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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 13, 1997
AMERICAN INDUSTRIAL PROPERTIES REIT
(Exact Name of Registrant as Specified in Charter)
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TEXAS 1-9016 75-6335572
(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation or Organization) Number) Identification Number)
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6210 N. Beltline Road, Suite 170, Irving, Texas 75063
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (972) 756-6000
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 13, 1997, pursuant to the terms of the Purchase and Sale
Agreement dated as of September 24, 1997, as amended, by and between American
Industrial Properties REIT, a Texas real estate investment trust (the "Trust"),
and Midway/Commerce Center Limited Partnership, a Texas limited partnership and
unrelated third party ("Midway"), the Trust acquired the Commerce Center
development in Houston, Texas ("Commerce Center"). Commerce Center consists of
nine light industrial buildings situated on 20.8 acres and totals 286,266
square feet. Commerce Center is currently 86% leased to 32 tenants, including
Federal Express. The Trust acquired Commerce Center for a total purchase price
of $10.7 million, which was agreed upon through arm's length negotiations
between the Trust and Midway. The purchase price was funded through (i)
approximately $6.6 million in borrowings under the Trust's $35 million secured
acquisition line with Prudential Securities Credit Corporation (the "Secured
Credit Line") and (ii) approximately $4.1 million from the Trust's cash
reserves. Commerce Center serves as collateral for the borrowing made under
the Secured Credit Line. The Trust intends to refinance this borrowing prior
to maturity on October 3, 1998 with proceeds from future permanent financings
or securities offerings.
After the acquisition of Commerce Center, the Trust now owns,
directly or through AIP-SWAG Operating Partnership, L.P., a Delaware limited
partnership of which the Trust is the 98% general partner, 23 real estate
properties consisting of 22 industrial or warehouse/distribution developments
and one enclosed speciality retail mall.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF THE PROPERTIES ACQUIRED PURSUANT TO RULE 3-14
OF REGULATION S-X.
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Trust to provide the financial statements required by
this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, such financial
statements shall be filed by amendment to this Form 8-K no later than 60 days
after the date on which this report was required to have been filed.
(b) PRO FORMA FINANCIAL INFORMATION.
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Trust to provide the financial statements required by
this Item 7(b). In accordance with Items 7(b)(2) and 7(a)(4) of Form 8-K, such
financial statements shall be filed by amendment to this Form 8-K no later than
60 days after the date on which this report was required to have been filed.
1
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(c) EXHIBITS.
*2.1 Purchase and Sale Agreement dated as of September 24, 1997 by and
between Midway/Commerce Center Limited Partnership, as Seller, and
American Industrial Properties REIT, as Buyer
*2.2 First Amendment to Purchase and Sale Agreement dated as of October
22, 1997 by and between Midway/Commerce Center Limited Partnership
and American Industrial Properties REIT
*2.3 Second Amendment to Purchase and Sale Agreement dated as of October
31, 1997 by and between Midway/Commerce Center Limited Partnership
and American Industrial Properties REIT
99.1 Credit Agreement dated as of October 3, 1997 between American
Industrial Properties REIT and AIP-SWAG Operating Partnership, L.P.,
as Borrower, and Prudential Securities Credit Corporation, as Lender
(filed as Exhibit 99.8 to the Trust's Current Report on Form 8-K
dated October 3, 1997, filed with the Commission on October 17, 1997
(File No. 1-9016), and incorporated herein by reference)
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* Filed herewith
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN INDUSTRIAL PROPERTIES REIT
By: /s/ Charles W. Wolcott
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Charles W. Wolcott
President and Chief Executive
Officer
Dated: November 25, 1997
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EXHIBIT LIST
*2.1 Purchase and Sale Agreement dated as of September 24, 1997 by and
between Midway/Commerce Center Limited Partnership, as Seller, and
American Industrial Properties REIT, as Buyer
*2.2 First Amendment to Purchase and Sale Agreement dated as of October
22, 1997 by and between Midway/Commerce Center Limited Partnership
and American Industrial Properties REIT
*2.3 Second Amendment to Purchase and Sale Agreement dated as of October
31, 1997 by and between Midway/Commerce Center Limited Partnership
and American Industrial Properties REIT
99.1 Credit Agreement dated as of October 3, 1997 between American
Industrial Properties REIT and AIP-SWAG Operating Partnership, L.P.,
as Borrower, and Prudential Securities Credit Corporation, as Lender
(filed as Exhibit 99.8 to the Trust's Current Report on Form 8-K
dated October 3, 1997, filed with the Commission on October 17, 1997
(File No. 1-9016), and incorporated herein by reference)
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* Filed herewith
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EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
MIDWAY/COMMERCE CENTER, L.P.
AND
AMERICAN INDUSTRIAL PROPERTIES REIT
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TABLE OF CONTENTS
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Page(s)
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1. Property Included in Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1)
2. Purchase Price; Earnest Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2)
3. Title to the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
4. Due Diligence Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
5. Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6)
6. Conditions Precedent to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)
7. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8)
8. Closing and Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9)
9. Representations, Warranties and Covenants of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . (14)
10. Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20)
11. Continuation and Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20)
12. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20)
13. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21)
14. Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22)
15. Maintenance of the Property and Property Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22)
16. Leasing; Buyer's Consent to New Contracts Affecting the Property; Termination of Existing Contracts . . . (22)
17. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23)
18. Cooperation with Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23)
19. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23)
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(i)
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20. Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23)
21. Publicity and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24)
22. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24)
23. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24)
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(ii)
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is dated as of
September 24, 1997, (the "Effective Date") by and between MIDWAY/COMMERCE
CENTER, L.P., a Texas limited partnership ("Seller"), and AMERICAN INDUSTRIAL
PROPERTIES REIT, a Texas real estate investment trust ("Buyer").
IN CONSIDERATION of the respective agreements hereinafter set forth,
Seller and Buyer agree as follows:
1. Property Included in Sale. Seller hereby agrees to sell and
convey to Buyer, and Buyer hereby agrees to purchase from Seller, subject to
the terms and conditions set forth herein, the following:
(a) that certain real property consisting of
approximately 20.8 acres, located in Houston, Harris County, Texas,
and being more particularly described in Exhibit A attached hereto
(the "Land");
(b) all of Seller's right, title and interest, if any, in
all rights, privileges and easements appurtenant to the Land,
including, without limitation, all minerals, oil, gas and other
hydrocarbon substances on and under and that may be produced from the
Land, as well as all development rights, land use entitlements,
including without limitation building permits, licenses, permits and
certificates, utilities commitments, air rights, water, water rights,
riparian rights, and water stock relating to the Land and any
rights-of-way or other appurtenances used in connection with the
beneficial use and enjoyment of the Land and all of Seller's right,
title and interest, if any, in and to all roads, easements, rights of
way and alleys adjoining, serving or servicing the Land (collectively,
the "Appurtenances");
(c) all improvements and fixtures located on the Land and
appurtenances, including, without limitation, nine (9) buildings
located on the Land containing approximately Two Hundred Eighty Six
Thousand Two Hundred Sixty Six (286,266) square feet of net rentable
area, and all apparatus, and equipment owned by Seller and used in
connection with the operation or occupancy of the Land and
appurtenances, such as heating and air conditioning systems and
facilities used to provide any utility, refrigeration, ventilation,
garbage disposal or other services on the Land and appurtenances, and
along with all on-site parking facilities (collectively, the
"Improvements", and together with the Land and Appurtenances, the
"Real Property");
(d) all tangible personal property owned by Seller
located on or in and used in connection with the Real Property as of
the date hereof and as of the "Closing Date" (as defined in Paragraph
8(b) below) including, without limitation, those items described in
the Personal Property Inventory attached hereto as Exhibit B attached
hereto (collectively, the "Tangible Personal Property"); and
(e) any intangible personal property now or hereafter
owned by Seller and used in the ownership, use or operation or
development of the Real Property and Tangible Personal Property,
including, without limitation, the right to use the name "Commerce
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Center" and any other trade name now used in connection with the Real
Property and, to the extent approved by Buyer pursuant to this
Agreement, any contract or lease rights (including, without limitation,
the lessor's interest in and to all tenant leases, rental agreements,
subleases and tenancies, including all amendments, modifications,
agreements, records, substantive correspondence, and other documents
affecting in any way a right to occupy any portion of the Real Property
(individually and collectively, the "Leases"), and Seller's interest in
all security deposits and prepaid rent, if any, under the Leases and
any and all guaranties of the Leases, utility contracts, warranties or
other agreements or rights relating to the ownership, use and operation
of the Real Property or Tangible Personal Property (collectively, the
"Intangible Property", and together with the Tangible Personal
Property, the "Personal Property").
All of the items referred to in Subparagraphs (a), (b), (c), (d) and
(e) above are collectively referred to as the "Property."
2. Purchase Price; Earnest Money.
(a) The purchase price of the Property is Ten Million
Seven Hundred Thousand and No/100 Dollars ($10,700,000.00), subject to
adjustments as provided in this Agreement (the "Purchase Price").
(b) The Purchase Price subject to any adjustments to the
Purchase Price provided in this Agreement, shall be delivered in
immediately available funds at the closing of the purchase and sale
contemplated hereunder (the "Closing") to an account at a national
banking association maintained by Partners Title Company, whose
address is 712 Main Street, Suite 2000E, Houston, Texas 77002 ("Escrow
Holder").
(c) Within three (3) days after the Effective Date, Buyer
shall deliver to the Escrow Holder (as hereinafter defined) a copy of
this Agreement together with a check or wired funds in the amount of
$100,000.00 (the "Earnest Money"), which Earnest Money shall be held
in escrow by the Escrow Holder and delivered to the party entitled
thereto in accordance with the provisions of this Agreement. The
Earnest Money shall be invested by the Escrow Holder in an
interest-bearing escrow account in a bank or other financial
institution acceptable to Buyer. All interest earned on the Earnest
Money shall belong to the party entitled to receive the Earnest Money.
(d) A portion of the Earnest Money in the amount of One
Hundred and No/100 Dollars ($100.00) (the "Independent Contract
Consideration") shall be deemed independent consideration for Seller's
execution and delivery of this Contract. If the Closing occurs, the
Independent Contract Consideration shall be applied as a credit
towards the Purchase Price. However, if the Closing does not occur,
for any reason, the Independent Contract Consideration shall be paid
by the Escrow Holder to Seller.
(e) Closing is contingent on Buyer obtaining all
approvals necessary to consummate the transaction described herein
within twenty-one (21) days after the Effective
(2)
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Date. If Buyer is unable to obtain such necessary approvals pursuant
to the provisions of this subparagraph, this Agreement shall be
terminated and all of the Earnest Money (other than the Independent
Contract Consideration) shall be returned to Buyer and all obligations
of Buyer and Seller hereunder (except those which expressly survive
termination of this Agreement) shall terminate and be of no further
force and effect.
3. Title to the Property.
(a) At the Closing, Seller shall convey to Buyer
indefeasible and insurable fee simple title to the Real Property and
Improvements, by duly executed and acknowledged special warranty deed
substantially in the form attached hereto as Exhibit C (the "Deed").
Evidence of delivery of indefeasible and insurable fee simple title
shall be the issuance by Partner's Title Company (the "Title Company")
to Buyer at the Closing of an Owner's Policy of Title Insurance in the
form promulgated by the Texas State Board of Insurance in the amount
of the Purchase Price at no more than the standard rates allowed by
the Texas Department of Insurance, insuring fee simple title to the
Real Property in Buyer, subject only to such exceptions as Buyer shall
approve pursuant to Paragraph 5, below (the "Title Policy"). The Title
Policy shall provide full coverage against mechanics' and
materialmen's liens, the printed form survey exception shall be
limited to "shortages in area" and the standard exception for taxes
shall read: "standby fees and taxes for the year 1997 and subsequent
years, and subsequent assessments for prior years due to change in
land usage or ownership" and shall contain such special endorsements
as Buyer may reasonably require, including, without limitation, any
endorsements required as a condition to Buyer's approval of any title
exceptions pursuant to Paragraph 5, below (the "Endorsements").
(b) At the Closing, Seller shall transfer title to the
Tangible Personal Property by a special warranty bill of sale in the
form attached hereto as Exhibit D (the "Bill of Sale"), such title to
be free of any liens, encumbrances or interests.
(c) At the Closing, Seller shall transfer title to the
Intangible Property, the "Assumed Contracts" (as hereinafter defined),
the "Permits" (as hereinafter defined), and the "Warranties and
Guaranties" (as hereafter defined) by an assignment of intangible
property in the form attached hereto as Exhibit E (the "Assignment of
Intangible Property"), and shall assign the Leases by an assignment of
leases in the form attached hereto as Exhibit F (the "Assignment of
Leases"), such title to be free of any liens, encumbrances or
interests.
(d) Seller shall cause all monetary encumbrances,
including without limitation all mechanics' liens, created by Seller
or on account of Seller's actions or inactions to be released from the
Property on or prior to the Closing and shall cause the Title Company
to insure title to the Property as vested in Buyer without any
exception for such matters. Seller may bond around any such
encumbrances so long as this will be sufficient to cause the Title
Company to insure title to the Property as vested in Buyer without any
exception for such a matter.
(3)
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4. Due Diligence Documents.
(a) Within five (5) days after the Effective Date,
Seller shall provide, at Seller's expense, the documents hereinafter
described (collectively, the "Preliminary Documents"). Each
Preliminary Document shall be accompanied by a dated transmittal
memorandum or cover letter. The Preliminary Documents consist of the
following:
(i) Title Commitment. A current title commitment
(the "Title Commitment") for an owner's Policy of title
insurance, covering the Real Property and issued by the Title
Company, together with a legible copy of each document, map
and survey referred to in the Title Commitment;
(ii) Survey. An as-built survey of the Property
(the "Existing Survey") prepared by a registered public
surveyor, in addition, within fifteen (15) days of the
Effective Date, Seller shall provide Buyer an update to the
Existing Survey (the "Survey") prepared by a registered public
surveyor, in accordance with the most recent Texas Surveyor's
Association standards for a Category 1A, Condition II Survey,
certified by such surveyor to Buyer and the Title Company in
the form attached hereto as Exhibit G and acceptable to the
Title Company for the purpose of limiting the standard printed
exception for survey matters to "shortages in area" in the
Title Policy. The Survey at a minimum shall (a) set forth the
legal description and street address of the Real Property, and
(b) show the location of all of the Improvements, all recorded
restrictions, easements, rights-of-way, ingress and egress,
all building restriction lines or applicable yard or setback
requirements, all curb cuts, all utility lines and facilities,
all visible restrictions, easements, rights-of-way, possible
rights of third parties, party walls and encroachments (either
onto the Land from adjacent property or onto adjacent property
from the Land) affecting the Real Property.
(iii) Agreements. Copies of all agreements
relating to the service, operation, repair, supply,
advertising, promotion, sale, leasing or management of the
Property or the use of any common facilities (the "Service
Agreements"). Buyer shall designate, prior to the expiration
of the "Due Diligence Period" (hereafter defined), those
Service Contracts that Seller shall assign to Buyer and that
Buyer shall assume as of the Closing Date, the Service
Contracts to be assumed by Buyer are referred to herein as
"Assumed Contracts";
(iv) Plans. Copies of all as-built plans and
specifications in Seller's or Seller's property manager's
possession, if any, for the Improvements, including without
limitation the plans and specifications for and a complete
description of all existing renovations and improvements to
the Real Property and all rentable space therein, and as-built
drawings for all underground utilities (collectively, the
"Plans"), together with a certificate from (the construction
lender's inspecting architect) certifying to Buyer that the
Improvements were constructed and completed in substantial
accordance with the Plans;
(4)
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(v) Warranties. Copies of any and all guarantees
or warranties in Seller's or Seller's property manager's
possession, if any, and other rights given to Seller in
connection with the construction of the Improvements or the
purchase of any of the Personal Property, if any (collectively
the "Warranties and Guaranties");
(vi) Reports. All reports in Seller's possession
or control relating to the Property excluding appraisals, but
including, without limitation, reports relating to the (i)
environmental condition of the Property, including without
limitation, environmental reports, environmental audits and
the like (which reports are listed on Exhibit H) and (ii)
soil, seismological, geological and drainage conditions, and
the flood and wind characteristics of the Property;
(vii) Rent Roll. A rent roll, dated no earlier
than ten (10) days prior to the Effective Date, and certified
by Seller to be accurate and complete, showing:
1) the name and address of each tenant of the
Improvements;
2) the rentable square footage for each tenant;
3) the commencement and expiration date of each
tenant's Lease;
4) the monthly rental payable by each tenant
(including the date and amount of any
schedule rent escalation's during the Lease
term);
5) the amount and nature of expenses for which
the tenant is responsible;
6) the amount of any security deposit;
7) details of any extension options, any options
to terminate or lease additional space, and
any rights of first refusal;
8) any free rent, or other unexpired concessions
or inducements, or obligations of Seller; and
9) aging of current accounts receivable from
tenants, along with a listing of any prepaid
rent (all rent is assumed due on the first of
the month unless otherwise noted), (the "Rent
Roll").
The Rent Roll is attached as Exhibit "I". Seller
shall deliver to Buyer for its approval, ten (10)
days prior to the Closing Date, an updated Rent Roll
dated not earlier than ten (10) days prior to the
Closing Date and certified by Seller to be accurate
and complete (the "Updated Rent Roll").
(viii) Leases. Copies of all Leases with all
tenants of the Improvements, certified by Seller to be
accurate and complete and a copy of the standard lease form
for the Improvements and access to copies of all
correspondence to or from such tenants. Seller may comply with
its obligation to deliver copies of Leases by providing Buyer
and its agents with full access to its lease files;
(ix) Operating Statements. Copies of operating
statements for the Property certified by Seller (or audited,
if audited statements are available) to be accurate and
complete, which shall cover the monthly periods from November
30, 1994 through
(5)
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August 31, 1997. Such statements shall include itemization of
income and expense, itemization of all capital expenditures
made and a report of net cash receipts during the respective
periods;
(x) Licenses, Etc. Copies of any licenses,
permits or certificates in Seller's or an agent of Seller's
possession, if any, required by governmental authorities in
connection with construction or occupancy of the Improvements,
including, without limitation, building permits, certificates
of completion, certificates of occupancy, environmental
permits and licenses, and swimming pool and sign permits;
(xi) Insurance Policies. Copies of all liability,
fire and casualty insurance policies carried by Seller and an
insurance claims history for the most recent calendar year
prior to Closing;
(xii) Commission Agreements and Proposed Leases. A
complete list, and copies, of all agreements for leasing
commissions and/or locator fees payable on prior leases,
existing leases and renewals or options affecting the Property
of which Seller is aware;
(xiii) Seller's Affidavit. At the Closing, Seller
shall deliver an affidavit (the "Seller's Affidavit") dated as
of the Closing Date in form and substance acceptable to Title
Company affirming the non-existence of security interests,
judgments, tax liens and bankruptcy proceedings which affect
or could affect the Property;
(xiv) Impact Fees. Evidence satisfactory to Buyer
that any impact fees (including, without limitation,
assessments for parks, schools or transportation) existing as
of the Effective Date have been fully paid; and
(xv) Other Documents. Current property tax bills,
and all data, correspondence, documents, agreements, waivers,
notices, applications and other records with respect to the
Property relating to transactions with taxing authorities,
governmental agencies, utilities, vendors, tenants and others
with whom Buyer may be dealing from and after the Closing
Date. Seller may satisfy this requirement by making its files
available to Buyer.
(b) Independent Audit. Promptly following the execution
of this Agreement and to the extent not already provided pursuant to
the terms of Paragraph 4(a) above, Seller shall provide to Buyer's
representatives and independent accounting firm access to all
financial and other information relating to the Property which would
be sufficient to enable Buyer's representatives and independent
accounting firm to prepare audited financial statements for 1995, 1996
and 1997 year-to-date in conformity with generally accepted accounting
principles and to enable them to prepare such statements, reports or
disclosures as Buyer may deem necessary or advisable. Seller shall
reasonably cooperate with Buyer's representatives and independent
accounting firm in connection with the aforementioned financial
analysis
(6)
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and shall provide any additional information necessary to allow Buyer
to make disclosures required by and otherwise comply with the
financial accounting requirements of Regulation S-X promulgated by the
Securities and Exchange Commission. Seller shall provide Buyer's
independent accounting firm a signed representation letter which will
be sufficient to enable an independent public accountant to render an
opinion on the financial statements related to the Property. Seller
shall authorize any attorneys who have represented Seller in any
material litigation pertaining to or affecting the Property to
respond, at Buyer's expense, to inquiries from Buyer's representatives
and independent accounting firm. If and to the extent Seller's
financial statements pertaining to the Property for any periods during
the years 1995, 1996 or 1997 year-to-date have been audited, promptly
after the execution of this Agreement, Seller shall provide Buyer with
copies of such audited financial statements and shall cooperate with
Buyer's representatives and independent public accountants to enable
them to contact the auditors who prepared such audited financial
statements and to obtain, at Buyer's expense, a reissuance of such
audited financial statements. If this Agreement terminates prior to
the Closing, other than by reason of a default of Seller, Buyer shall
deliver to Seller copies of any audited financial statements of the
Property prepared for Buyer and assign to Seller without warranty all
of Buyer's rights thereto.
5. Due Diligence Review.
Buyer's obligation to consummate the transactions contemplated in this
Agreement is expressly conditioned upon the satisfaction of each of the
conditions set forth in this section. Each condition is intended solely for the
benefit of Buyer and may be waived in whole or part by Buyer upon written
notice to Seller.
(a) Approval of Preliminary Documents and Physical
Condition. Buyer shall review each of the Preliminary Documents, the
physical condition of the Property and such other items as Buyer deems
necessary in order for Buyer, at its sole election, to determine
whether the Property is acceptable to Buyer. If Buyer determines in
its sole discretion that the Property is not acceptable, Buyer shall
have the right to terminate this Agreement by written notice to Seller
within thirty (30) days after the Effective Date (the "Due Diligence
Period") in which case the Earnest Money shall be returned to Buyer.
Additionally, prior to the end of the Due Diligence Period, Buyer
shall provide a notice (the "MCI Notice") to Seller setting forth the
requirements of Buyer with respect to the removal of certain
specialized improvements in that portion of the improvements covered
by a Lease to which MCI Communications, Inc. and/or one of its
affiliates is a tenant of a portion of the Property.
(b) Termination of Agreement . Notwithstanding anything
in this Agreement to the contrary, Buyer shall have the right to
terminate this Agreement at any time during the Due Diligence Period.
Additionally, Buyer shall have the right, at any time prior to
Closing, to terminate this Agreement should any representation or
warranty by Seller contained herein prove to be untrue or misleading
in any material respect. In the event this Agreement is terminated
pursuant to Paragraph 5, then, subject to the provisions of Paragraph
7, the Earnest Money shall be returned to Buyer and all obligations of
Buyer and Seller hereunder (except the provisions of this Agreement
which recite that they survive termination) shall
(7)
<PAGE> 11
terminate and be of no further force or effect. The provisions of this
subparagraph shall survive termination of this Agreement.
6. Conditions Precedent to Closing. The following are conditions
precedent to Buyer's obligation to purchase the Property (the "Conditions
Precedent"). The Conditions Precedent are intended solely for the benefit of
Buyer and may be waived only by Buyer in writing. In the event any condition
precedent is not satisfied or waived by Buyer, Buyer may, in its sole and
absolute discretion, terminate this Agreement at which point the Earnest Money
shall be returned to Buyer and, subject to the provisions of Paragraph 7, all
obligations of Buyer and Seller hereunder (except provisions of this agreement
which recite that they survive termination) shall terminate and be of no
further force or effect.
(a) All of Seller's representations and warranties
contained in this Agreement shall have been true and correct when made
and shall be true and correct as of the Closing Date.
(b) The physical condition of the Property shall be
substantially the same on the Closing Date as on the date of Buyer's
execution of this Agreement, except for reasonable wear and tear and
loss by casualty (subject to the provisions of Paragraph 13, below)
and repairs, replacements and improvements made with Buyer's written
approval (which approval shall not be unreasonably withheld).
(c) As of the Closing Date, there shall be no litigation
or administrative agency or other governmental proceeding of any kind
whatsoever, pending or threatened, which was not disclosed in writing
to Buyer during the Due Diligence Period and which, after Closing
would, in Buyer's reasonable discretion, materially adversely affect
the value of the Property or the ability of Buyer to operate the
Property in the manner in which it is currently being operated, and no
proceedings shall be pending or threatened which would be likely to
cause the redesignation or other modification of the zoning
classification of, or of any building or environmental code
requirements applicable to, any of the Property or any property
adjacent to the Property.
(d) Seller shall deliver notices of termination at or
prior to the Closing Date, at no cost or expense to Buyer, any and all
Service Contracts or other agreements affecting the Property that are
not Assumed Contracts.
(e) Seller shall have fully complied with all of Seller's
duties and obligations contained in this Agreement.
(f) Seller shall have delivered to Buyer estoppel
certificates ("Tenant Estoppels") within three (3) days prior to the
Closing Date and dated effective no earlier than thirty (30) days
prior to the Closing Date in a form substantially similar to Exhibit
"L" attached hereto or in such other form as provided for in each
applicable Lease, from tenants occupying eighty-five percent (85%) of
the square footage of the Improvements currently under
(8)
<PAGE> 12
occupancy; provided, however, that such Tenant Estoppels must include
Tenant Estoppels from the five largest tenants (measured by leased net
rentable area of square footage).
(g) Any deferred maintenance on the roof(s) of the
Improvements sufficient to comply with that certain Competition
Roofing Report shall have been completed to Buyer's reasonable
satisfaction, or, in the alternative, Buyer shall have received a
credit against the Purchase Price (agreed to in writing by Buyer) for
the cost of any such deferred maintenance relating to the roof of the
Improvements.
7. Remedies.
(a) In the event the sale of the Property is not consummated
because of a breach or default under this Agreement on the part of
Buyer, the Earnest Money shall be paid to and retained by Seller as
liquidated damages. The parties have agreed that Seller's actual
damages, in the event of a default by Buyer, would be extremely
difficult or impracticable to determine. THEREFORE, BY PLACING THEIR
INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT ONE HUNDRED THOUSAND AND
NO/100 DOLLARS ($100,000.00) HAS BEEN AGREED UPON, AFTER NEGOTIATION,
AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS
SELLER'S EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE
EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF BUYER.
INITIALS: Seller /s/ DBF Buyer /s/ LF
------------------- --------------
(b) In the event the sale of the Property is not consummated
because of a breach or default under or breach of this agreement on
the part of Seller or if a Condition Precedent cannot be fulfilled
because Seller frustrated such fulfillment by Seller's gross
negligence or willful misconduct, Buyer shall, at Buyer's election,
receive a return on the Earnest Money or continue this Agreement
pending Buyer's action for specific performance and/or damages.
8. Closing and Escrow.
(a) Upon mutual execution of this Agreement, the parties
hereto shall deposit an executed counterpart of this Agreement with
Escrow Holder and this Agreement shall serve as instructions to Escrow
Holder for consummation of the purchase and sale contemplated hereby.
(b) The parties shall conduct an escrow Closing. The Closing
shall be on or before fifteen (15) days after the expiration of the
Due Diligence Period or on such other date mutually agreed upon
between Buyer and Seller in writing (the "Closing Date"). In the
event the Closing does not occur on or before the Closing Date, Escrow
Holder shall, unless it is notified by both parties to the contrary
within five (5) days after the Closing Date, return to the depositor
thereof items which were deposited hereunder and shall deliver the
Earnest Money to the party entitled to receive same. Any such return
shall not, however, relieve either party of any liability it may have
for its wrongful failure to Close.
(9)
<PAGE> 13
(c) At or before the Closing, Seller shall deliver to
Escrow Holder or Buyer the following:
(i) a duly executed and acknowledged Deed;
(ii) a duly executed Bill of Sale;
(iii) originals of all Leases and a duly executed
and acknowledged Assignment of Leases;
(iv) originals of the Assumed Contracts not
previously delivered to Buyer (to the extent originals are
available; provided if originals are not available Seller
shall provide Buyer with true, correct and complete copies);
(v) a duly executed Assignment of Intangible
Property;
(vi) to the extent in Seller or an agent of
Seller's possession, originals of the building permits and
certificates of occupancy for the Improvements and all
tenant-occupied space included within the Improvements and all
Warranties and Guaranties not previously delivered to Buyer;
(vii) notices to the Tenants in the form attached
as Exhibit J, duly executed by Seller;
(viii) the Tenant Estoppels for those tenants of the
Property as required by Paragraph 6(f);
(ix) a duly executed affidavit that Seller is not
a "foreign person" within the meaning of Section 1445(e)(3) of
the Internal Revenue Code of 1986 (the "Code") in the form
attached as Exhibit K;
(x) evidence reasonably satisfactory to Buyer
that Seller has completed removal from the Property of the
items specified in the MCI Notice or otherwise made
arrangements reasonably satisfactory to Buyer that such
removal will occur promptly after Closing, in either instance
at no expense to Buyer;
(xi) such resolutions, authorizations, bylaws or
other corporate and/or partnership documents or agreements
relating to Seller and its partners as shall be reasonably
required by the Title Company;
(xii) a full release of all monetary encumbrances
affecting the Property, including without limitation any
mechanics' liens and such bond, indemnity or other
arrangements as shall be necessary to cause the Title Company
to insure title to the Property as vested in Buyer without any
exception for such matters;
(10)
<PAGE> 14
(xiii) a closing statement in form and content
satisfactory to Buyer and Seller (the "Closing Statement")
duly executed by Seller;
(xiv) all keys to the Property in Seller's or
Seller's management company's possession;
(xv) evidence of termination of any Service
Contracts and other agreements affecting the Property that are
not Assumed Contracts;
(xvi) any documents or agreements reasonably
required by the Title Company to issue the Title Policy;
(xvii) any other instruments, records or
correspondence called for hereunder which have not previously
been delivered; and
(xviii) a duly executed Seller's Affidavit pursuant
to Paragraph 4(a)(xiii).
Buyer may waive compliance on Seller's part under any of the foregoing items by
an instrument in writing.
(d) At or before the Closing, Buyer shall deliver to
Escrow Holder or Seller the following:
(i) a duly executed Assignment of Leases;
(ii) a duly executed Assignment of Intangible
Property;
(iii) the Closing Statement, duly executed by
Buyer; and
(iv) the Purchase Price less any proration credits
provided for this Agreement.
(e) Seller and Buyer shall each deposit such other
instruments as are reasonably required by Escrow Holder or Title
Company or otherwise required to close the escrow and consummate the
purchase of the Property in accordance with the terms hereof.
(f) Prorations, Closing Costs and Adjustments.
(1) The following are to be apportioned as of
12:01 AM on the Closing Date, as follows:
(i) Rent. Rent under the Leases shall
be apportioned as of the Closing Date. With respect to
any rent arrearages arising under the Leases, after
Closing, Buyer shall pay to Seller any rent actually
collected which is applicable to the period preceding
the Closing Date; provided, however, that
(11)
<PAGE> 15
all rent collected by Buyer shall be applied first to
all unpaid rent accruing after the Closing Date, and
then to unpaid rent accruing prior to the Closing
Date. Buyer shall make good faith efforts to recover
any rent arrearages. Seller shall be permitted to
pursue its remedy for collection of any rent
arrearages applicable to the period prior to the
Closing Date, provided that Buyer shall incur no cost,
expense or liability in connection therewith, but
Seller shall not be permitted to commence eviction
procedures.
(ii) Leasing Costs. Seller shall pay as
of the Closing all leasing commission and tenant
improvement costs, if any, in connection with any
Lease executed on or before the Effective Date that
are due and payable as of the Closing. Seller shall
be entitled to a credit in addition to the Purchase
Price for any such commissions or out of pocket costs
reasonably incurred in connection with any Lease
executed on or before the Closing, but after the
Effective Date.
(iii) Security Deposits. Buyer shall be
entitled to a credit against the Purchase Price for
the total sum of all unapplied security deposits paid
to Seller by tenants under any Leases.
(iv) Unexpired Concessions. Buyer shall
be entitled to a credit against the Purchase Price for
any free rent, abatements, or other unexpired
concessions under any Leases to the extent they apply
to any period after the Closing.
(v) Tenant Charges. Where the Leases
contain tenant obligations for taxes, common area
expenses, operating expenses or additional charges of
any other nature, and where Seller has collected any
portion thereof in excess of amounts owed by tenants
for such items for the period prior to the Closing
Date, then there shall be an adjustment and credit
given to Buyer on the Closing Date for such excess
amounts collected. Buyer shall apply all such excess
amounts to the charges owed by tenants for such items
for the period after the Closing Date and, if required
by the Leases, shall rebate or credit tenants with any
remainder. Where Seller has failed to collect the
appropriate portion thereof owed by tenants for such
items for the period prior to the Closing Date, no
credit or adjustment shall be given to Seller on the
Closing Date, and Buyer shall have no obligation to
remit any such amounts to Seller after Closing.
(vi) Utility Charges. Seller shall cause
all the utility meters to be read on the Closing Date,
and will be responsible for the cost of all utilities
used prior to the Closing Date, except to the extent
such utility charges are billed to and paid by tenants
directly.
(12)
<PAGE> 16
(vii) Real Estate Taxes and Special
Assessments. General real estate taxes payable for the
1996 calendar year and all prior years shall be paid
by Seller. General real estate taxes payable for the
1997 calendar year shall be prorated between Seller
and Buyer as of the Closing Date utilizing 1996 actual
tax information which shall be final and binding on
Seller and Buyer. Seller shall pay on or before
Closing the full amount of any bonds or assessments
against the Property including interest payable
therewith, including any bonds or assessments that may
be payable after the Closing Date as a result of or in
relation to the construction or operation of any
Improvements or any public improvements that took
place or for which any assessment was levied prior to
the Closing Date. Buyer shall pay the full amount of
any bonds or assessments incurred after the Closing
Date that are not subject to the immediately preceding
sentence.
(viii) Other Apportionments. Amounts
payable under the Assumed Contracts, annual or
periodic permit and/or inspection fees (calculated on
the basis of the period covered), and liability for
other Property operation and maintenance expenses and
other recurring costs shall be apportioned as of the
Closing Date.
(ix) Preliminary Closing Adjustment.
Seller and Buyer shall jointly prepare and approve a
preliminary Closing adjustment on the basis of the
Leases and other sources of income and expenses, and
shall deliver such computation to Escrow Holder prior
to Closing.
(2) Closing Costs. Seller shall pay for the
Survey, the Title Commitment, and the premium for the Title
Policy. Recording fees, escrow fees and costs and the cost of
the survey deletion for the Title Policy shall be paid fifty
percent (50%) by Buyer and fifty percent (50%) by Seller.
Seller shall be responsible for all costs incurred in
connection with the prepayment or satisfaction of any loan or
bond secured by the Property including, without limitation,
any prepayment fees, penalties or charges. All other costs and
charges of the escrow for the sale not otherwise provided for
in this Agreement shall be allocated in accordance with the
closing customs for Harris County, Texas. Buyer and Seller
shall each be responsible for their respective legal fees to
negotiate and execute this Agreement. In the event this
Agreement is terminated or Closing occurs, the foregoing
allocation of costs shall survive such termination or Closing.
(3) Survival. The provisions of this
Subparagraph (f) shall survive the Closing.
9. Representations, Warranties and Covenants of Seller. As of
the date hereof and again as of Closing, Seller represents and warrants to, and
covenants with, Buyer as follows:
(13)
<PAGE> 17
(a) To Seller's actual knowledge, the use and operation
of the Property now are, and at the time of Closing will be, in
compliance with all Laws. Seller shall not commit or permit to occur,
any action which will result in such a violation between the date
hereof and the Closing.
(b) To Seller's actual knowledge, all documents delivered by
Seller to Buyer, or made available to Buyer for review in connection
with the transactions contemplated hereunder, including without
limitation, all documents described in Paragraph 4, above, are and at
the time of Closing will be true, correct and complete copies of all
such documents in Seller's possession and/or control. To Seller's
knowledge, all of Seller's files in connection with the Property, and
all other matters described in Paragraph 4, above, in Seller's
possession and/or control were delivered to or made available to Buyer
for Buyer's review and there are no documents required for a complete
understanding of the items described in Paragraph 4, above, or which
are otherwise of significance in evaluating the Property which are not
contained in Seller's files or which have not been delivered or made
available to Buyer, or which are otherwise necessary to make the
documents referred to in Paragraph 4, above, complete. Any of the
foregoing documents which constitute contracts and are to be assumed
by Buyer at Closing are and at the time of Closing will be, in full
force and effect, without default by (or notice of default to) any
party. Seller is not, and will not be at the time of Closing, in
default under any contract or agreement affecting the Property,
whether or not such contract or agreement is to be assumed by Buyer at
Closing.
(c) To Seller's actual knowledge, there are no
condemnation, environmental, zoning or other land-use regulation
proceedings, either instituted or planned to be instituted, which
would detrimentally affect the use, operation or value of the
property, nor has Seller received written notice of any special
assessment proceedings affecting the Property (other than as set forth
in the Title Commitment). Seller shall notify Buyer promptly of any
such proceedings of which Seller becomes aware except as disclosed in
that certain [Fugro report] dated October 8, 1994.
(d) To Seller's actual knowledge, all water, sewer, gas,
electric, telephone, and drainage facilities and all other utilities
required by law or by the normal use and operation of the Property are
and at the time of Closing will be installed to the property lines of
the Land, are and at the time of Closing will be connected pursuant to
valid permits, and are and at the time of Closing will be adequate to
service the Property and to permit compliance with all Laws.
(e) To Seller's actual knowledge, Seller has obtained all
licenses, permits, variances, approvals, authorizations, easements and
rights of way, including proof of dedication, required from all
governmental authorities having jurisdiction over the Property or from
private parties for the present use, operation and occupancy of the
Property and to insure vehicular and pedestrian ingress to and egress
from the Property.
(f) Seller has not been served with, Seller has no actual
knowledge of any pending, and Seller has received no written notice of
any threatened litigation against Seller
(14)
<PAGE> 18
affecting the use or operation of the Property for its intended
purpose or the ability of Seller to perform its obligations under this
agreement. Seller shall notify Buyer promptly of any such litigation
of which Seller becomes aware.
(g) To Seller's actual knowledge, at the time of Closing there
will be no outstanding written or oral contracts made by Seller for
any improvements to the Property which have not been fully paid for
and Seller shall cause to be discharged all mechanics' and
materialmen's liens arising from any labor or materials furnished to
the Property prior to the time of Closing.
(h) To Seller's actual knowledge and other than as disclosed
in that certain [Fugro report] dated October 8, 1994, (i) Seller and
the Property and any real estate in the vicinity of the Property are
in compliance in all material respects with all Environmental Laws;
(ii) Seller has not engaged in any Environmental Activity and, to the
best knowledge of Seller, no Environmental Activity has otherwise
occurred on the Property, except in compliance with all Environmental
Law; (iii) Seller has not received any notice, order, directive,
complaint or other communication, written or oral, from any
governmental agency or other person or entity alleging the occurrence
of any Environmental Activity in violation of any Environmental Laws;
(iv) no underground storage tanks (whether existing or abandoned)
exist on the Property or, to the best of Seller's knowledge on any
property which abuts or is adjacent to the Property; (v) the Use of
the Property for its intended purpose will not result in any
Environmental Activity in violation of any applicable Environmental
Laws; (vi) to Seller's knowledge, the Property does not contain any
building materials that contain Hazardous Material. For the purposes
of this subparagraph, the following words shall have the following
meanings:
(1) "Use" means use, ownership, development,
construction, maintenance, management, operation or occupancy
of the Property or any portion thereof.
(2) "Environmental Law" means federal, state and
local laws, statutes, ordinances, rules, regulations
(including without limitation the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended
from time to time (42 U.S.C. Sections 9601 et seq.)
("CERCLA"), the Federal Insecticide Fungicide and Rodenticide
Act of 1976 (7 U.S.C. Sections 136, et. seq. ("FIFRA") and
the applicable provisions of the Texas Health and Safety Code,
and Texas Water Code, as amended from time to time (the "Texas
Codes") and rules and regulations promulgated thereunder),
authorizations, judgments, decrees, administrative orders,
concessions, grants, franchises, agreements and other
governmental restrictions and requirements relating to the
environment or to any Hazardous Material, Environmental
Activity or Remedial Work.
(3) Environmental Activity" means any actual,
proposed or threatened storage, holding, existence, suspected
existence, release, suspected release, emission, discharge,
generation, processing, abatement, removal, disposition,
handling or transportation of any Hazardous Material from,
under, into, on or across the Property
(15)
<PAGE> 19
or otherwise relating to the Property or the Use of the
Property, or any other activity or occurrence that causes or
would cause any such event to exist.
(4) "Hazardous Material" means, at any time, (a)
any substance, product, chemical, compound, material, mixture,
waste or other material of any nature whatsoever (i) which is
now or hereafter listed, defined or otherwise classified
pursuant to any Environmental Laws as a "hazardous substance",
"hazardous waste", "infectious waste", "hazardous material",
"extremely hazardous waste", "toxic substance", "toxic
pollutant" or any other formulation intended to define, list
or classify substances by reason of deleterious properties
such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity or reproductive toxicity; (ii) which
is now or hereafter regulated or listed by any local, state or
federal governmental authority, entity or agency pursuant to
any Environmental Laws; or (iii) which may give rise to any
liability under any Environmental Laws or under any statutory
or common law theory based on negligence, trespass,
intentional tort, nuisance or strict liability or under any
reported decisions of state or federal court; (b) asbestos and
asbestos-containing materials; and (c) radon; (d) PCB's,
petroleum and petroleum products or fractions thereof,
including without limitation, crude oil, and any fraction
thereof, natural gas, natural gas liquids, liquefied natural
gas or synthetic gas usable for fuel or any mixture thereof.
(5) "Remedial Work" means, at any time, any
investigation, monitoring, restoration, abatement,
detoxification, containment, handling, treatment, removal,
storage, decontamination, clean-up, transport, disposal or
other ameliorative work or response action required by any (i)
Environmental Laws, (ii) order or request of any federal,
state or local government agency, or (iii) any judgment,
consent decree, settlement or compromise, with respect to any
Hazardous Materials Claims.
(6) "Hazardous Materials Claims" means, at any
time, any and all enforcement, investigation, monitoring,
clean-up, removal, remedial or other governmental or
regulatory actions, agreements or orders threatened,
instituted or completed pursuant to any Environmental Laws and
any and all other actions, proceedings, claims, demands or
causes of action, whether meritorious or not (including,
without limitation, third party claims for contribution,
indemnity, damages, injury to real or personal property) made
or threatened, which directly or indirectly relate to, arise
from or are based in whole or in part on, (i) the occurrence
or alleged occurrence of any Environmental Activity; (ii) any
violation or alleged violation of any applicable Environmental
Laws relating to the Property or to its use; (iii) or any
investigation, inquiry, order, hearing, action or other
proceeding by or before any governmental agency in connection
with any Environmental Activity.
(i) To Seller's actual knowledge, as of the Closing Date, and
with respect to any Leases entered into by Seller during its ownership
of the Property, Seller shall have (i) completed all original building
and tenant construction and all related punch list items, (ii)
completed all obligations with respect to any remodeling or renovating
to be completed by
(16)
<PAGE> 20
Seller as landlord under the Leases; and (iii) paid all obligations of
the landlord pursuant to the Leases, including, without limitation,
tenant improvement, remodeling or renovating costs, leasing
commissions, locator fees and other concessions.
(j) To Seller's actual knowledge, there are no
assessments or bonds assessed or proposed to be assessed, against the
Property, except (i) matters which are set forth in the Title
Commitment, (ii) contracts and other agreements set forth in the
Schedule of Agreements, and (iii) the Leases. To Seller's knowledge
there are no existing or proposed easements, covenants, restrictions,
agreements or other documents which affect title to the Property and
which will not be disclosed by the Title Commitment.
(k) Seller has not filed or been the subject of any
filing of a petition under the Federal Bankruptcy Law or any federal
or state insolvency laws or laws for composition of indebtedness or
for the reorganization of debtors.
(l) To Seller's actual knowledge: the Land is a separate
and distinct legal parcel; if such parcel is a part of an existing
subdivision, or if it has been created by way of a subdivision of
land, such subdivision and all required plats thereof have been
completed in accordance with all applicable laws, rules and
regulations; should any of the Property be destroyed by fire or other
casualty, no further subdivision or platting of the Land will be
required in order to obtain necessary building permits and
certificates of occupancy from the applicable city, county, and state
governmental entities and municipalities; all utilities serving the
Property are located in dedicated public easements or rights-of-way
which are immediately contiguous and adjacent to the Land; such parcel
contains no property which is part of a real property tax parcel which
is not entirely included within the Land; and no portion of the
Property is currently affected by or subject to any special assessment
or special use or tax abatement recognized or permitted by any taxing
authority including, but not limited to, any agricultural use
exemption or other tax exemption, and no penalty, special assessment,
or back taxes from any special assessment or exemption shall be due
upon transfer of title to the Property to Buyer or upon any change of
use of the Property by Buyer.
(m) To Seller's actual knowledge: no portion of the
Property is located in a wetland area, as defined by Laws, or in a
designated or recognized floodplain, flood plain district, flood
hazard area or area of similar characterization and no use of any
portion of the Property will violate any requirement of the United
States Corps of Engineers or Laws relating to wetland areas.
(o) To Seller's actual knowledge, no brokerage, finders
fee or commission, locator fee or similar fee or commission is
currently due or unpaid by Seller with respect to any Lease except as
disclosed by Seller.
(p) To Seller's actual knowledge, the copies of the
Leases delivered by Seller to Buyer contain all of the information
pertaining to any rights of any parties to occupy the Property,
including, without limitation, all information regarding any rent
concessions, tenant improvements, or other inducements to lease.
(17)
<PAGE> 21
(q) To Seller's actual knowledge, the Rent Roll is true,
complete and accurate and, except as disclosed by Seller to Buyer in
writing, there exist no defaults.
(r) To Seller's actual knowledge, there are no existing
easements, covenants, restrictions, agreements or other documents
which affect title to the Property which will not be disclosed by the
Title Commitment and to Seller's knowledge there are no proposed
easements, covenants, restrictions, agreements or other documents
which will affect title to the Property which will not be disclosed by
the Title Commitment;
(s) To Seller's actual knowledge, all Improvements comply
with applicable building codes and all final certificates of occupancy
for the Improvements have been issued.
(t) Seller is a limited partnership, duly organized and
validly existing and in good standing under the laws of the State of
Texas; this Agreement and all documents executed by Seller which are
to be delivered to Buyer at the Closing are and at the time of Closing
will be duly authorized, executed and delivered by Seller, are and at
the time of Closing will be legal, valid and binding obligations of
Seller enforceable against Seller in accordance with their respective
terms, are and at the time of Closing will be sufficient to convey
title (if they purport to do so), and do not and at the time of
Closing will not violate any provision of any agreement or judicial
order to which Seller or the Property is subject. Seller has obtained
all necessary authorizations, approvals and consents to the execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(u) Seller is not a "foreign person" within the meaning
of Section 1445(f)(3) of the Code.
(v) Seller is the legal fee simple owner of the Property,
with full right to convey the same, and, without limiting the
generality of the foregoing, Seller has not granted any option or
right of first refusal or first opportunity to any party to acquire
any interest in any of the Property.
(w) To Seller's actual knowledge: the Improvements are
not in violation of any applicable building, moratorium, coastal or
wetlands management zone or environmental protection law, regulation
or ordinance and any necessary environmental impact statements
relating to the Improvements or the construction thereof have been (a)
prepared by Seller, by its predecessors in title to the Property or by
other parties responsible therefor and (b) if required, filed with and
favorably and finally acted upon by all governmental offices and/or
officials having jurisdiction.
For purposes of this Agreement, whenever the phrase "to Seller's
actual knowledge" or words of similar import are used, they shall be deemed to
refer to the actual knowledge of Bruce Fincher without any duty of inquiry and
shall not include any imputed knowledge.
10. Representations and Warranties of Buyer. Buyer hereby
represents and warrants to Seller as follows: Buyer is a real estate investment
trust organized under the laws of the State of
(18)
<PAGE> 22
Texas; this Agreement and all documents executed by Buyer which are to be
delivered to Seller at the Closing are or at the time of Closing will be duly
authorized, executed and delivered by Buyer, and are or at the Closing will be
legal, valid and binding obligations of Buyer, and do not and at the time of
Closing will not violate any provisions of any agreement or judicial order to
which Buyer is subject.
11. Continuation and Survival.
(a) All representations, warranties and covenants by the
respective parties contained herein or made in writing pursuant to
this Agreement are intended to merge with the delivery to Buyer of the
Deed and shall not survive Closing except for those representations
and warranties contained in subparagraphs 9(k), 9(t), 9(u) and 9(v)
which representations and warranties shall expressly survive the
Closing Date for a period of one (1) year, and not merge with the
delivery to Buyer of the Deed. PURCHASER ACKNOWLEDGES AND AGREES
THAT, EXCEPT AS PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, DOES
NOT MAKE AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS, WARRANTIES,
PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER
WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT
OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO: (A) THE NATURE,
QUALITY OR CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION,
THE SURFACE AND SUBSURFACE WATER, SOILS AND GEOLOGY; (B) THE INCOME TO
BE DERIVED FROM THE PROPERTY; (C) THE SUITABILITY OF THE PROPERTY FOR
ANY AND ALL ACTIVITIES AND USES WHICH PURCHASER MY CONDUCT THEREON;
(D) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY
LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL
AUTHORITY OR BODY; (E) THE HABITABILITY, MERCHANT-ABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OF THE PROPERTY; OR (F) ANY OTHER MATTER WITH
RESPECT TO THE PROPERTY. WITHOUT LIMITING THE FOREGOING, SELLER DOES
NOT AND HAS NOT MADE ANY REPRESENTATION OR WARRANTY REGARDING THE
PRESENCE OR ABSENCE OF ANY HAZARDOUS SUBSTANCES (as hereinafter
defined) ON, UNDER OR ABOUT THE PROPERTY OR THE COMPLIANCE OR
NONCOMPLIANCE OF THE PROPERTY WITH ENVIRONMENTAL LAWS (as hereinafter
defined). For purposes of this Agreement, the term "Environmental
Laws" shall mean the following federal laws as they may be cited,
referenced and amended from time to time: the Clean Air Act, the
Comprehensive Environmental Response, Compensation and Liability Act,
the Federal Water Pollution Control Act (the Clean Water Act), the
Occupational Safety and Health Act, the Resource Conservation and
Recovery Act, the Safe Drinking Water Act, the Superfund Amendments
and Reauthorization Act, and the Toxic Substances Control Act; any and
all equivalent environmental laws of the State of Texas, as they may
be cited, referenced and amended from time to time; any rules or
regulations promulgated under and adopted pursuant to the above
federal and state laws; or any other equivalent federal, state or local
statute or any requirement, rule, regulation, code or order adopted
pursuant thereto, including, but not limited to, those relating to the
generation, transportation, treatment, storage, recycling, disposal,
(19)
<PAGE> 23
handling or release of "Hazardous Substances", as such term is defined
herein. "Hazardous Substances" shall mean flammables, explosives,
radioactive materials, hazardous wastes, asbestos or any materials
containing asbestos, polychlorinated biphenyls (PCBs), toxic
substances or related materials, petroleum, used oil, associated oil
or natural gas exploration, production and development wastes, or any
substances defined as "hazardous substances", "hazardous materials",
"hazardous wastes", or "toxic substances" under the Comprehensive
Environmental Response, Compensation & Liability Act, as amended, the
Superfund Amendments and Reauthorization Act, as amended, the
Hazardous Materials Transportation Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Hazardous Materials
Transportation Act, as amended, and the Toxic Substances Control Act,
as amended, or any other similar law or regulation now or hereafter
enacted or promulgated by any federal, state, local or governmental
authority. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT HAVING BEEN
GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY, PURCHASER IS PURCHASING
THE PROPERTY PURSUANT TO ITS INDEPENDENT EXAMINATION, STUDY,
INSPECTION AND KNOWLEDGE OF THE PROPERTY AND PURCHASER IS RELYING UPON
ONLY SELLER'S REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT, ITS OWN DETERMINATION OF THE VALUE OF THE PROPERTY AND USES
TO WHICH THE PROPERTY MAY BE PUT, AND NOT ON ANY THIRD PARTY
INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER. PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT ANY INFORMATION PROVIDED OR TO BE
PROVIDED WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF
SOURCES AND THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR
VERIFICATION OF SUCH INFORMATION AND SELLER MAKES NO REPRESENTATIONS
AS TO THE ACCURACY OR CORRECTNESS OF SUCH INFORMATION. The occurrence
of the Closing shall constitute an acknowledgment by Purchaser that
the Property was accepted with representation or warranty, express or
impled (except for the special warranties of title set forth in the
Deed and the representations and warranties contained in the Agreement
which by there terms survive Closing), and otherwise in an "AS IS" and
"WITH ALL FAULTS" condition based solely on Purchaser's own
inspection. The acknowledgments and agreements of Purchaser set forth
in this Paragraph 11 shall survive the Closing and shall not be merged
therein.
12. Indemnity.
(a) Subject to the other terms and conditions of this
Agreement, Seller shall hold harmless, indemnify and defend Buyer, its
successors and assigns and their respective agents, employees,
officers, trustees, members and retirants and the Property from and
against any and all obligations, liabilities, claims, liens or
encumbrances, demands, losses, damages, causes of action, judgments,
costs and expenses (including attorneys' fees), whether direct,
contingent or consequential and no matter how arising ("Losses and
Liabilities") in any way (i) related to the Property and arising or
accruing during the time prior to the Closing.
(20)
<PAGE> 24
(b) Subject to the other terms and conditions of this
Agreement, Buyer shall hold harmless, indemnify and defend Seller, its
successors and assigns and their respective agents, employees, officers
and partners, from and against any and all Losses and Liabilities in
any way related to the Property and arising or accruing after the
Closing.
(c) The provisions of Paragraph 12 shall survive Closing.
13. Risk of Loss. In the event any of the Property is damaged or
destroyed prior to the Closing Date, and such damage or destruction (a) is
fully covered by Seller's insurance, except for the deductible amounts and any
coinsurance contribution due from Seller thereunder, and the insurer agrees to
timely pay for the entire cost of such repair less such deductible and
coinsurance, and (b) would cost less than One Hundred Thousand Dollars
($100,000.00) to repair or restore, then this Agreement shall remain in full
force and effect and Buyer shall acquire the Property upon the terms and
conditions set forth herein. In such event, Buyer shall receive a credit
against the Purchase Price equal to such deductible and coinsurance amounts,
and Seller shall assign to Buyer all of Seller's right, title and interest in
and to all proceeds of insurance on account of such damage or destruction. In
the event any of the Property is damaged or destroyed prior to the Closing
Date, and such damage or destruction (c) is not fully covered by Seller's
insurance, other than the deductible and coinsurance amounts, and (d) would
cost less than Fifty Thousand Dollars ($50,000.00) to repair or restore, then
the transaction contemplated by this Agreement shall be consummated with Buyer
receiving a credit against the Purchase Price at the Closing in an amount
reasonably determined by Seller and Buyer (after consultation with unaffiliated
experts) to be the cost of repairing such damage or destruction, but in no
event more than One Hundred Thousand Dollars ($100,000.00). In the event (e)
any of the Property is damaged or destroyed prior to the Closing and the cost
of repair would exceed One Hundred Thousand Dollars ($100,000.00), or (f) if
condemnation proceedings are commenced against a significant portion of the
Property, then, notwithstanding anything to the contrary set forth in this
Paragraph, Buyer shall have the right, at its election, either to terminate
this Agreement in its entirety, or only as to that portion of the Property
subject to condemnation proceedings (in which case there shall be an equitable
adjustment to the Purchase Price), or to not terminate this Agreement and
purchase the Property. Buyer shall have ten (10) days after Seller notifies
Buyer that any portion of the Property is subject to condemnation proceedings
to make such election by delivery to Seller of an election notice (the
"Election Notice"). Buyer's failure to deliver the Election Notice within such
thirty (30) day period shall be deemed an election to terminate this Agreement
in its entirety. In the event this Agreement is terminated in its entirety or
in part pursuant to this Paragraph, by delivery of notice of termination to
Seller, Buyer and Seller shall each be released from all obligations hereunder
pertaining to that portion of the Property affected by such termination. In
the event Buyer elects not to terminate this Agreement, Seller shall notify
Buyer that Buyer shall receive an assignment of condemnation proceeds of any
Property taken as a result of such proceeding, in which case this Agreement
shall otherwise remain in full force and effect, and Seller shall be entitled
to any condemnation awards. Any repairs elected to be made by Seller pursuant
to this Paragraph shall be made within one hundred and eighty (180) days
following such damage or destruction and the Closing shall be extended until
the repairs are substantially completed. As used in this Paragraph, the cost to
repair or restore shall include the cost of lost rental revenue.
(21)
<PAGE> 25
14. Possession. Possession of the Property shall be delivered
to Buyer on the Closing Date (subject to the rights of the tenants in
possession under Leases), provided, however, that prior to the Closing Date
Seller shall afford authorized representatives of Buyer reasonable access to
the Property for purposes of satisfying Buyer with respect to the
representations, warranties and covenants of Seller contained herein and with
respect to satisfaction of any Conditions Precedent to the Closing contained
herein, including, without limitation, a Phase I environmental investigation.
In the event this Agreement is terminated, Buyer shall restore the Property to
substantially the condition in which it was found. Buyer hereby agrees to
indemnify and hold Seller harmless from any damage or injury to persons or
property caused by Buyer or its authorized representatives during their entry
and investigations prior to the Closing. The indemnity contained in the
preceding sentence shall survive the termination of this Agreement or the
Closing, as applicable, provided that Buyer shall have no liability under such
indemnity unless Seller gives Buyer written notice of any claim it may have
against Buyer under such indemnity within twenty-four (24) months of such
termination or the Closing Date, as applicable.
15. Maintenance of the Property and Property Personnel. Between
Seller's execution of this Agreement and the Closing, Seller shall maintain the
Property in good order, condition and repair, reasonable wear and tear
excepted, shall perform all work required to be performed by the landlord under
the terms of any Lease, and shall make all repairs, maintenance and
replacements of the Improvements and any Tangible Personal Property and
otherwise operate the Property in the same manner as before the making of this
Agreement, as if Seller were retaining the Property. After full execution of
this Agreement and until the Closing, Seller shall maintain all existing
personnel on the Property, if any, in their current employment positions at
their current (or an increased) rate of compensation. Any changes in such
personnel, other than in the ordinary course of business which would not result
in a reduction in the level of management attention or service to the Property,
shall be subject to Buyer's reasonable approval.
16. Leasing; Buyer's Consent to New Contracts Affecting the
Property; Termination of Existing Contracts. Seller shall use commercially
reasonable efforts until Closing to lease any vacant space in the Improvements
to tenants pursuant to Leases in form and content acceptable to Buyer. Seller
shall not, after the date of Seller's execution of this Agreement, enter into
any Lease or contract affecting the Property, or any amendment thereof, or
permit any tenant to enter into any sublease, assignment or agreement
pertaining to the Property, or waive, compromise or settle any rights of Seller
under any contract or Lease, or agree to return any security deposit, or
modify, amend, or terminate any Assumed Contract, without in each case
obtaining Buyer's prior written consent thereto, which consent shall not be
unreasonably withheld or delayed. Buyer shall be deemed to have approved any
request for consent made by Seller pursuant to this paragraph if Buyer fails to
respond to Seller with Buyer's approval or disapproval within five (5) business
days of Seller's request for Buyer's approval. Seller shall terminate prior to
the Closing, at no cost or expense to Buyer, any and all management agreements
or contracts affecting the Property that are not listed on the Schedule of
Agreements. At Closing, Seller will receive a credit for actual costs
reasonably incurred and documented in connection with Leases entered into by
Seller after the Effective Date.
17. Insurance. Through the Closing Date, Seller shall maintain or
cause to be maintained, at Seller's sole cost and expense:
(22)
<PAGE> 26
(a) a policy or policies of insurance in amounts equal to
the full replacement value of the Improvements and the Tangible
Personal Property, insuring against all insurable risks, including,
without limitation, fire, vandalism, malicious mischief, lightning,
windstorm, water, earthquake and other perils customarily covered by
casualty insurance and the costs of demolition and debris removal; and
(b) a policy or policies of workers' compensation an
employers' liability insurance, commercial general liability
insurance, and automobile liability insurance, each in the amount and
form maintained by Seller prior to the date of this Agreement.
18. Cooperation with Buyer. Seller shall cooperate and do all
acts as may be reasonably required or requested by Buyer with regard to the
fulfillment of any Condition Precedent. Seller hereby irrevocably authorizes
Buyer and its agents to make all reasonable inquiries with and applications to
any third party, including any governmental authority, as Buyer may reasonably
require to complete its due diligence.
19. Brokers and Finders. Pursuant to separate agreements, Seller
shall pay L. J. Melody and CB Commercial brokerage commissions for their
services in this transaction and Midway Management a fee for its services.
Except as provided in the foregoing sentence, neither party has had any contact
or dealings regarding the Property, or any communication in connection with the
subject matter of this transaction, through any real estate broker or other
person who can claim a right to a commission or finder's fee in connection with
the sale contemplated herein. In the event that any other broker or finder
claims a commission or finder's fee based upon any contact, dealings or
communication, the party through whom the broker or finder makes its claim
shall be responsible for said commission or fee and all costs and expenses
(including reasonable attorneys' fees) incurred by the other party in defending
against the same. The party through whom any other broker or finder makes a
claim shall hold harmless, indemnify and defend the other party hereto, its
successors and assigns, agents, employees, officers, trustees, members and
retirants and the Property from and against any and all obligations,
liabilities, claims, demands, liens, encumbrances and losses (including
attorneys' fees), whether direct, contingent or consequential, arising out of,
based on, or incurred as a result of such claim. The provisions of this
Paragraph shall survive the Closing or termination of this Agreement.
20. Marketing. Seller agrees not to enter into any back-up
contracts or letter(s) of intent with any other prospective purchasers during
the term of this Agreement.
21. Publicity and Confidentiality. The parties shall at all times
keep this transaction and any documents received from each other confidential,
except to the extent necessary to (a) comply with applicable law and
regulations, or (b) carry out the obligations set forth in this Agreement. Any
such disclosure to third parties shall indicate that the information is
confidential and should be so treated by the third party. No press release or
other public disclosure may be made by Seller or Buyer or any of its agents
concerning this transaction without the prior written consent of the other
party.
(23)
<PAGE> 27
22. Exculpation of Buyer. This Agreement is being executed by and
on behalf of Buyer. Seller acknowledges and agrees that all persons dealing
with Buyer must look solely to the amount of liquidated damages provided in
Paragraph 7 for the enforcement of any claims against or liability of Buyer.
No present or future officer, director, employee, trust manager, Shareholder or
agent of Buyer shall have any personal liability, directly or indirectly, and
recourse shall not be had against any such officer, director, employee, trust
manager, shareholder or agent, under or in connection with this Agreement or
any other document or instrument heretofore or hereafter executed in connection
with this Agreement. Seller hereby waives and releases any and all such
personal liability and recourse. The limitations of liability provided in this
Paragraph are in addition to, and not in limitation of, any limitation on
liability applicable to Buyer provided by law or in any other contract,
agreement or instrument.
23. Exculpation of Seller. Borrower acknowledges and agrees that
all persons dealing with Seller must look solely to the remedies provided in
Paragraph 7 for the enforcement of any claims against a liability of Seller.
No present or future officer, director, employee, trust manager, Shareholder or
agent of Seller shall have any personal liability, directly or indirectly, and
recourse shall not be had against any such officer, director, employee, trust
manager, shareholder or agent, under or in connection with this Agreement or
any other document or instrument heretofore or hereafter executed in connection
with this Agreement. Buyer hereby waives and releases any and all such
personal liability and recourse. The limitations of liability provided in this
Paragraph are in addition to, and not in limitation of, any limitation on
liability applicable to Seller provided by law or in any other contract,
agreement or instrument.
23. Miscellaneous.
(a) Notices. Any notice, consent or approval required or
permitted to be given under this Agreement shall be in writing and
shall be deemed to have been given upon (i) hand delivery, (ii) one
(1) business day after being deposited with Federal Express or another
reliable overnight courier service or next day delivery, (iii) being
transmitted by facsimile telecopy, or (iv) two (2) business days after
being deposited in the United States mail, registered or certified
mail, postage prepaid, return receipt required, and addressed as
follows:
If to Seller: Midway/Commerce Center, L.P.
c/o The Midway Companies
5200 San Felipe
Houston, Texas 77056-2797
Attn: Mr. Bruce Fincher
Fax No.: 713/629-5235
Telephone No.: 713/629-5200
(24)
<PAGE> 28
With a copy to: Coats, Rose, Yale, Holm, Ryman & Lee
800 First City Tower
1001 Fannin
Houston, Texas 77002-6707
Attn: Barry J. Palmer, Esq.
Fax No.: (713) 651-0220
Telephone No.: (713) 653-7395
And to: Arthur Capital Group
70 East Lake Street, Suite 600
Chicago, Illinois 60601
Attn: Mr. Jim Weber
Fax No.: 312/553-0440
Telephone No.: 312/629-3484
If to Seller: American Industrial Properties REIT
6210 North Beltline, Suite 170
Irving, Texas 75063-2656
Attn: Mr. Lewis D. Friedland
Fax No.: (972) 756-0704
Telephone No.: (972) 756-6000
And a copy to: Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P.
2200 Ross Avenue, Suite 900
Dallas, Texas 75201
Attn: Brad B. Hawley
Fax No.: (214) 220-4899
Telephone No.: (214) 220-4888
or such other address as either party may from time to time specify in
writing to the other.
(b) Successors and Assigns. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and
their respective successors, heirs, administrators and assigns.
Neither Buyer nor Seller shall assign its right, title and interest in
and to this Agreement without the other party's prior written consent
unless any such assignment is to an affiliate of Buyer or Seller(an
entity controlled by the Buyer or Seller or an entity in which the
Buyer or Seller owns a majority ownership interest), as the case may
be, in which event no such consent shall be required.
(c) Amendments. Except as otherwise provided herein,
this Agreement may be amended or modified only by a written instrument
executed by Seller and Buyer.
(d) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas.
(25)
<PAGE> 29
(e) Merger of Prior Agreements. This Agreement and the
exhibits hereto constitute the entire agreement between the parties
and supersede all prior agreements and understandings between the
parties relating to the subject matter hereof, including without
limitation, that certain Letter of Intent dated August 18, 1997,
executed by Buyer and Seller (the "Letter of Intent"), as the same may
have been amended, which shall be of no further force or effect upon
execution of this Agreement by Buyer and Seller.
(f) Enforcement. In the event a dispute arises
concerning the performance, meaning or interpretation of any provision
of this Agreement, the defaulting party or the party not prevailing in
such dispute shall pay any and all costs and expenses incurred by the
other party in enforcing or establishing its rights hereunder,
including, without limitation, court costs and attorneys' fees. In
addition to the foregoing award of attorneys' fees to the prevailing
party, the prevailing party in any lawsuit on this Agreement shall be
entitled to its attorneys' fees incurred in any post judgment
proceedings to collect or enforce the judgment. This provision is
separate and several and shall survive the merger of this Agreement
into any judgment on this Agreement.
(g) Time of the Essence. Time is of the essence of this
Agreement.
(h) Severability. If any provision of this Agreement, or
the application thereof to any person, place, or circumstance, shall
be held by a court of competent jurisdiction to be invalid,
unenforceable or void, the remainder of this Agreement and such
provisions as applied to other persons, places and circumstances shall
remain in full force and effect.
(i) Exhibits. All exhibits attached hereto are
incorporated herein as though fully set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Seller:
MIDWAY/COMMERCE CENTER, L.P.,
a Texas limited partnership
By: Midway Commerce Center
Associates, L.P.,
its general partner
By: Midway Equities, Inc.,
its general partner
By: /s/ D. Bruce Fincher
----------------------------
[SELLER TO INITIAL Name: D. Bruce Fincher
SUBPARAGRAPH 7(a)] ---------------------------
Title: President
--------------------------
(26)
<PAGE> 30
Buyer:
AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By: /s/ Lewis D. Friedland
--------------------------------
[BUYER TO INITIAL Name: Lewis D. Friedland
SUBPARAGRAPH 7(a)] --------------------------------
Title: Vice President
--------------------------------
Partners Title Company agrees to act as Escrow Holder and disburse and/or apply
the Earnest Money in accordance with the terms of this Agreement and to comply
with the terms and provisions of Paragraph 21 of this Agreement. Partners
Title Company agrees to comply with all reporting requirements of Section 6045
of the United States Internal Revenue Code and the regulations promulgated
thereunder.
PARTNERS TITLE COMPANY
By: /s/ Karen Highfield
--------------------------------
Its: Vice President
--------------------------------
Dated: October 8, 1997
--------------------------------
(27)
<PAGE> 31
LIST OF EXHIBITS
<TABLE>
<CAPTION>
Section Reference
-----------------
<S> <C> <C> <C> <C>
Exhibit A - Description of Land l(a)
Exhibit B - Inventory of Tangible Personal
Property l(d)
Exhibit C - Deed 3(a)
Exhibit D - Bill of Sale 3(b)
Exhibit E - Assignment and Assumption of
Intangible Property 3(c)
Exhibit F - Assignment of Leases 3(c)
Exhibit G - Surveyor's Certificate 4(a)(ii)
Exhibit H - Environmental Reports 4(a)(vi)
Exhibit I - Rent Roll 4(a)(vii)
Exhibit J - Notice of Lease Assignment 8(c)(vii)
Exhibit K - Certificate of Transferor Other
Than an Individual (FIRPTA) 8(c)(ix)
Affidavit)
Exhibit L - Tenant Estoppel 6(f)
</TABLE>
(THE EXHIBITS HAVE BEEN OMITTED, BUT SHALL BE PROVIDED TO THE SECURITIES AND
EXCHANGE COMMISSION UPON REQUEST.)
(28)
<PAGE> 1
EXHIBIT 2.2
FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
This First Amendment To Purchase and Sale Agreement (this "First
Amendment") is entered into on this the 22nd day of October, 1997, by and
between Midway/Commerce Center Limited Partnership, a Texas limited partnership
(hereinafter referred to as "Seller"), and American Industrial Properties REIT,
a Texas real estate investment trust (hereinafter referred to as "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser entered into a Purchase and Sale
Agreement (hereinafter referred to as the "Contract") dated as of September 24,
1997, pursuant to which Seller agreed to sell to Purchaser and Purchaser agreed
to purchase from Seller, in accordance with the terms and conditions thereof,
20.8 acres of land located in Houston, Harris County, Texas, and all
improvements thereon (the real property and all improvements hereinafter
referred to collectively as the "Property"), which Property is more
particularly described by metes and bounds on Exhibit "A" attached to the
Contract; and
WHEREAS, Seller and Purchaser desire to amend the Contract to more
accurately describe the name of the Seller and to extend the Due Diligence
Period an additional ten (10) days.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Seller and Purchaser agree as follows:
1. Seller and Purchaser acknowledge that Midway/Commerce Center,
L.P., a Texas limited partnership, named as Seller in the Contract,
and Midway/Commerce Center Limited Partnership, a Texas limited
partnership, are one and the same entity.
2. Pursuant to this First Amendment, the name of the Seller in
the Contract is hereby amended to Midway/Commerce Center Limited
Partnership, a Texas limited partnership. Any documents executed by
Seller in connection with the sale of the Property to Purchaser shall
reflect that the name of the Seller is Midway/Commerce Center Limited
Partnership, a Texas limited partnership.
3. Seller and Purchaser acknowledge and agree that the Due
Diligence Period as defined in Section 5 (a) of the Contract during
which time Purchaser shall review the Preliminary Documents, the
physical condition of the Property and such other items as Purchaser
deems necessary in order for Purchaser to determine whether the
Property is acceptable to Purchaser is extended until Monday, November
3, 1997.
4. Seller and Purchaser acknowledge that the extension of the Due
Diligence Period pursuant to this First Amendment shall not affect the
Closing Date as defined in Section 8 (b) of the Contract. The Closing
of the sale of the Property pursuant to the Contract shall occur no
later than Monday, November 10, 1997.
5. All terms, obligations and conditions in the Contract not
superseded or amended by any provision of this First Amendment shall
remain in full force and effect as originally
<PAGE> 2
written in the Contract. All capitalized terms used herein and not
otherwise defined herein shall have the meaning assigned to such terms
in the Contract.
6. This First Amendment shall be binding upon and inure to the
benefit of the successors and assigns of Seller, and shall be binding
upon and inure to the benefit of Purchaser, its successors, and to the
extent assignment may be made pursuant to the Contract, Purchaser's
assigns. The pronouns of any gender shall include the other gender,
and either the singular or the plural shall include the other.
7. All references to the Contract in any document heretofore or
hereafter executed shall be deemed to refer to the Contract, as
amended by this First Amendment.
8. This First Amendment may be executed in two or more
counterparts, and it shall not be necessary that any one of the
counterparts be executed by all of the parties hereto. Each fully or
partially executed counterpart shall be deemed an original, but all
such counterparts taken together shall constitute but one and the same
instrument.
In witness whereof, the parties hereto have executed this First
Amendment on the date first written above.
SELLER:
Midway/Commerce Center Limited Partnership,
a Texas limited partnership
By: Midway Commerce Center
Associates, L.P.,
its general partner
By: Midway Equities, Inc., its
general partner
By: /s/ D. Bruce Fincher
-----------------------------
Name: D. Bruce Fincher
-----------------------------
Title: President
-----------------------------
PURCHASER:
American Industrial Properties REIT,
a Texas real estate investment trust
By: /s/ Marc A. Simpson
------------------------------------
Name: Marc A. Simpson
------------------------------------
Title: Vice President
------------------------------------
<PAGE> 1
EXHIBIT 2.3
SECOND AMENDMENT TO
PURCHASE AND SALE AGREEMENT
This Second Amendment To Purchase and Sale Agreement (this "Second
Amendment") is entered into effective as of October 31, 1997, by and between
Midway/Commerce Center Limited Partnership, a Texas limited partnership
(hereinafter referred to as "Seller"), and American Industrial Properties REIT,
a Texas real estate investment trust (hereinafter referred to as "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser entered into a Purchase and Sale
Agreement (hereinafter referred to as the "Contract") dated as of September 24,
1997, pursuant to which Seller agreed to sell to Purchaser and Purchaser agreed
to purchase from Seller, in accordance with the terms and conditions thereof,
20.8 acres of land located in Houston, Harris County, Texas, and all
improvements thereon (the real property and all improvements hereinafter
referred to collectively as the "Property"), which Property is more
particularly described by metes and bounds on Exhibit "A" attached to the
Contract; and
WHEREAS, the Contract was amended pursuant to that certain First
Amendment to Purchase and Sale Agreement (the "First Amendment") dated October
22, 1997, to more accurately describe the name of the Seller and extend the Due
Diligence Period an additional ten (10) days.
WHEREAS, pursuant to this Second Amendment, Seller and Purchaser
desire to amend the Contract to extend the Due Diligence Period and the Closing
Date.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Seller and Purchaser agree as follows:
1. The Due Diligence Period as defined in Section 5(a) of the
Contract and amended pursuant to the First Amendment during which time
Purchaser shall review the Preliminary Documents, the physical
condition of the Property and such other items as Purchaser deems
necessary in order for Purchaser to determine whether the Property is
acceptable to Purchaser is extended an additional four (4) days from
Monday, November 3, 1997 to Friday, November 7, 1997.
2. The Closing Date as defined in Section 8(b) of the Contract is
extended an additional ten (10) days and shall occur no later than
Thursday, November 20, 1997 (the "Extension Period").
3. Purchaser acknowledges that in consideration of Seller
agreeing to extend the Closing Date pursuant to this Second Amendment,
Purchaser agrees to pay to Seller an additional $10,000 for every day
during the Extension Period (beginning Tuesday, November 11, 1997, and
ending Thursday, November 20, 1997) that Purchaser fails to close the
sale of the Property. In no event shall the Closing be extended
beyond the Extension Period.
4. All terms, obligations and conditions in the Contract not
superseded or amended by any provision of this Second Amendment shall
remain in full force and effect as originally written
<PAGE> 2
in the Contract. All capitalized terms used herein and not otherwise
defined herein shall have the meaning assigned to such terms in the
Contract.
5. This Second Amendment shall be binding upon and inure to the
benefit of the successors and assigns of Seller, and shall be binding
upon and inure to the benefit of Purchaser, its successors, and to the
extent assignment may be made pursuant to the Contract, Purchaser's
assigns. The pronouns of any gender shall include the other gender,
and either the singular or the plural shall include the other.
6. All references to the Contract in any document heretofore or
hereafter executed shall be deemed to refer to the Contract, as
amended by this Second Amendment.
7. This Second Amendment may be executed in two or more
counterparts, and it shall not be necessary that any one of the
counterparts be executed by all of the parties hereto. Each fully or
partially executed counterpart shall be deemed an original, but all
such counterparts taken together shall constitute but one and the same
instrument.
In witness whereof, the parties hereto have executed this Second
Amendment to be effective for all purposes on the date first written above.
SELLER:
Midway/Commerce Center Limited Partnership,
a Texas limited partnership
By: Midway Commerce Center Associates, L.P.,
its general partner
By: Midway Equities, Inc.,
its general partner
By: /s/ D. Bruce Fincher
------------------------
Name: D. Bruce Fincher
------------------------
Title: President
------------------------
Date: November 3, 1997
PURCHASER:
American Industrial Properties REIT, a
Texas real estate investment trust
By: /s/ Lewis D. Friedland
-------------------------------------
Name: Lewis D. Friedland
-------------------------------------
Title: Vice President
-------------------------------------
Date: November 3, 1997
