trust Partnership or any of its assigns to any Person.
3.10 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, the Trust or any of their 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 EVEREN.
3.11 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 the Trust, any Subsidiary, or any
Trust Partnership is a party or by which either the Trust, any Subsidiary, or
any Trust Partnership is bound (collectively, the "THE TRUST 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 Trust Benefit Plans, current
descriptive booklets and summary plan descriptions of the Trust 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 Buyer. To the extent applicable, the Trust Benefit Plans
comply, in all material respects, with the requirements of ERISA and the Code.
Except as set forth in Schedule 3.11, no Trust 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 Trust Benefit Plan nor the Trust, any
Subsidiary, or any Trust Partnership has incurred any liability or penalty under
Section 4975 of the Code or Section 502(i) of ERISA. Each Trust 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
and the Trust threatened, claims (other than pursuant to the terms of any such
plan) against or otherwise involving any of the Trust Benefit Plans and no
Action has been brought against or with respect to any Trust Benefit Plan, and
neither the Trust nor any Subsidiary nor any Trust Partnership has incurred any
liability to any party with respect to any Trust Benefit Plan. All contributions
required to be made to the Trust Benefit Plans have been made or provided for.
Except as set forth in Schedule 3.11, neither the Trust nor any Subsidiary nor
any Trust Partnership maintains or contributes to any plan or
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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 the Trust nor any
Subsidiary nor any Trust Partnership has represented, promised or contracted
(whether in oral or written form) to any employee or former 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 Trust 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 Trust Benefit Plan is subject to Title IV of ERISA and
neither the Trust nor any Subsidiary nor any Trust 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 "Trust" includes any entity required
to be aggregated with the Trust pursuant to Code Section 414(b), (c), (m) or (o)
and (ii) provisions of ERISA or the Code include regulations prescribed under
such provisions.
3.12 LABOR MATTERS. Neither the Trust nor any Subsidiary nor any Trust
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 and the
Trust, threatened labor dispute, strike or work stoppage against the Trust, any
Subsidiary, or any Trust Partnership. Neither the Trust nor any Subsidiary nor
any Trust Partnership, nor their respective representatives or employees, has
committed any unfair labor practices in connection with the operation of the
respective businesses of the Trust, each Subsidiary, and each Trust Partnership,
and there is no pending or, to the knowledge of the Seller and the Trust,
threatened charge or complaint against the Trust, any Subsidiary, or any Trust
Partnership by the National Labor Relations Board or any comparable state
agency. The Trust, Subsidiaries, and Trust Partnerships are in compliance with
all applicable Laws respecting employment, consulting, employment practices,
wages, hours, and terms and conditions of employment.
3.13 PROPERTIES.
(a) Schedule 3.13 contains a complete and correct list of all real
property owned or leased by the Trust, each Subsidiary and each Trust
Partnership (collectively, the "PROPERTIES"). Except as set forth in Schedule
3.13, the Trust, Subsidiary or Trust Partnership, as applicable, owns good 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 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.
(b) The Trust has delivered to Buyer a true, correct and complete copy of
a rent roll with respect to each Property setting forth, among other matters,
the term (commencement or renewal date
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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 the Trust,
Subsidiaries and Trust Partnerships and, to Seller's and the Trust'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 October 31, 1996 except as set forth
in Schedule 3.13. To Seller's and the Trust's knowledge, no tenant of the
Properties has initiated or threatened bankruptcy since January 1, 1996. No
tenant of the Properties is an Affiliate or Associate of the Trust, any
Subsidiary or any Trust 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, the Trust, Subsidiaries, Trust Partnerships or the Properties. Except
as set forth in Schedule 3.13, since January 1, 1996, no tenants have terminated
their leases prior to expiration and, to Seller's and the Trust'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 the Trust nor any
Subsidiary nor any Trust 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 the Trust, Subsidiaries or Trust Partnerships, as applicable, and no written
notice of any such violation has been received by the Trust, any Subsidiary or
any Trust Partnership from any Governmental Entity.
(e) The Trust, Subsidiaries or Trust 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 the
Closing Date will be, fully paid when due. No notice of cancellation has been
received, or to the knowledge of Seller and the Trust threatened, with respect
thereto.
(f) Except as set forth in Schedule 3.13, there is no Action pending, or
to the knowledge of Seller and the Trust 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 the Trust.
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(g) To the Seller's and the Trust'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 and the Trust's knowledge and except as set forth on
Schedule 3.13, no capital expenditures are contemplated by the Trust to be
incurred by the Trust, any Subsidiary or any Trust 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 the Trust on 30 days notice.
(j) To Seller's and the Trust'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
the Trust, Subsidiaries or Trust 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, 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 the Trust, Subsidiaries or Trust
Partnerships with respect to their respective operations, income, assets and
shareholders or partners in order to maintain the Trust's status as a real
estate investment trust ("REIT") under the Code.
(c) The Trust 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"). The Trust, 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, the
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Trust 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, 1996 in order for the Trust to
maintain its qualification as a REIT under the Code.
(d) Except as disclosed in Schedule 3.14, the Trust, Subsidiaries and
Trust 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, the Trust, Subsidiaries and
Trust Partnerships have established (and until the Closing Date will maintain)
on their respective books and records reserves adequate to pay all Taxes of the
Trust, Subsidiaries and Trust 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 the Closing Date, there will be no, material Tax liens upon the
assets of the Trust, Subsidiaries and Trust Partnerships, except liens for Taxes
not yet due.
(g) Except as disclosed in Schedule 3.14, the Trust, Subsidiaries, and
Trust Partnerships have complied (and until the Closing Date will comply) in all
material respects with the provisions 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, the Trust, Subsidiaries and
Trust 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 the Trust, any Subsidiary or any Trust 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 and the
Trust's knowledge, threatened with regard to any Taxes or Tax Returns of the
Trust, Subsidiaries or Trust Partnerships, and no notice of any material claim
has been received by the Trust, any Subsidiary or any Trust Partnership from any
authority in a jurisdiction where the Trust,
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Subsidiaries or Trust Partnerships do not file Tax Returns that the Trust, any
Subsidiary or any Trust Partnership is or may be subject to Tax in that
jurisdiction.
(j) The Trust, Subsidiaries and Trust 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 Closing Date.
(k) The Trust has made available (or, with respect to all Tax Returns
filed after the date hereof, will make available) to Buyer complete and accurate
copies of all Tax Returns, and amendments thereto, filed by the Trust, any
Subsidiary or any Trust Partnership for all taxable periods or years ending on
or prior to the Closing Date.
(l) Neither the Trust nor any Subsidiary nor any Trust 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 the Trust, and the Internal Revenue Service has not
proposed any such adjustment or change in accounting method.
(m) The Trust has made available to Buyer all relevant information with
respect to the federal income tax net operating loss carryovers of the Trust as
of December 31, 1995, based on the federal income Tax Returns filed by the Trust
as of such date.
(n) For all taxable years from and including its Initial REIT Year through
the Closing Date, (i) the Trust 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) the Trust
has demanded the written statements from its shareholders required 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 the Trust, Subsidiaries and Trust Partnerships. The Trust
has made available to Buyer 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, the Trust, Subsidiaries and Trust 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 and the Trust, 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
the Trust, any Subsidiary or any Trust 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 the Trust, Subsidiaries and Trust Partnerships. The
Trust, Subsidiaries and Trust Partnerships are in compliance
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with the terms of such policies applicable to them and there are no claims by
the Trust, any Subsidiary or any Trust 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 the Trust
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 Trust, any
Subsidiary or any Trust Partnership or, to the knowledge of Seller and the
Trust, 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 the Trust are and have been conducted in all material respects in
compliance with applicable Environmental Laws. Except as set forth in the
documentation provided to the Trust pursuant to Section 3.17(b) and in Schedule
3.17, the Trust 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
the Trust pursuant to Section 3.17(b) and in Schedule 3.17, the Trust 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) The Trust has made available to Buyer true, correct, and complete
copies of all written reports of any environmental assessment, compliance or
regulatory audit, inspection, or investigation of the Properties in its
possession, and the Trust has not received any other written report containing
any evidence of Environmental Noncompliance.
(c) Except as set forth in the documentation provided to the Trust
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 the Trust
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 and the
Trust accurately reflect in all material respects all actions taken to the date
of this Agreement by the shareholder of Seller, the holders of Common Shares,
the Board of Directors of Seller, the Trust
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Managers and committees of the Trust Managers, as applicable, 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 the
Trust accurately reflect the ownership of the Common Shares. The Trust maintains
accounting records which fairly reflect, in all material respects, the Trust's
transactions.
3.19 NEW YORK STOCK EXCHANGE LISTING. The outstanding Common Shares are
listed on the New York Stock Exchange. The sale and delivery of the Shares to
Buyer pursuant to this Agreement along with the subsequent sale and delivery of
any other Common Shares to Buyer 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 the Trust,
Subsidiaries or the Trust Partnerships that the Trust has not disclosed to Buyer
that materially adversely affect, or insofar as Seller and the Trust can
reasonably foresee, will materially adversely affect, the business, financial
condition, assets, results of operations or prospects of the Trust, Subsidiaries
or Trust Partnerships.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to, and agrees with, Seller and the Trust as
follows:
4.1 ORGANIZATION AND RELATED MATTERS. Buyer is a corporation duly
organized and validly existing under the laws of the State of Delaware. Buyer
has all necessary corporate power and corporate authority to carry on its
business as now being conducted. Buyer has all necessary corporate power and
corporate authority to execute, deliver and perform this Agreement and the
transactions contemplated hereby. USAA beneficially owns, and at Closing will
beneficially own, directly or indirectly, all of the capital stock of Buyer.
4.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement by Buyer has been duly and validly authorized by Buyer and by all
other necessary corporate action on the part of Buyer and no other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement or
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Buyer and constitutes the legally valid and binding
obligation of Buyer, enforceable against Buyer 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. The execution and delivery
of this Agreement by Buyer 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 material Contracts of Buyer, other than any filing required
under the Exchange Act.
4.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement by Buyer will not violate the provisions of, or constitute a breach or
default (whether upon lapse of time and/or
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the occurrence of any act or event or otherwise) under, (a) Buyer's certificate
of incorporation and bylaws, pursuant to which Buyer was organized and by which
Buyer is governed, (b) any Law to which Buyer is subject or (c) any Contract to
which Buyer is a party that is material to the financial condition, results of
operations or conduct of the business of Buyer.
4.4 NO BROKERS OR FINDERS. No agent, broker, finder or investment or
commercial banker, or other Person or firms engaged by or acting on behalf of
Buyer or their respective 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.
4.5 LEGAL PROCEEDINGS. There is no Order or Action pending against or, to
the knowledge of Buyer, affecting Buyer that individually or when aggregated
with one or more other Actions has, or if determined adversely would have, a
material adverse effect on the business, properties, or financial condition of
Buyer or on Buyer's ability to perform this Agreement.
4.6 INVESTMENT REPRESENTATION. Buyer is acquiring the Shares from Seller
for Buyer's own account, for investment purposes only and not with a view to or
for sale in connection with the distribution thereof. Buyer agrees to execute
any further certificate or other document representing Buyer's investment intent
or as to any other matter reasonably requested by Seller or the Trust to assure
compliance with applicable securities laws.
4.7 LEGENDS; STOP-TRANSFER ORDERS.
(a) The certificates for the Shares will bear a legend relating to
restrictions on transfer imposed pursuant to the percentage ownership limitation
contained in the Charter Documents.
(b) The Trust may impose appropriate stop-transfer instructions relating
to the restrictions set forth herein.
4.8 STATUS FOR REIT OWNERSHIP AND INCOME TESTS. At the Closing, applying
the stock ownership rules of Code Section 856(h), Buyer will be treated as a
corporation, and the Shares that it owns will be treated as owned
proportionately by Buyer's policyholders (its "shareholders" for this purpose).
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 and the Trust, jointly and severally, covenant and agree to take such
actions, or refrain from taking such actions, as are set forth in this Section
5.
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5.1 ACCESS. The Trust shall, and shall cause the Subsidiaries and Trust
Partnerships to, authorize and permit Buyer 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 the
Trust, Subsidiaries and Trust Partnerships as Buyer may from time to time
reasonably request, and to make copies of such books, records and other
documents and to discuss the business of the Trust, Subsidiaries and Trust
Partnerships with Buyer and its partners and their respective officers,
employees, accountants and counsel, as Buyer considers necessary or appropriate
for the purposes of familiarizing itself with the business of the Trust,
obtaining any necessary Approvals of, or Permits for, the transactions
contemplated by this Agreement and conducting an evaluation of the organization
and business of the Trust. From the date of this Agreement up to and including
the Closing Date, the Trust will permit, and cause Subsidiaries and Trust
Partnerships to permit, Buyer and its partners, and their respective officers,
directors, agents, attorneys, accountants, and representatives, to audit such
books and records, to meet with tenants of the Properties, and to conduct such
investigations, tests, or inspections of the Properties as the Trust shall
approve in the Trust's sole discretion, including intrusive sampling studies to
ascertain whether or not there are any Hazardous Materials on, in, or under the
Properties.
5.2 MATERIAL ADVERSE CHANGES; SEC FILINGS; REPORTS; FINANCIAL STATEMENTS.
(a) The Trust shall promptly notify Buyer of any event of which Seller or
the Trust obtains knowledge which has had or might reasonably be expected to
have a material adverse effect on the Trust's business or which if known as of
the date hereof would have been required to be disclosed to Buyer.
(b) The Trust will, and will cause the Subsidiaries and Trust Partnerships
to, furnish to Buyer as soon as available copies of all SEC Filings, reports,
renewals, filings, certificates, statements and other documents filed with any
Governmental Entity.
5.3 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 December 24,
1996, the Trust agrees with and for the benefit of Buyer that the Trust shall
not, and the Trust shall cause Subsidiaries and Trust Partnerships not to,
without the prior written consent of Buyer, which consent may not unreasonably
be withheld:
(a) conduct the business of the Trust, Subsidiaries and Trust Partnerships
in any manner except in the ordinary course consistent with past practices; or
(b) purchase any real property; or
(c) 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
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any shares of its Capital Stock, as applicable, except for dividends the record
date of which is after the Closing Date; or
(d) issue, sell, redeem or acquire for value, or agree to do so, any debt
obligations, Common Shares or Capital Stock; or
(e) incur or agree to incur any obligation or liability (absolute or
contingent) that individually calls for payment by the Trust, any Subsidiary or
any Trust 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)
and (ii) liabilities arising out of, incurred in connection with, or related to
the consummation of the transactions contemplated by this Agreement; or
(f) merge, 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
(g) change the number of Trust Managers or the Board of Directors of any
of the Subsidiaries, or admit any additional partners to the Trust Partnerships;
or
(h) amend the Charter Documents or the charter or organizational documents
of the Subsidiaries or Trust Partnerships; or
(i) 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
(j) cancel, satisfy or prepay any debt, obligation, liability or
encumbrance, or waive any claim or right of value of the Trust, Subsidiaries or
Trust Partnerships; or
(k) (i) increase in any manner the compensation or fringe benefits
(including, but not limited to, severance benefits) payable or to become payable
by the Trust, Subsidiaries, or Trust 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, stock option (including, without limitation, the
granting of any stock option or stock appreciation right or performance or
restricted
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stock award), stock purchase or other employee benefit plan, (ii) increase in
any manner the compensation or fringe benefits (including, but not limited to,
severance benefits) payable or to become payable by the Trust, Subsidiaries or
Trust Partnerships to any employee who is not an officer, Trust Manager,
director or partner of the Trust, Subsidiaries or Trust Partnerships as salary
or wages or under any bonus, insurance, welfare, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of any stock option or stock appreciation right
or performance or restricted stock award) stock 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 the Trust, Subsidiaries or Trust
Partnerships, or (iii) enter into, adopt, amend in any material respect (except
as required by law) or terminate any Trust Benefit Plan or any agreement,
arrangement, plan or policy between the Trust, Subsidiaries or Trust
Partnerships, as applicable, and one or more of its Trust Managers, directors,
partners, officers, employees or independent contractors; or
(l) make any tax election other than in connection with maintaining the
Trust's qualification as a REIT or take any action that would cause the Trust
not to qualify as a REIT, or fail to take any reasonable action to preserve the
Trust's qualification as a REIT; or
(m) make any change in any significant accounting principles or practices
used by the Trust, Subsidiaries or Trust Partnerships, except as required by the
SEC; or
(n) 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 the Trust,
Subsidiaries or Trust Partnerships; or
(o) 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
(p) incur any indebtedness for borrowed money or assume, endorse (other
than endorsements of negotiable instruments in the ordinary course of business),
guarantee or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the liabilities or obligations of any Person; or
(q) take any action that would, or fail to take any action which failure
would, result in any of Seller's and the Trust's representations and warranties
set forth in this Agreement not being true; or
(r) agree to or make any commitment to take any action prohibited by this
Section 5.3.
5.4 PROHIBITION OF SOLICITATION.
(a) GENERAL PROHIBITION. The Trust shall not, and it shall direct and use
its best efforts to cause its officers, Trust Managers, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it), and Seller to not, directly or indirectly,
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) with respect to a merger, acquisition,
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consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or Common Shares of the Trust (any such
proposal or offer being hereinafter referred to as an "ALTERNATIVE PROPOSAL") or
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any Person relating to an Alternative
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Alternative Proposal. Except as disclosed to Buyer in writing prior to the date
of this Agreement, Seller and the Trust represent and warrant to Buyer that
there are no existing activities, discussions or negotiations with any Person
with respect to an Alternative Proposal. Seller and the Trust hereby agree to
notify Buyer immediately if any inquiries or proposals are received by, any
information is requested from, or any negotiations or discussions are sought to
be initiated or continued with Seller or the Trust with respect to an
Alternative Proposal.
(b) UNSOLICITED OFFERS. Nothing contained in Section 5.4(a) shall prohibit
the Trust Managers or Board of Directors of Seller from: (i) furnishing
information to or entering into discussions or negotiations with any Person that
makes an unsolicited bona fide Alternative Proposal if, and only to the extent
that, (1) prior to furnishing such information to, or entering into discussions
or negotiations with, such Person, the Trust or Seller provides written notice
to Buyer to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such Person, (2) prior to furnishing such
information to, or entering into discussions or negotiations with, such Person,
the Trust or Seller receives from such Person an executed confidentiality
agreement in customary form on terms not less favorable in any material respect
to the Trust or Seller than the terms of the letter agreement, dated July 12,
1996 by and between Buyer and the Trust (the "CONFIDENTIALITY AGREEMENT"), (3)
the Trust or Seller keeps Buyer informed of the status of any such discussions
or negotiations and (4) the Trust and Seller shall not disclose the terms of
this Agreement and other information with respect to transactions among Seller,
the Trust and Buyer except as permitted under Section 12.9 hereto; and (ii) to
the extent applicable, complying with Rule 14e-2 promulgated under the Exchange
Act with regard to an Alternative Proposal. Nothing in this Section 5.4 shall
permit Seller or the Trust to terminate this Agreement or affect any other
obligation of Seller or the Trust under this Agreement.
(c) BUYER'S CONTINUING RIGHTS. Seller or the Trust shall be permitted to
enter into a binding agreement relating to an Alternative Proposal only if the
Trust Managers or the Board of Directors of Seller, as applicable, determine,
after considering the advice of its legal counsel, that the failure to
consummate such a transaction might reasonably be expected to subject the Trust
Managers or Board of Directors of Seller to liability for breach of their
fiduciary duties to the Trust's or Seller's shareholders. The terms of any
Alternative Proposal to which the Trust or Seller is a party in which the Trust
is the surviving entity shall provide that Buyer shall have the right, at its
election, to purchase the Shares upon payment of the Purchase Price prior to
consummation of any such transaction. In the event that the Trust shall not be
the surviving entity of such transaction, upon consummation of such transaction
the Trust and Seller shall cause such third party to assume the obligations of
Seller and the Trust under this Agreement and Buyer shall have the right, at its
election, to acquire, upon payment of the Purchase Price, such securities or
other property as it would have been
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entitled to receive upon exchange of the Shares if Buyer had purchased the
Shares immediately prior to the consummation of such transaction.
(d) REIMBURSEMENT OF EXPENSES. If for any reason, regardless of fault, the
Shares are not sold by Seller to Buyer, Seller or the Trust shall reimburse
Buyer for all out-of-pocket expenses incurred by Buyer in connection with the
transactions contemplated by this Agreement upon the submission by Buyer to
Seller and the Trust of documentation evidencing the incurrence of such
expenses.
5.5 NOTIFICATION OF CERTAIN MATTERS. Seller and the Trust shall give
prompt notice to Buyer, and Buyer shall give prompt notice to Seller and the
Trust, 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 Buyer, the Trust 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.
5.6 PERMITS AND APPROVALS.
(a) Seller, the Trust and Buyer each agree to cooperate and use their best
efforts to obtain (and will immediately prepare all registrations, filings and
applications, requests and notices preliminary to all) Approvals and Permits
that may be necessary or which may be reasonably requested by Seller, the Trust
or Buyer to consummate the transactions contemplated by this Agreement.
(b) To the extent that the Approval of a third party with respect to any
Material Contract is required in connection with the transactions contemplated
by this Agreement, Seller and the Trust shall use their best efforts to obtain
such Approval prior to the Closing Date.
SECTION 6. ADDITIONAL CONTINUING COVENANTS AND AGREEMENTS
6.1 USE OF PROCEEDS. The proceeds from the sale of the Shares to Buyer,
net of any costs (including any accounting and legal costs and expenses)
associated with the transactions contemplated by this Agreement, shall be
applied by Seller to expenses provided for in the Settlement Agreement and
general reserves.
6.2 ENVIRONMENTAL MATTERS. Seller and the Trust will advise Buyer 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.
6.3 STATUS FOR REIT OWNERSHIP AND INCOME TESTS. Following the Closing, and
at all subsequent times during which Buyer owns any of the Shares, applying the
stock ownership rules of
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Code Section 856(h), Buyer will be treated as a corporation, and the Shares that
it owns will be treated as owned proportionately by Buyer's policyholders (its
"shareholders" for this purpose).
6.4 PROHIBITED TRANSACTIONS. The Trust shall not effect any business
transactions, or agree to effect any business transactions, with Affiliates,
Trust Managers or employees of the Trust except in the ordinary course of
business and unless the consideration paid by the Trust in any such business
transaction is fair value at market rates.
6.5 REGISTRATION RIGHTS AGREEMENT. Contemporaneously with the Closing,
Buyer and the Trust shall enter into a Registration Rights Agreement
substantially in the form of Exhibit B.
6.6 REIT QUALIFICATION. The Trust shall take all actions necessary to
maintain the Trust's qualification as a REIT and, without the written consent of
Buyer, shall take no action that would cause the Trust not to qualify as a REIT
or fail to take any action that would preserve the Trust's qualification as a
REIT.
6.7 SERVICES BY BUYER. To the extent permitted by law and the Charter
Documents, Buyer shall have the right to provide management and leasing services
to the Trust at fair market rates.
SECTION 7. GENERAL CONDITIONS OF PURCHASE
The obligations of the parties to effect the Closing shall be subject to
the following conditions unless waived in writing by all parties:
7.1 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 Closing Date.
7.2 APPROVALS. To the extent required by applicable Law, all Permits and
Approvals required to be obtained in connection with the Closing from any
Governmental Entity or any consent from a third party material to the Trust or
its business shall have been received or obtained on or prior to the Closing
Date.
7.3 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 Closing Date whether or not Buyer or its Affiliates
is a party.
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7.4 NEW YORK STOCK EXCHANGE. The Trust will use its best efforts to
maintain the listing of its Common Shares on the New York Stock Exchange.
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SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to effect the Closing shall be subject to the
following conditions except to the extent waived in writing by Buyer:
8.1 SETTLEMENT AGREEMENT. The final settlement of the Pure World
Litigation by the court overseeing such settlement shall have occurred on or
before the Closing Date.
8.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Seller and the Trust set forth in this Agreement shall be true and
correct at the Closing Date as if made on and as of the Closing Date.
8.3 PERFORMANCE BY SELLER AND THE TRUST. Seller and the Trust 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 and the Trust on or before the Closing Date,
including the covenants set forth in Section 5.
8.4 NO MATERIAL ADVERSE CHANGE. During the period from the date of the
Audited Financial Statements to the Closing Date, (i) there shall not have been
any material adverse change in the business, assets, prospects, financial
condition or the results of operations of the Trust, and the Trust shall not
have sustained any material Loss or damage to its assets (including those of
Subsidiaries and Trust Partnerships), except for Losses covered by insurance,
that adversely affects its ability to conduct a material part of its business
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 Buyer, significantly impair the marketability or value of the
Shares, (iii) the trading in any securities of the Company 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 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.
8.5 CERTIFICATION BY SELLER AND THE TRUST. Buyer shall have received a
certificate, dated as of the Closing Date, signed by the President of Seller and
by the President of the Trust, certifying, in such detail as Buyer and its
counsel reasonably may request, that the conditions specified in Section 8.1,
Section 8.2, Section 8.3, and Section 8.4 have been fulfilled.
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8.6 OPINION OF SELLER AND THE TRUST'S COUNSEL. Buyer shall have received
from counsel for Seller and the Trust an opinion, dated as of the Closing Date,
in form and substance reasonably satisfactory to Buyer as to the matters set
forth in Schedule 8.6.
8.7 NO OTHER BUSINESS COMBINATION TRANSACTION. Seller or the Trust shall
not have entered into an agreement relating to an Alternative Proposal and the
Board of Directors of Seller or the Trust Managers shall not have recommended an
Alternative Proposal.
SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER AND THE TRUST
The obligations of Seller and the Trust to effect the Closing shall be
subject to the following conditions, except to the extent waived in writing by
Seller and the Trust:
9.1 SETTLEMENT AGREEMENT. The final settlement of the Pure World
Litigation by the court overseeing such settlement shall have occurred on or
before the Closing Date.
9.2 ACCURACY OF BUYER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Buyer set forth in this Agreement shall be
true and correct at the Closing Date as if made on and as of the Closing Date.
9.3 BUYER'S PERFORMANCE. Buyer 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 Buyer
on or before the Closing Date.
9.4 CERTIFICATION BY BUYER. Seller and the Trust shall have received a
certificate, dated as of the Closing Date, signed by the President or a Vice
President of Buyer, certifying, in such detail as Seller, the Trust and their
counsel reasonably may request, that the conditions specified in Section 9.2 and
Section 9.3 have been fulfilled.
9.5 OPINION OF BUYER'S COUNSEL. Seller and the Trust shall have received
from counsel to Buyer an opinion, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Trust as to the matters set forth in
Schedule 9.5.
SECTION 10. TERMINATION OF OBLIGATIONS; SURVIVAL
10.1 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:
(a) MUTUAL CONSENT. By mutual consent in writing of Buyer, the Trust and
Seller.
(b) CONDITIONS TO BUYER'S PERFORMANCE NOT MET. By Buyer with written
notice to Seller and the Trust if the Closing Date has not occurred on or before
December 31, 1996.
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Notwithstanding the foregoing, Buyer may not exercise any right to terminate
this Agreement pursuant to this paragraph if Buyer has breached in any material
respect its covenants or agreements set forth in this Agreement in any manner
that shall have proximately contributed to the failure of the Closing Date to
occur on or before December 31, 1996.
(c) CONDITIONS TO SELLER'S AND THE TRUST'S PERFORMANCE NOT MET. By Seller
and the Trust with written notice to Buyer if the Closing Date has not occurred
on or before December 31, 1996. Notwithstanding the foregoing, Seller and the
Trust may not exercise any right to terminate this Agreement pursuant to this
paragraph if Seller or the Trust has breached in any material respect its
covenants or agreements set forth in this Agreement in any manner that shall
have proximately contributed to the failure of the Closing Date to occur on or
before December 31, 1996.
(d) MISREPRESENTATION OR MATERIAL BREACH. By Buyer, Seller or the Trust
with written notice to the other party if there has been a misrepresentation or
material breach on the part of Seller, the Trust or Buyer, respectively, 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 ten business days after receipt of notice from Buyer, Seller or the Trust
of the terminating party's intention to terminate.
(e) ENVIRONMENTAL NONCOMPLIANCE. By Buyer in the event of the discovery of
any Release or other matter prior to the Closing Date which, if known to Seller
or the Trust as of the date of this Agreement, would have constituted a breach
of the representations and warranties contained in Section 3.17.
10.2 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.
10.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in or made pursuant to this Agreement shall expire on the
third anniversary of the Closing except that (a) the representations and
warranties contained in Section 3.2 shall continue forever (subject to all
defenses of Seller and the Trust 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 11 with respect to the breach of any representation or
warranty prior to the applicable expiration date, such representation or
warranty
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shall continue indefinitely until such claim is finally resolved. All covenants
and agreements of the parties hereto shall be continuing and shall survive the
Closing Date pursuant to the terms thereof.
SECTION 11. INDEMNIFICATION
11.1 OBLIGATIONS OF SELLER AND THE TRUST. Seller and the Trust, jointly
and severally, agree to indemnify, defend and hold harmless Buyer and its
officers, employees, agents, directors and Affiliates (collectively, the "BUYER
INDEMNIFIED PARTIES") from and against any and all Losses of the Buyer
Indemnified Parties (as incurred) as a result of, or based upon, relating to or
arising out of, directly or indirectly, the transactions contemplated hereby or
by the Registration Rights Agreement, including, without limitation, as a
consequence of (a) any inaccuracy in, or breach or nonperformance of, any of the
representations, warranties, covenants or agreements made by Seller and the
Trust in, or pursuant to, this Agreement, or (b) any pending or threatened
Action brought by the Trust's shareholders or creditors or any other Person
other than the Buyer Indemnified Parties or their creditors relating to, or
arising out of or in connection with, directly or indirectly, the transactions
contemplated under this Agreement; provided, however, that Seller and the Trust
shall not be obligated to indemnify, defend or hold harmless any of the Buyer
Indemnified Parties for any claims based solely on actions taken by any of the
Buyer Indemnified Parties other than the performance of the covenants and
agreements to be undertaken by Buyer pursuant to the terms and conditions of
this Agreement and any other action authorized in writing by Seller and the
Trust. As a condition to the rights of any of the Buyer Indemnified Parties
under this Section 11, Seller and the Trust may require that any such Person
provide a written undertaking that such Person will repay to Seller or the
Trust, as applicable, any amount expended by Seller or the Trust to indemnify,
defend or hold harmless such Person in the event and to the extent a court
determines that Seller's and the Trust's indemnification or defense of such
Person is prohibited by applicable Law.
11.2 OBLIGATIONS OF BUYER. Buyer agrees to indemnify, defend and hold
harmless Seller and the Trust and their Trust Managers, officers, employees,
agents, directors and Affiliates (collectively, the "SELLER INDEMNIFIED
PARTIES") from and against any 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 Buyer in, or
pursuant to, this Agreement, or (b) any pending or threatened Action brought by
Buyer's policyholders or creditors relating to, or arising out of or in
connection with, directly or indirectly, the transactions contemplated under
this Agreement; provided, however, that Buyer 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 and the Trust pursuant to the terms and conditions of this Agreement and
any other action authorized in writing by Buyer. As a condition to the rights of
any of the Seller Indemnified Parties under this Section 11, Buyer may require
that any such Person provide a written undertaking that such Person will repay
to Buyer any amount expended by Buyer to indemnify, defend or hold harmless such
Person in the event and to the extent a court determines that Buyer's
indemnification or defense of such Person is prohibited by applicable Law.
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11.3 PROCEDURE.
(a) 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.
(b) 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 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.
11.4 SURVIVAL. The indemnity set forth in this Section 11 shall survive
the Closing or 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
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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 clause (b) of Sections 11.1 or 11.2, forever.
11.5 NOTICE BY SELLER AND THE TRUST. Seller, the Trust and Buyer agree to
notify in writing the other party 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 party),
whether before or after Closing.
SECTION 12. GENERAL
12.1 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.
12.2 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.
12.3 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.
12.4 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 TEXAS, WITHOUT GIVING EFFECT
TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION (WHETHER OF THE STATE OF TEXAS
OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF TEXAS.
12.5 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 Buyer may assign its rights hereunder (including but not
limited to its rights under Section 11) to any member of
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<PAGE> 42
the USAA Group. Buyer shall remain liable to Seller for the payment of the
Purchase Price and for other obligations of Buyer hereunder notwithstanding a
permitted assignment.
12.6 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.
12.7 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 party.
12.8 PUBLICITY AND REPORTS. The Trust and Buyer 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 party, except to the extent
that independent legal counsel to the Trust or Buyer, as the case may be, shall
advise the Trust or Buyer 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).
12.9 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) may otherwise be required by Law to be disclosed or (c) to the
extent such duty as to confidentiality is waived in writing by the other party.
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 party
all documents (and reproductions thereof) received by it or its representatives
from such other party (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.
12.10 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.
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<PAGE> 43
12.11 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 Buyer, addressed to:
USAA Real Estate Company
8000 Robert F. McDermott Freeway
IH-10 West, Suite 600
San Antonio, Texas 78230-3884
Attention: David M. Holmes
Randal R. Seewald, Esq.
Telephone: (210) 498-0626
Telecopy: (210) 498-6214
If to Seller or the Trust, addressed to:
American Industrial Properties REIT
6220 North Beltline Road, Suite 205
Irving, Texas 75063-2656
Attention: Mr. Charles W. Wolcott
President and Chief Executive Officer
Telephone: (972) 550-6053
Telecopy: (972) 550-6037
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.
12.12 EXPENSES. Seller, the Trust and Buyer shall pay their 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 their respective financial advisers,
accountants and counsel.
12.13 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.
Buyer, Seller and the Trust
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<PAGE> 44
shall be entitled to seek any equitable remedy to the extent such remedy is
available under applicable Law.
12.14 REPRESENTATION BY COUNSEL; INTERPRETATION. Seller, the Trust and
Buyer each acknowledge 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 Buyer, Seller and the Trust, and no rule of strict construction shall
be applied against any party to this Agreement.
12.15 SEVERABILITY. If any provision of this Agreement is determined to be
invalid, illegal or unenforceable by any Governmental Entity, the remaining
provisions of this Agreement to the extent permitted by Law shall remain in full
force and effect to the extent permitted by Law, and the parties hereby to the
same extent waive any provision of Law that renders any provision hereof
prohibited or unenforceable in any respect.
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<PAGE> 45
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officers as of the day and year first
above written.
"BUYER"
USAA REAL ESTATE COMPANY
By:_____________________________________
T. Patrick Duncan
Senior Vice President - Operations
"SELLER"
AMERICAN INDUSTRIAL PROPERTIES REIT,
INC.
By:_____________________________________
Charles W. Wolcott
President and Chief Executive Officer
"TRUST"
AMERICAN INDUSTRIAL PROPERTIES REIT
By:_____________________________________
Charles W. Wolcott
President and Chief Executive Officer
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<PAGE> 1
EXHIBIT 10.5
USAA REAL ESTATE COMPANY
8000 MCDERMOTT FREEWAY
SUITE 600
SAN ANTONIO, TEXAS 78230-3884
December 18, 1996
American Industrial Properties REIT
6220 North Beltline, Suite 205
Irving, Texas 75063
Re: 8.8% Promissory Note dated February 27, 1992 in the original
principal amount of $23,261,317.66 ("Note A") executed by Trammell
Crow Real Estate Investors ("Trammell Crow") and payable to The
Manufacturers Life Insurance Company ("MLI") and the 8.8% Promissory
Note, dated February 27, 1992, in the original principal amount of
$19,143,646.92 ("Note B") executed by Trammell Crow and payable to
The Manufacturers Life Insurance Company (U.S.A.) ("MLI-USA")
(collectively the "Notes")
Gentlemen:
American Industrial Properties REIT ("AIP"), the predecessor obligor
on the Notes, has requested that USAA Real Estate Company or one of its
affiliates (collectively, "USAA") commence negotiations with MLI and MLI-USA for
the purchase or repayment of the Notes. USAA is willing to commence these
negotiations, subject to AIP's acceptance of the following terms and conditions:
1. Purchase of the Notes. USAA, with the assistance of AIP, will
commence negotiations with MLI to purchase the Notes at a price acceptable to
USAA, in its sole discretion. Consummation of any such purchase by USAA shall be
in USAA's sole discretion, but shall in any event require (a) completion of
satisfactory due diligence, in USAA's sole discretion, with respect to the
Notes, including, without limitation, review of the Notes, the Settlement
Agreement by and between AIP, Patapsco #1 Limited Partnership, Patapsco #2
Limited Partnership, MLI and MLI-USA dated as of May 22, 1996, the Note Purchase
Agreement, dated February 27, 1992, by and between Trammell Crow Real Estate
Investors and MLI, the Option Agreement, dated May 22, 1996, between MLI,
MLI-USA and AIP and other agreements concerning the obligations under the Notes
(collectively the "Note Documents"), (b) negotiation and consummation of the
purchase or repayment of the Notes (the "Purchase Documents"), on terms
satisfactory to USAA, in its sole discretion, and (c) execution and delivery of
agreements, in form and substance satisfactory to
<PAGE> 2
AIP
December 18, 1996
Page 2
USAA, in its sole discretion, by USAA and AIP, necessary to implement the
modifications to (or replacement of) the Notes and the other Note Documents
described in paragraph 2 below. AIP will use its best efforts to assist USAA to
complete this transaction and will also execute any consents or other documents
necessary for USAA to acquire the Notes. In the event USAA does not purchase the
Notes from MLI, USAA shall have the option, in its sole discretion, to advance
to AIP the funds necessary to repay the Notes, in which case AIP agrees to repay
USAA such funds on terms consistent with those set forth below.
2. Note Modifications. For the consideration of the mutual
obligations set forth below, the Notes (or the obligations represented thereby)
and the other Note Documents (or the obligations represented thereby) will be
modified (or replaced), effective upon consummation of the Purchase Documents,
to incorporate the following terms:
a. USAA will amend the current aggregate principal balance
($9,419,213) of the Notes so that the resulting aggregate principal
balance of the Notes will be at least $7,040,721, and in any event
$1,591,103 greater than the amount paid by USAA to purchase the Notes
(provided such purchase price for this purpose shall be limited to
$5,449,618 plus accrued interest), plus the expenses incurred by USAA in
connection with this transaction. Such amendment shall not apply to any
accrued and unpaid interest on the Notes. AIP acknowledges that the
foregoing may result in income to AIP.
b. Subject to clause (e) below, the Notes will continue to accrue
interest at a non-default rate of 8.8% per annum, with accrued interest
payable monthly in arrears, and the maturity of the Note will be extended
to December 31, 2000.
c. AIP will waive its right to make the discounted prepayments
contemplated by the Option Agreement dated as of May 22, 1996 relating to
the Notes (the "Option Agreement") and AIP will have no further right to
make any optional prepayment of the Notes.
d. The Notes will be amended to provide that, subject to obtaining
the shareholder approval described in clause (e) below, such Notes are
convertible (in whole or in part) at USAA's option, at any time, into a
number of shares of beneficial interest, $.10 par value per share, of AIP
(the "Shares") determined as follows:
P / C = S
<PAGE> 3
AIP
December 18, 1996
Page 3
where (i) "P" equals the aggregate principal balance of such Notes at the
date of conversion; (ii) "C" equals the conversion price determined
pursuant to clause (f) below; and (iii) "S" equals such number of Shares.
e. AIP will submit the conversion feature described in clause (d)
above to its shareholders for approval as promptly as possible after USAA
acquires the Notes and will use its best efforts to secure such approval.
If AIP has not obtained shareholder approval of such conversion feature by
June 30, 1997, (a) effective July 1, 1997 the interest rate applicable to
the Notes will increase to 18% (but in no event to exceed the highest
lawful rate) and (b) AIP will be required to make a mandatory prepayment
of the full principal of the Notes, plus accrued, unpaid interest on
October 31, 1997.
f. The conversion price "C" referred to in clause (d) above will be
determined as follows:
(i) if the conversion of such Note occurs on or before
December 31, 1997, the conversion price will be $2.00;
(ii) if the conversion of such Note occurs after the period in
(i) above but on or before December 31, 2000, the conversion price
per share will be $2.25.
The conversion prices described above will be subject to further
adjustment pursuant to anti-dilution provisions acceptable to USAA.
g. Upon conversion of either Note into Shares, AIP shall be required
to enter into a Registration Rights Agreement with USAA covering the
resale of such Shares substantially in the same form as provided in the
Registration Rights Agreement dated December 13, 1996, between AIP and
USAA.
3. No Defaults. AIP represents and warrants that it is in compliance
with the terms of the Settlement Agreement dated as of May 22, 1996 relating to
the Notes (the "Settlement Agreement") and the other documents pertaining
thereto and that there are currently no defaults existing with respect to the
Settlement Agreement or any other material contract of AIP.
4. Term. The term of this Agreement shall be four years from the
date hereof, unless replaced by the terms of new notes and related documents
reflecting the terms set forth herein.
<PAGE> 4
AIP
December 18, 1996
Page 4
This letter does not constitute a commitment by USAA to lend or to
otherwise advance funds to AIP. However, AIP understands that USAA will commence
negotiations with MLI and expend funds in connection therewith in reliance upon
AIP's agreements contained herein. Please acknowledge your agreement to the
foregoing by signing a counterpart hereof in the space provided below and
returning the same to USAA no later than 5:00 p.m. (San Antonio, Texas time) on
December 17, 1996.
Very truly yours,
USAA REAL ESTATE COMPANY
By:______________________________________
Name: T. Patrick Duncan
Title: Senior Vice President - Operations
Accepted and agreed to this _____ day of December, 1996.
AMERICAN INDUSTRIAL PROPERTIES REIT
By:______________________________________
Name: Charles W. Wolcott
Title: President
<PAGE> 1
EXHIBIT 10.6
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and entered
into as of December 19, 1996, by and between American Industrial Properties
REIT, a Texas real estate investment trust (the "COMPANY"), and USAA Real Estate
Company, a Delaware corporation ("USAA").
WITNESSETH:
WHEREAS, pursuant to that certain Share Purchase Agreement, dated as of
December 13, 1996, between the Company and USAA (the "SHARE PURCHASE
AGREEMENT"), USAA purchased 924,600 Common Shares (the "SHARES"); and
WHEREAS, pursuant to the terms of the Share Purchase Agreement, the
Company and USAA agreed that the Company would grant certain registration rights
to USAA with respect to the Shares;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized terms shall
have the following meanings:
Closing Date: The closing date as defined in the Share Purchase
Agreement.
Common Shares: The common shares of beneficial interest, $.10 par
value per share, of the Company.
Exchange Act: The Securities Exchange Act of 1934, as amended from
time to time.
Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
Registrable Securities: (a) The Shares and (b) any securities issued
or issuable with respect to the Shares by way of stock dividend or stock split
or in connection with a combination of
<PAGE> 2
shares, recapitalization, merger, consolidation or other reorganization or
otherwise. Any Registrable Security will cease to be a Registrable Security when
(i) a registration statement covering such Registrable Security has been
declared effective by the SEC and the Registrable Security has been disposed of
pursuant to such effective registration statement, (ii) the Registrable Security
is sold under circumstances in which all of the applicable conditions of Rule
144 (or any similar provisions then in force) under the Securities Act are met,
or (iii) the Registrable Security has been otherwise transferred, the Company
has delivered a new certificate or other evidence of ownership for it not
bearing a legend restricting further transfer, and it may be resold without
subsequent registration under the Securities Act.
Registration Expenses: See Section 5 hereof.
Registration Statement: The Registration Statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included therein, all amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission or any successor entity.
Securities Act: The Securities Act of 1933, as amended from time to
time.
Share Purchase Agreement: See the Recitals to this Agreement.
Shares: See the Recitals to this Agreement.
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. Registration Rights.
(a) Shelf Registration. Upon the written request of USAA, the Company
shall file a "shelf" registration statement on any appropriate form pursuant to
Rule 415 (or similar rule that may be adopted by the SEC) under the Securities
Act (a "SHELF REGISTRATION") for all of the then Registrable Securities, subject
to the request of USAA to exclude any Registrable Securities.
The Company hereby agrees to file such registration statement as promptly
as practicable following the request therefor, and in any event within 60 days
following the date such request is received by the Company, and thereafter to
use its commercially reasonable efforts to cause such Shelf Registration to
become effective and thereafter to keep it continuously effective, and to
prevent the happening of any event of the kind described in Section 4(c)(3),
(4), (5) or (6) hereof that requires the Company to give notice pursuant to the
last paragraph of Section 4 hereof, for a period terminating on the third year
anniversary of the date on which the SEC declares the Shelf Registration
effective, or such shorter period as shall terminate, on the date on which all
the Registrable Securities covered by the Shelf Registration have been sold
pursuant to such Shelf
2
<PAGE> 3
Registration. The Company shall be obligated to file only one Shelf Registration
and shall not be obligated to file a Shelf Registration if three Demand
Registrations (hereinafter defined) have been effected under Section 2(b).
The Company further agrees to promptly supplement or make amendments to
the Shelf Registration, if required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by the Securities
Act or rules and regulations thereunder for shelf registration or if requested
by USAA or any underwriter of the Registrable Securities.
If USAA so elects, the offering of Registrable Securities pursuant to a
Shelf Registration shall be in the form of an Underwritten Offering.
(b) Demand Registration.
At any time during the five year period following the Closing Date, USAA
may make a written request (the "DEMAND NOTICE") for registration under the
Securities Act (a "DEMAND REGISTRATION") of the Registrable Securities held by
it.
The Demand Notice will specify the number of shares of Registrable
Securities proposed to be sold and will also specify the intended method of
disposition thereof. Unless USAA shall consent in writing, no other party,
including the Company, shall be permitted to offer securities under any such
Demand Registration. The Company shall not be required to effect more than three
Demand Registrations under this Section 2(b). A registration requested pursuant
to this Section 2(b) will not be deemed to have been effected (and it shall not
count as one of the three Demand Registrations) unless the Registration
Statement relating thereto has become effective under the Securities Act;
provided, however that if, after such Registration Statement has become
effective, the offering of the Registrable Securities pursuant to such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court, such registration
will be deemed not to have been effected (and it shall not count as one of the
three Demand Registrations). USAA may, at any time prior to the effective date
of the Registration Statement relating to such registration, revoke its Demand
Notice by providing a written notice to the Company.
If USAA so elects, the offering of Registrable Securities pursuant to a
Demand Registration shall be in the form of an Underwritten Offering. If the
managing underwriter or underwriters of such offering advise the Company and
USAA in writing that in their opinion the number of shares of Registrable
Securities requested to be included in such offering is sufficiently large to
materially and adversely affect the success of such offering, the Company will
include in such registration the aggregate number of Registrable Securities
which in the opinion of such managing underwriter or underwriters can be sold
without any such material adverse effect; provided, however, that Registrable
Securities may be excluded before all shares proposed to be sold by other
parties, including the Company, have been excluded. If any Registrable
Securities are excluded, such registration shall not count as one of the three
Demand Registrations.
3
<PAGE> 4
No registration pursuant to a request or requests referred to in this
subsection 2(b) shall be deemed to be a Shelf Registration.
(c) Incidental Registration. If at any time during the five year period
following the Closing Date the Company proposes to file a registration statement
under the Securities Act (other than in connection with the Shelf Registration,
a Demand Registration or a Registration Statement on Form S-4 or S-8, or any
form that is substituting therefor or is a successor thereto) with respect to an
offering of any class of security by the Company for its own account or for the
account of any of its security holders, then the Company shall give written
notice of such proposed filing to USAA as soon as practicable (but in no event
less than thirty days before the anticipated filing date), and such notice shall
(i) offer USAA the opportunity to register such number of Registrable Securities
as it may request and (ii) describe such securities and specifying the form and
manner and other relevant facts involved in such proposed registration
(including, without limitation, (x) whether or not such registration will be in
connection with an Underwritten Offering and, if so, the identity of the
managing underwriter and whether such Underwritten Offering will be pursuant to
a "best efforts" or "firm commitment" underwriting and (y) the price (net of any
underwriting commissions, discounts and the like) at which the Registrable
Securities are reasonably expected to be sold, if such disclosure is acceptable
to the managing underwriter), USAA shall advise the Company in writing within
twenty (20) days after the date of receipt of such notice from the Company of
the number of Registrable Securities for which registration is requested. The
Company shall include in such Registration Statement all such Registrable
Securities so requested to be included therein, and, if such registration is an
Underwritten Registration, the Company shall use its commercially reasonable
efforts to cause the managing underwriter or underwriters to permit the
Registrable Securities requested to be included in the registration statement
for such offering to be included (on the same terms and conditions as similar
securities of the Company included therein to the extent appropriate); provided,
however, that if the managing underwriter or underwriters of such offering
deliver a written opinion to USAA that either because of (i) the kind of
securities which USAA, the Company, or any other Persons intend to include in
such offering or (ii) the size of the offering which USAA, the Company, or such
other Persons intend to make, the success of the offering would be materially
and adversely affected by inclusion of the Registrable Securities requested to
be included, then (A) in the event that the size of the offering is the basis of
such managing underwriter's opinion, the amount of securities to be offered for
the account of USAA and other holders registering securities of the Company
pursuant to similar incidental registration rights shall be reduced pro rata
(according to the Registrable Securities beneficially owned by such holders) to
the extent necessary to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing underwriter or
underwriters; and (B) in the event that the combination of securities to be
offered is the basis of such managing underwriter's opinion, (x) the Registrable
Securities and other securities to be included in such offering shall be reduced
as described in clause (A) above or, (y) if the actions described in clause (A)
would, in the judgment of the managing underwriter, be insufficient to
substantially eliminate the adverse effect that inclusion of the Registrable
Securities requested to be included would have on such offering, such
Registrable Securities will be excluded from such offering.
No registration pursuant to a request or requests referred to in this
subsection 2(c) shall
4
<PAGE> 5
be deemed to be a Shelf Registration.
3. Hold-Back Agreements.
(a) Restrictions on Public Sale by Holder of Registrable Securities. USAA
agrees, if reasonably requested by the managing underwriters in an Underwritten
Offering, not to effect any public sale or distribution of securities of the
Company of the same class as the securities included in such Registration
Statement, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such Underwritten Registration), during the 10-day period
prior to the filing of a Registration Statement with respect to such
Underwritten Offering, and during the 90-day period beginning on the closing
date of each Underwritten Offering made pursuant to such Registration Statement,
to the extent timely notified in writing by the Company or the managing
underwriters.
(b) Restrictions on Sale of Securities by the Company. The Company agrees
not to effect any public sale or distribution of any securities similar to those
being registered, or any securities convertible into or exchangeable or
exercisable for such securities (except pursuant to a registration statement on
Form S-4 or S-8, or any substitute form that may be adopted by the SEC) during
the ten days prior to the filing of a registration statement with respect to
such Underwritten Offering, and during the 90-day period beginning on the
effective date of any Registration Statement (except as part of such
registration statement (x) where USAA consents or (y) where USAA is
participating in such registration statement pursuant to Section 2(c) hereof,
such registration statement was filed by the Company with respect to the sale of
securities by the Company, and USAA is not simultaneously participating in a
registration statement pursuant to Section 2(b) hereof) or the commencement of a
public distribution of Registrable Securities pursuant to such registration
statement.
4. Registration Procedures. In connection with the Company's registration
obligations pursuant to Section 2 hereof, the Company will use its commercially
reasonable efforts to effect such registration to permit the sale of such
Registrable Securities in accordance with the intended method or methods of
distribution thereof, and pursuant thereto the Company will use commercially
reasonable efforts to as expeditiously as possible:
(a) prepare and file with the SEC, as soon as practicable, and in any
event within 60 days from the date of request, a Registration Statement relating
to the applicable registration on any appropriate form under the Securities Act,
which forms shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof and shall
include all financial statements of the Company, and use its commercially
reasonable efforts to cause such Registration Statement to become effective;
provided that before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of the Registration Statement, the Company will furnish
USAA and the underwriters, if any, copies of all such documents proposed to be
filed, which documents will be subject to the review of USAA and the
underwriters, and the Company will not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto (including such
documents incorporated by reference) to which USAA or the
5
<PAGE> 6
underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for the applicable period, or such shorter
period which will terminate when all Registrable Securities covered by such
Registration Statement have been sold; cause the Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the provisions of
all securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement to the
Prospectus; the Company shall not be deemed to have used commercially reasonable
efforts to keep a Registration Statement effective during the applicable period
if it voluntarily takes any action that would result in USAA not being able to
sell its Registrable Securities during that period unless such action is
required under applicable law; provided that the foregoing shall not apply to
actions taken by the Company in good faith and for valid business reasons,
including without limitation the acquisition or divestiture of assets, so long
as the Company promptly thereafter complies with the requirements of Section
4(l) hereof, if applicable;
(c) notify USAA and the managing underwriters, if any, promptly, and (if
requested by any such Person) confirm such advice in writing, (1) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (2) of any request by the SEC for
amendments or supplements to the Registration Statement or the Prospectus or for
additional information, (3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose, (4) if at any time the representations and
warranties of the Company contemplated by paragraph (n) below cease to be true
and correct, (5) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (6) of the happening of any event which makes any statement made in
the Registration Statement, the Prospectus or any document incorporated therein
by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus or any document incorporated therein by
reference in order to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) if reasonably requested by the managing underwriter or underwriters or
USAA, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and USAA agree should be
included therein relating to the sale of the Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being sold to such underwriters, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
Underwritten (or best efforts underwritten) Offering of the Registrable
Securities to be sold in such offering; and make all
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required filings of such Prospectus supplement or post-effective amendment as
soon as notified of the matters to be incorporated in such Prospectus supplement
or post-effective amendment;
(f) prior to the filing of any document which is to be incorporated by
reference into the Registration Statement or the Prospectus (after initial
filing of the Registration Statement), make available representatives of the
Company for discussion of such document and make such changes in such document
prior to the filing thereof as USAA or the underwriters may reasonably request;
(g) furnish to USAA and each managing underwriter, if any, without charge,
at least one signed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference);
(h) deliver to USAA and the underwriters, if any, without charge, as many
copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons may reasonably request; the
Company consents to the use of the Prospectus or any amendment or supplement
thereto by USAA and the underwriters, if any, in connection with the offering
and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(i) prior to any public offering of Registrable Securities, register or
qualify or cooperate with USAA, the underwriters, if any, and their respective
counsel in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions as USAA or any underwriter reasonably requests in writing and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
Registration Statement;
(j) cooperate with USAA and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations and registered in
such names as the managing underwriters may request at least two business days
prior to any sale of Registrable Securities to the underwriters;
(k) cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable USAA or the
underwriters, if any, to consummate the disposition of such Registrable
Securities;
(l) upon the occurrence of any event contemplated by Section 4(c)(6)
above, prepare a supplement or post-effective amendment to the Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, the Prospectus will not
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contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(m) cause all Registrable Securities covered by the Registration Statement
to be listed on each securities exchange on which similar securities issued by
the Company are then listed;
(n) enter into such agreements (including an underwriting agreement) and
take all such other actions in connection therewith in order to expedite or
facilitate the disposition of such Registrable Securities and in connection
therewith, whether or not an underwriting agreement is entered into and whether
or not the registration is an Underwritten Registration, (1) make such
representations and warranties to USAA and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters in
primary underwritten offerings; (2) obtain opinions of counsel to the Company
and updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and USAA,
covering the matters customarily covered in opinions requested in Underwritten
Offerings and such other matters as may be reasonably requested by USAA and the
underwriters, if any); (3) obtain "cold comfort" letters and updates thereof
from the Company's independent certified public accountants addressed to USAA
and the underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters by
underwriters in connection with primary Underwritten Offerings; (4) if an
underwriting agreement is entered into, the same shall set forth in full the
indemnification provisions and procedures of Section 6 hereof with respect to
all parties to be indemnified pursuant to said Section ; and (5) the Company
shall deliver such documents and certificates as may be requested by USAA and
the managing underwriters, if any, to evidence compliance with clause (1) above
and with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company. The above shall be done at each
closing under such underwriting or similar agreement or as and to the extent
required thereunder;
(o) make available for inspection by a representative of USAA, any
underwriter participating in any disposition pursuant to such registration, and
any attorney or accountant retained by USAA or any underwriter, all financial
and other records, pertinent corporate documents and properties of the Company
and cause the Company's officers, trust managers and employees to supply all
information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with such registration; provided that any
records, information or documents that are designated by the Company in writing
as confidential shall be kept confidential by such Persons unless disclosure of
such records, information or documents is required by court or administrative
order;
(p) otherwise use its commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering a
period of 12 months, beginning within three months after the effective date of
the registration statement, which earnings statement shall satisfy the
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provisions of section 11(a) of the Securities Act; and
(q) cooperate with USAA and each underwriter participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD").
The Company may require USAA to furnish to the Company such information
regarding the distribution of Registrable Securities as the Company may from
time to time reasonably request in writing.
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USAA agrees by acquisition of such Registrable Securities that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 4(l) hereof, USAA will forthwith discontinue disposition of
Registrable Securities until USAA's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(l) hereof, or until it is advised
in writing (the "ADVICE") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings which
are incorporated by reference in the Prospectus, and, if so directed by the
Company, USAA will deliver to the Company (at the Company's expense), all
copies, other than permanent file copies then in USAA's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Company shall give any such notice, the time
periods regarding the effectiveness of Registration Statements set forth in
Section 2 hereof and Section 4(b) hereof shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 4(c)(6) hereof to the date when USAA shall receive copies of
the supplemented or amended prospectus contemplated by Section 4(l) hereof or
the Advice.
5. Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation:
all registration and filing fees; fees with respect to filings required to be
made with the NASD; fees and expenses of compliance with securities or blue sky
laws (including fees and disbursements of counsel for the underwriters or USAA
in connection with blue sky qualifications of the Registrable Securities and
determination of their eligibility for investment under the laws of such
jurisdictions as the managing underwriters or USAA may designate); printing
expenses, messenger, telephone and delivery expenses; fees and disbursements of
counsel for the Company and fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to Section
4(n) hereof); securities acts liability insurance, if the Company so desires;
all internal expenses of the Company (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties); the expense of any annual audit; the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange on which similar securities issued by the Company are
then listed; and the fees and expenses of any Person, including special experts,
retained by the Company (all such expenses being herein called "REGISTRATION
EXPENSES") will be borne by the Company regardless of whether the Registration
Statement becomes effective. The Company shall not have any obligation to pay
any underwriting fees, discounts, or commissions attributable to the sale of
Registrable Securities, or any legal fees and expenses of counsel to USAA.
6. Indemnification; Contribution.
(a) Indemnification by Company. The Company agrees to indemnify and hold
harmless USAA and its partners, and their respective partners, officers,
directors, employees and agents, and each Person who controls such Person
(within the meaning of Section 15 of the Securities Act
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or Section 20 of the Exchange Act) against all losses, claims, damages,
liabilities and expenses arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or preliminary prospectus or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as the same are caused by
or contained in any information furnished in writing to the Company by USAA
expressly for use therein. The Company will also indemnify underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, their officers and trust managers and each
Person who controls such Persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same extent as provided
above with respect to the indemnification of USAA, if requested.
(b) Indemnification by Holder of Registrable Securities. USAA agrees to
indemnify and hold harmless the Company and its trust managers, officers,
employees and agents, and each Person who controls the Company (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue statement of a material fact or any omission of a material fact required
to be stated in the Registration Statement or Prospectus or preliminary
prospectus or necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by USAA to the
Company specifically for inclusion in such Registration Statement or Prospectus.
In no event shall the liability of USAA hereunder be greater in amount than the
dollar amount of the proceeds received by USAA upon the sale of the Registrable
Securities giving rise to such indemnification obligation. The Company shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above with respect to information
so furnished in writing by such Persons specifically for inclusion in any
Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, (b) the indemnifying
party shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such Person or (c) based upon written advice of
counsel to such Person, there shall be one or more defenses available to such
Person that are not available to the indemnifying party or there shall exist
conflicts of interest pursuant to applicable rules of professional conduct
between such Person and the indemnifying party (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume
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the defense of such claim on behalf of such Person), in each of which events the
fees and expenses of such counsel shall be at the expense of the indemnifying
party. The indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably
withheld), but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the indemnifying
party shall indemnify and hold harmless the indemnified parties from and against
any loss or liability (to the extent stated above) by reason of such settlement
or judgment. No indemnified party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for in
the preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by the preceding clauses (a)
and (b), then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations, provided, that USAA shall not be
required to contribute an amount greater than the dollar amount of the proceeds
received by USAA with respect to the sale of the Registrable Securities giving
rise to such indemnification obligation. The relative fault of the Company on
the one hand and of USAA on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement or
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 10(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentations.
7. Rule 144. The Company hereby agrees that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of USAA, make publicly
available other information so long as necessary to permit sales pursuant to
Rule 144 under the Securities Act), and it will take such further action as USAA
may reasonably request, all to the extent required from time to time to enable
USAA to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
USAA, the Company will deliver to USAA a written statement as to whether it has
complied with such information and requirements.
8. Participation in Underwritten Registrations.
(a) If any of the Registrable Securities covered by the Shelf Registration
are to be sold in an Underwritten Offering, the investment banker or investment
bankers and manager or
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managers that will administer the offering will be selected by USAA; provided,
that such investment bankers and managers must be reasonably satisfactory to the
Company.
(b) No Person may participate in any Underwritten Registration hereunder
unless such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Nothing in this Section 8 shall be construed to create any additional rights
regarding the registration of Registrable Securities in any Person otherwise
than as set forth herein.
9. Miscellaneous.
(a) Remedies. Each party hereto, in addition to being entitled to exercise
all rights provided herein or granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement to
the extent available under applicable law. Each party hereto agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
(b) Additional Registration Rights. The Company will not on or after the
date of this Agreement, enter into any agreement granting registration rights to
any other Person with respect to the securities of the Company that are not
junior or subordinate to the rights granted to USAA hereunder without the
written consent of USAA. The Company has not previously entered into any
agreement with respect to its securities granting any registration rights to any
Person.
(c) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given without the written consent of the Company and USAA.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air courier guaranteeing overnight delivery:
(i) if to USAA, at the most current address given by USAA to the
Company in accordance with the provisions of this subsection, which address
initially is 8000 Robert F. McDermott Freeway, IH-10, Suite 600, San Antonio,
Texas 78230-3884, Attention: David Holmes.
(ii) if to the Company, initially at 6220 Beltline Road, Suite 205,
Irving, Texas 75063-2656, Attention: Charles W. Wolcott, President and Chief
Executive Officer, and thereafter at such other address as may be designated
from time to time by notice given in accordance with the provisions of this
Section 9(d).
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(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
holders of Registrable Securities, it being understood that the registration
rights granted to USAA hereunder shall also be for the benefit of, and
enforceable by, the single first transferee of 100% of USAA's remaining
registrable securities and, provided further, that the Company cannot assign its
rights hereunder except pursuant to a merger.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT, AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO, SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAWS.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
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In any proceeding brought to enforce any provision of this Agreement the
successful party shall be entitled to recover reasonable attorneys' fees in
addition to its costs and expenses and any other available remedy.
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.
"COMPANY"
AMERICAN INDUSTRIAL PROPERTIES REIT
By:_____________________________________
Charles W. Wolcott
President and Chief Executive Officer
"USAA"
USAA REAL ESTATE COMPANY
By:_____________________________________
T. Patrick Duncan
Senior Vice President - Operations
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Exhibit 10.7
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and entered
into as of December 20, 1996, by and between American Industrial Properties
REIT, a Texas real estate investment trust (the "COMPANY"), and USAA Real Estate
Company, a Delaware corporation ("USAA").
WITNESSETH:
WHEREAS, pursuant to that certain Share Purchase Agreement, dated as of
December 20, 1996, among the Company, American Industrial Properties REIT, Inc.,
a Maryland corporation ("Sub"), and USAA (the "SHARE PURCHASE AGREEMENT"), USAA
purchased 998,100 Common Shares (the "SHARES") from Sub; and
WHEREAS, pursuant to the terms of the Share Purchase Agreement, the
Company and USAA agreed that the Company would grant certain registration rights
to USAA with respect to the Shares;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized terms shall
have the following meanings:
Closing Date: The closing date as defined in the Share Purchase
Agreement.
Common Shares: The common shares of beneficial interest, $.10 par
value per share, of the Company.
Exchange Act: The Securities Exchange Act of 1934, as amended from
time to time.
Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
<PAGE> 2
Registrable Securities: (a) The Shares and (b) any securities issued
or issuable with respect to the Shares by way of stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. Any Registrable Security
will cease to be a Registrable Security when (i) a registration statement
covering such Registrable Security has been declared effective by the SEC and
the Registrable Security has been disposed of pursuant to such effective
registration statement, (ii) the Registrable Security is sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met, or (iii) the
Registrable Security has been otherwise transferred, the Company has delivered a
new certificate or other evidence of ownership for it not bearing a legend
restricting further transfer, and it may be resold without subsequent
registration under the Securities Act.
Registration Expenses: See Section 5 hereof.
Registration Statement: The Registration Statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included therein, all amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission or any successor entity.
Securities Act: The Securities Act of 1933, as amended from time to
time.
Share Purchase Agreement: See the Recitals to this Agreement.
Shares: See the Recitals to this Agreement.
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. Registration Rights.
(a) Shelf RegistrationUpon the written request of USAA, the Company shall
file a "shelf" registration statement on any appropriate form pursuant to Rule
415 (or similar rule that may be adopted by the SEC) under the Securities Act (a
"SHELF REGISTRATION") for all of the then Registrable Securities, subject to the
request of USAA to exclude any Registrable Securities.
The Company hereby agrees to file such registration statement as promptly
as practicable following the request therefor, and in any event within 60 days
following the date such request is received by the Company, and thereafter to
use its commercially reasonable efforts to cause such Shelf Registration to
become effective and thereafter to keep it continuously effective, and to
prevent the happening of any event of the kind described in Section 4(c)(3),
(4), (5) or (6) hereof that
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requires the Company to give notice pursuant to the last paragraph of Section 4
hereof, for a period terminating on the third year anniversary of the date on
which the SEC declares the Shelf Registration effective, or such shorter period
as shall terminate, on the date on which all the Registrable Securities covered
by the Shelf Registration have been sold pursuant to such Shelf Registration.
The Company shall be obligated to file only one Shelf Registration and shall not
be obligated to file a Shelf Registration if three Demand Registrations
(hereinafter defined) have been effected under Section 2(b).
The Company further agrees to promptly supplement or make amendments to
the Shelf Registration, if required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by the Securities
Act or rules and regulations thereunder for shelf registration or if requested
by USAA or any underwriter of the Registrable Securities.
If USAA so elects, the offering of Registrable Securities pursuant to a
Shelf Registration shall be in the form of an Underwritten Offering.
(b) Demand Registration.
At any time during the five year period following the Closing Date, USAA
may make a written request (the "DEMAND NOTICE") for registration under the
Securities Act (a "DEMAND REGISTRATION") of the Registrable Securities held by
it.
The Demand Notice will specify the number of shares of Registrable
Securities proposed to be sold and will also specify the intended method of
disposition thereof. Unless USAA shall consent in writing, no other party,
including the Company, shall be permitted to offer securities under any such
Demand Registration. The Company shall not be required to effect more than three
Demand Registrations under this Section 2(b). A registration requested pursuant
to this Section 2(b) will not be deemed to have been effected (and it shall not
count as one of the three Demand Registrations) unless the Registration
Statement relating thereto has become effective under the Securities Act;
provided, however that if, after such Registration Statement has become
effective, the offering of the Registrable Securities pursuant to such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court, such registration
will be deemed not to have been effected (and it shall not count as one of the
three Demand Registrations). USAA may, at any time prior to the effective date
of the Registration Statement relating to such registration, revoke its Demand
Notice by providing a written notice to the Company.
If USAA so elects, the offering of Registrable Securities pursuant to a
Demand Registration shall be in the form of an Underwritten Offering. If the
managing underwriter or underwriters of such offering advise the Company and
USAA in writing that in their opinion the number of shares of Registrable
Securities requested to be included in such offering is sufficiently large to
materially and adversely affect the success of such offering, the Company will
include in such registration the aggregate number of Registrable Securities
which in the opinion of such managing underwriter or
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underwriters can be sold without any such material adverse effect; provided,
however, that Registrable Securities may be excluded before all shares proposed
to be sold by other parties, including the Company, have been excluded. If any
Registrable Securities are excluded, such registration shall not count as one of
the three Demand Registrations.
No registration pursuant to a request or requests referred to in this
subsection 2(b) shall be deemed to be a Shelf Registration.
(c) Incidental Registration. If at any time during the five year period
following the Closing Date the Company proposes to file a registration statement
under the Securities Act (other than in connection with the Shelf Registration,
a Demand Registration or a Registration Statement on Form S-4 or S-8, or any
form that is substituting therefor or is a successor thereto) with respect to an
offering of any class of security by the Company for its own account or for the
account of any of its security holders, then the Company shall give written
notice of such proposed filing to USAA as soon as practicable (but in no event
less than thirty days before the anticipated filing date), and such notice shall
(i) offer USAA the opportunity to register such number of Registrable Securities
as it may request and (ii) describe such securities and specifying the form and
manner and other relevant facts involved in such proposed registration
(including, without limitation, (x) whether or not such registration will be in
connection with an Underwritten Offering and, if so, the identity of the
managing underwriter and whether such Underwritten Offering will be pursuant to
a "best efforts" or "firm commitment" underwriting and (y) the price (net of any
underwriting commissions, discounts and the like) at which the Registrable
Securities are reasonably expected to be sold, if such disclosure is acceptable
to the managing underwriter), USAA shall advise the Company in writing within
twenty (20) days after the date of receipt of such notice from the Company of
the number of Registrable Securities for which registration is requested. The
Company shall include in such Registration Statement all such Registrable
Securities so requested to be included therein, and, if such registration is an
Underwritten Registration, the Company shall use its commercially reasonable
efforts to cause the managing underwriter or underwriters to permit the
Registrable Securities requested to be included in the registration statement
for such offering to be included (on the same terms and conditions as similar
securities of the Company included therein to the extent appropriate); provided,
however, that if the managing underwriter or underwriters of such offering
deliver a written opinion to USAA that either because of (i) the kind of
securities which USAA, the Company, or any other Persons intend to include in
such offering or (ii) the size of the offering which USAA, the Company, or such
other Persons intend to make, the success of the offering would be materially
and adversely affected by inclusion of the Registrable Securities requested to
be included, then (A) in the event that the size of the offering is the basis of
such managing underwriter's opinion, the amount of securities to be offered for
the account of USAA and other holders registering securities of the Company
pursuant to similar incidental registration rights shall be reduced pro rata
(according to the Registrable Securities beneficially owned by such holders) to
the extent necessary to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing underwriter or
underwriters; and (B) in the event that the combination of securities to be
offered is the basis of such managing underwriter's opinion, (x) the Registrable
Securities and other securities to be included in such offering shall be reduced
as described in clause (A) above or, (y)
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<PAGE> 5
if the actions described in clause (A) would, in the judgment of the managing
underwriter, be insufficient to substantially eliminate the adverse effect that
inclusion of the Registrable Securities requested to be included would have on
such offering, such Registrable Securities will be excluded from such offering.
No registration pursuant to a request or requests referred to in this
subsection 2(c) shall be deemed to be a Shelf Registration.
3. Hold-Back Agreements.
(a) Restrictions on Public Sale by Holder of Registrable Securities. USAA
agrees, if reasonably requested by the managing underwriters in an Underwritten
Offering, not to effect any public sale or distribution of securities of the
Company of the same class as the securities included in such Registration
Statement, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such Underwritten Registration), during the 10-day period
prior to the filing of a Registration Statement with respect to such
Underwritten Offering, and during the 90-day period beginning on the closing
date of each Underwritten Offering made pursuant to such Registration Statement,
to the extent timely notified in writing by the Company or the managing
underwriters.
(b) Restrictions on Sale of Securities by the Company. The Company agrees
not to effect any public sale or distribution of any securities similar to those
being registered, or any securities convertible into or exchangeable or
exercisable for such securities (except pursuant to a registration statement on
Form S-4 or S-8, or any substitute form that may be adopted by the SEC) during
the ten days prior to the filing of a registration statement with respect to
such Underwritten Offering, and during the 90-day period beginning on the
effective date of any Registration Statement (except as part of such
registration statement (x) where USAA consents or (y) where USAA is
participating in such registration statement pursuant to Section 2(c) hereof,
such registration statement was filed by the Company with respect to the sale of
securities by the Company, and USAA is not simultaneously participating in a
registration statement pursuant to Section 2(b) hereof) or the commencement of a
public distribution of Registrable Securities pursuant to such registration
statement.
4. Registration Procedures. In connection with the Company's registration
obligations pursuant to Section 2 hereof, the Company will use its commercially
reasonable efforts to effect such registration to permit the sale of such
Registrable Securities in accordance with the intended method or methods of
distribution thereof, and pursuant thereto the Company will use commercially
reasonable efforts to as expeditiously as possible:
(a) prepare and file with the SEC, as soon as practicable, and in any
event within 60 days from the date of request, a Registration Statement relating
to the applicable registration on any appropriate form under the Securities Act,
which forms shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof and shall
include all financial statements of the Company, and use its commercially
reasonable efforts
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<PAGE> 6
to cause such Registration Statement to become effective; provided that before
filing a Registration Statement or Prospectus or any amendments or supplements
thereto, including documents incorporated by reference after the initial filing
of the Registration Statement, the Company will furnish USAA and the
underwriters, if any, copies of all such documents proposed to be filed, which
documents will be subject to the review of USAA and the underwriters, and the
Company will not file any Registration Statement or amendment thereto or any
Prospectus or any supplement thereto (including such documents incorporated by
reference) to which USAA or the underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for the applicable period, or such shorter
period which will terminate when all Registrable Securities covered by such
Registration Statement have been sold; cause the Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the provisions of
all securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement to the
Prospectus; the Company shall not be deemed to have used commercially reasonable
efforts to keep a Registration Statement effective during the applicable period
if it voluntarily takes any action that would result in USAA not being able to
sell its Registrable Securities during that period unless such action is
required under applicable law; provided that the foregoing shall not apply to
actions taken by the Company in good faith and for valid business reasons,
including without limitation the acquisition or divestiture of assets, so long
as the Company promptly thereafter complies with the requirements of Section
4(l) hereof, if applicable;
(c) notify USAA and the managing underwriters, if any, promptly, and (if
requested by any such Person) confirm such advice in writing, (1) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (2) of any request by the SEC for
amendments or supplements to the Registration Statement or the Prospectus or for
additional information, (3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose, (4) if at any time the representations and
warranties of the Company contemplated by paragraph (n) below cease to be true
and correct, (5) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (6) of the happening of any event which makes any statement made in
the Registration Statement, the Prospectus or any document incorporated therein
by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus or any document incorporated therein by
reference in order to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
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<PAGE> 7
(e) if reasonably requested by the managing underwriter or underwriters or
USAA, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and USAA agree should be
included therein relating to the sale of the Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being sold to such underwriters, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
Underwritten (or best efforts underwritten) Offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(f) prior to the filing of any document which is to be incorporated by
reference into the Registration Statement or the Prospectus (after initial
filing of the Registration Statement), make available representatives of the
Company for discussion of such document and make such changes in such document
prior to the filing thereof as USAA or the underwriters may reasonably request;
(g) furnish to USAA and each managing underwriter, if any, without charge,
at least one signed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference);
(h) deliver to USAA and the underwriters, if any, without charge, as many
copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons may reasonably request; the
Company consents to the use of the Prospectus or any amendment or supplement
thereto by USAA and the underwriters, if any, in connection with the offering
and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(i) prior to any public offering of Registrable Securities, register or
qualify or cooperate with USAA, the underwriters, if any, and their respective
counsel in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions as USAA or any underwriter reasonably requests in writing and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
Registration Statement;
(j) cooperate with USAA and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations and registered in
such names as the managing underwriters may request at least two business days
prior to any sale of Registrable Securities to the underwriters;
(k) cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable USAA or the
underwriters, if any, to consummate the disposition of such Registrable
Securities;
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<PAGE> 8
(l) upon the occurrence of any event contemplated by Section 4(c)(6)
above, prepare a supplement or post-effective amendment to the Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, the Prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(m) cause all Registrable Securities covered by the Registration Statement
to be listed on each securities exchange on which similar securities issued by
the Company are then listed;
(n) enter into such agreements (including an underwriting agreement) and
take all such other actions in connection therewith in order to expedite or
facilitate the disposition of such Registrable Securities and in connection
therewith, whether or not an underwriting agreement is entered into and whether
or not the registration is an Underwritten Registration, (1) make such
representations and warranties to USAA and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters in
primary underwritten offerings; (2) obtain opinions of counsel to the Company
and updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and USAA,
covering the matters customarily covered in opinions requested in Underwritten
Offerings and such other matters as may be reasonably requested by USAA and the
underwriters, if any); (3) obtain "cold comfort" letters and updates thereof
from the Company's independent certified public accountants addressed to USAA
and the underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters by
underwriters in connection with primary Underwritten Offerings; (4) if an
underwriting agreement is entered into, the same shall set forth in full the
indemnification provisions and procedures of Section 6 hereof with respect to
all parties to be indemnified pursuant to said Section ; and (5) the Company
shall deliver such documents and certificates as may be requested by USAA and
the managing underwriters, if any, to evidence compliance with clause (1) above
and with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company. The above shall be done at each
closing under such underwriting or similar agreement or as and to the extent
required thereunder;
(o) make available for inspection by a representative of USAA, any
underwriter participating in any disposition pursuant to such registration, and
any attorney or accountant retained by USAA or any underwriter, all financial
and other records, pertinent corporate documents and properties of the Company
and cause the Company's officers, trust managers and employees to supply all
information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with such registration; provided that any
records, information or documents that are designated by the Company in writing
as confidential shall be kept confidential by such Persons unless disclosure of
such records, information or documents is required by court or administrative
order;
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<PAGE> 9
(p) otherwise use its commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering a
period of 12 months, beginning within three months after the effective date of
the registration statement, which earnings statement shall satisfy the
provisions of section 11(a) of the Securities Act; and
(q) cooperate with USAA and each underwriter participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD").
The Company may require USAA to furnish to the Company such information
regarding the distribution of Registrable Securities as the Company may from
time to time reasonably request in writing.
USAA agrees by acquisition of such Registrable Securities that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 4(l) hereof, USAA will forthwith discontinue disposition of
Registrable Securities until USAA's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(l) hereof, or until it is advised
in writing (the "ADVICE") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings which
are incorporated by reference in the Prospectus, and, if so directed by the
Company, USAA will deliver to the Company (at the Company's expense), all
copies, other than permanent file copies then in USAA's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Company shall give any such notice, the time
periods regarding the effectiveness of Registration Statements set forth in
Section 2 hereof and Section 4(b) hereof shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 4(c)(6) hereof to the date when USAA shall receive copies of
the supplemented or amended prospectus contemplated by Section 4(l) hereof or
the Advice.
5. Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation:
all registration and filing fees; fees with respect to filings required to be
made with the NASD; fees and expenses of compliance with securities or blue sky
laws (including fees and disbursements of counsel for the underwriters or USAA
in connection with blue sky qualifications of the Registrable Securities and
determination of their eligibility for investment under the laws of such
jurisdictions as the managing underwriters or USAA may designate); printing
expenses, messenger, telephone and delivery expenses; fees and disbursements of
counsel for the Company and fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to Section
4(n) hereof); securities acts liability insurance, if the Company so desires;
all internal expenses of the Company (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties); the expense of any annual audit; the fees and expenses
incurred in connection with the listing of the securities to
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<PAGE> 10
be registered on each securities exchange on which similar securities issued by
the Company are then listed; and the fees and expenses of any Person, including
special experts, retained by the Company (all such expenses being herein called
"REGISTRATION EXPENSES") will be borne by the Company regardless of whether the
Registration Statement becomes effective. The Company shall not have any
obligation to pay any underwriting fees, discounts, or commissions attributable
to the sale of Registrable Securities, or any legal fees and expenses of counsel
to USAA.
6. Indemnification; Contribution.
(a) Indemnification by Company. The Company agrees to indemnify and hold
harmless USAA and its partners, and their respective partners, officers,
directors, employees and agents, and each Person who controls such Person
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) against all losses, claims, damages, liabilities and expenses
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
prospectus or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by USAA expressly for use
therein. The Company will also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, their officers and trust managers and each Person who controls
such Persons (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) to the same extent as provided above with respect to the
indemnification of USAA, if requested.
(b) Indemnification by Holder of Registrable Securities. USAA agrees to
indemnify and hold harmless the Company and its trust managers, officers,
employees and agents, and each Person who controls the Company (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue statement of a material fact or any omission of a material fact required
to be stated in the Registration Statement or Prospectus or preliminary
prospectus or necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by USAA to the
Company specifically for inclusion in such Registration Statement or Prospectus.
In no event shall the liability of USAA hereunder be greater in amount than the
dollar amount of the proceeds received by USAA upon the sale of the Registrable
Securities giving rise to such indemnification obligation. The Company shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above with respect to information
so furnished in writing by such Persons specifically for inclusion in any
Prospectus or Registration Statement.
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(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, (b) the indemnifying
party shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such Person or (c) based upon written advice of
counsel to such Person, there shall be one or more defenses available to such
Person that are not available to the indemnifying party or there shall exist
conflicts of interest pursuant to applicable rules of professional conduct
between such Person and the indemnifying party (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person), in each of which events the fees and expenses of such counsel
shall be at the expense of the indemnifying party. The indemnifying party will
not be subject to any liability for any settlement made without its consent (but
such consent will not be unreasonably withheld), but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party shall indemnify and hold harmless the
indemnified parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. No indemnified party will be
required to consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for in
the preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by the preceding clauses (a)
and (b), then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations, provided, that USAA shall not be
required to contribute an amount greater than the dollar amount of the proceeds
received by USAA with respect to the sale of the Registrable Securities giving
rise to such indemnification obligation. The relative fault of the Company on
the one hand and of USAA on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement or
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 10(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentations.
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7. Rule 144. The Company hereby agrees that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of USAA, make publicly
available other information so long as necessary to permit sales pursuant to
Rule 144 under the Securities Act), and it will take such further action as USAA
may reasonably request, all to the extent required from time to time to enable
USAA to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
USAA, the Company will deliver to USAA a written statement as to whether it has
complied with such information and requirements.
8. Participation in Underwritten Registrations.
(a) If any of the Registrable Securities covered by the Shelf Registration
are to be sold in an Underwritten Offering, the investment banker or investment
bankers and manager or managers that will administer the offering will be
selected by USAA; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
(b) No Person may participate in any Underwritten Registration hereunder
unless such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Nothing in this Section 8 shall be construed to create any additional rights
regarding the registration of Registrable Securities in any Person otherwise
than as set forth herein.
9. Miscellaneous.
(a) Remedies. Each party hereto, in addition to being entitled to exercise
all rights provided herein or granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement to
the extent available under applicable law. Each party hereto agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
(b) Additional Registration Rights. The Company will not on or after the
date of this Agreement, enter into any agreement granting registration rights to
any other Person with respect to the securities of the Company that are not
junior or subordinate to the rights granted to USAA hereunder without the
written consent of USAA. The Company has not previously entered into any
agreement with respect to its securities granting any registration rights to any
Person.
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(c) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given without the written consent of the Company and USAA.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air courier guaranteeing overnight delivery:
(i) if to USAA, at the most current address given by USAA to the
Company in accordance with the provisions of this subsection, which address
initially is 8000 Robert F. McDermott Freeway, IH-10, Suite 600, San Antonio,
Texas 78230-3884, Attention: David Holmes.
(ii) if to the Company, initially at 6220 Beltline Road, Suite 205,
Irving, Texas 75063-2656, Attention: Charles W. Wolcott, President and Chief
Executive Officer, and thereafter at such other address as may be designated
from time to time by notice given in accordance with the provisions of this
Section 9(d).
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
holders of Registrable Securities, it being understood that the registration
rights granted to USAA hereunder shall also be for the benefit of, and
enforceable by, the single first transferee of 100% of USAA's remaining
registrable securities and, provided further, that the Company cannot assign its
rights hereunder except pursuant to a merger.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT, AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO, SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAWS.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
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(j) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
In any proceeding brought to enforce any provision of this Agreement the
successful party shall be entitled to recover reasonable attorneys' fees in
addition to its costs and expenses and any other available remedy.
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.
"COMPANY"
AMERICAN INDUSTRIAL PROPERTIES REIT
By:_____________________________________
Charles W. Wolcott
President and Chief Executive Officer
"USAA"
USAA REAL ESTATE COMPANY
By:_____________________________________
T. Patrick Duncan
Senior Vice President - Operations
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EXHIBIT 10.8
AGREEMENT FOR JOINT FILING
In connection with the beneficial ownership of Shares of
Beneficial Interest, par value $.10 per share, of USAA Real Estate Company, USAA
Capital Corporation and United Services Automobile Association hereby agree to
the joint filing on behalf of such persons all filings, including the filing of
a Schedule 13D and all amendments thereto pursuant to Rule 13d-2(f)(1)(iii)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
required under the Exchange Act pursuant to which joint filing statements are
permitted.
IN WITNESS WHEREOF, the undersigned have caused this Agreement
for Joint Filing to be signed as of this 20th day of December, 1996.
USAA REAL ESTATE COMPANY
By: /s/ T. PATRICK DUNCAN
---------------------------------------
Name: T. Patrick Duncan
Title: Senior Vice President -- Operations
USAA CAPITAL CORPORATION
Signature: /s/ MICHAEL D. WAGNER
---------------------------------
Name: Michael D. Wagner
Title: Vice President
UNITED SERVICES AUTOMOBILE ASSOCIATION
Signature: /s/ MICHAEL D. WAGNER
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Name: Michael D. Wagner
Title: Vice President
