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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 1)
American Industrial Properties REIT
-----------------------------------
(Name of Issuer)
Common Shares of Beneficial Interest, $.01 par value per share
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(Title of Class of Securities)
026791 20 2
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(CUSIP Number)
Scott A. Wolstein, President and Chief Executive Officer
Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
(440) 247-4700
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 16, 1998
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
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CUSIP NO. 026791 20 2 13D
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Scott A. Wolstein
2 CHECK APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /x/
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO (exchange of shares in a merger)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(a) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
6*
NUMBER OF 8 SHARED VOTING POWER
SHARES -0-*
BENEFICIALLY 9 SOLE DISPOSITIVE POWER
OWNED BY 6*
EACH 10 SHARED DISPOSITIVE POWER
REPORTING -0-*
PERSON WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
-0-*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than one percent (1%)*
14 TYPE OF REPORTING PERSON
IN
* See Item 5(a) for a discussion of Mr. Wolstein's status with, and the
fact that he may be deemed to beneficially own all shares held by,
Developers Diversified Realty Corporation.
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This Amendment No. 1 to Schedule 13D is filed to reflect Amendment
No. 1 to the Share Purchase Agreement dated as of September 14, 1998 ("Amendment
No. 1"), between Developers Diversified Realty Corporation, an Ohio corporation
("DDRC"), and American Industrial Properties REIT, a Texas real estate
investment trust ("AIP"). Amendment No. 1 was entered into on September 16,
1998.
ITEM 1. SECURITY AND ISSUER
This Amendment No. 1 to Schedule 13D relates to the common shares
of beneficial interest, $.01 par value per share ("Common Shares"), issued by
AIP to DDRC and Scott A. Wolstein, the Chairman of the Board, President and
Chief Executive Officer of DDRC, pursuant to the Agreements (as defined herein).
The principal executive offices of AIP are located at 6210 North
Beltline Road, Suite 170, Irving, Texas 75063-2656.
ITEM 2. IDENTITY AND BACKGROUND
This schedule is filed jointly by: (i) DDRC by virtue of its
direct ownership of 2,207,618 Common Shares, and (ii) Scott A. Wolstein by
virtue of his direct ownership of 6 Common Shares and his status as the Chairman
of the Board, President and Chief Executive Officer of DDRC (DDRC and Mr.
Wolstein collectively, the "Reporting Parties").
The business address of each of the Reporting Persons is 34555
Chagrin Boulevard, Moreland Hills, Ohio 44022.
Mr. Wolstein's principal occupation is serving as the Chairman of
the Board, President and Chief Executive Officer of DDRC. Under the Purchase
Agreement, Mr. Wolstein has been appointed Chairman of the Board of AIP. Mr.
Wolstein is a citizen of the United States.
Set forth in Appendix A hereto are the name, business address,
present principal occupation or employment, and the name, principal business and
address of any corporation or other organization in which such employment is
conducted, of each director and executive officer of DDRC. Each such person is a
citizen of the United States.
During the last five years, none of DDRC, Mr. Wolstein or any of
the persons named in Appendix A: (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws, or finding any
violations with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Under the Share Purchase Agreement dated as of July 30, 1998,
between AIP and DDRC, as amended by Amendment No. 1 (as amended, the "Purchase
Agreement"), DDRC received 949,147 Common Shares in exchange for $14,711,778.50.
DDRC borrowed this amount under its existing credit facility with The First
Chicago National Bank, as administrative agent, and certain other banks (the
"Credit Facility").
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Under the Merger Agreement (the "Merger Agreement" and, together
with the Purchase Agreement, the "Agreements") dated as of July 30, 1998 among
AIP, DDRC and DDR Office Flex Corporation, a Delaware corporation ("Merger
Sub"), DDRC received 1,258,471 Common Shares and Mr. Wolstein received 6 Common
Shares in exchange for their respective interests in Merger Sub. Merger Sub
owned five light industrial or office properties and was merged into AIP, with
AIP as the survivor of the merger. The closing of the purchase of 949,147 Common
Shares and 1,258,477 Common Shares under the Purchase Agreement and the Merger
Agreement, respectively, are collectively referred to herein as the "Initial
Closing," and the date of the Initial Closing is referred to as the "Initial
Closing Date."
DDRC anticipates funding the additional purchases of Common Shares
and Preferred Shares (as defined herein) described in Item 4(a) through a
combination of all or some of the following: working capital, borrowings under
the Credit Facility, and the issuance of medium-term notes or equity securities
under its shelf registration statement.
ITEM 4. PURPOSE OF TRANSACTION
Except as described below, neither of the Reporting Persons has
any current plans or proposals which relate to or would result in any of the
events described in Items (a) through (j) of Item 4 of Schedule 13D:
(a) Under the rules of the New York Stock Exchange (the "NYSE"), a
majority the holders of the Common Shares (the "Shareholders") present at a
meeting of the Shareholders at which a quorum is present must approve each of
the Purchase Agreement, the Merger Agreement and the transactions contemplated
under each of the Agreements (collectively, the "Transactions"). Following
Shareholder approval, DDRC is obligated to purchase (the "Second Purchase") at a
closing (the "Second Closing," and the date of the Second Closing, the "Second
Closing Date"), the number of Common Shares that is equal to (i) the sum of (x)
the aggregate principal balance of and accrued interest on any loans then
outstanding under the Funding Option, and (y) the aggregate purchase price,
after subtracting the value of any debt financing, of certain property
acquisitions approved by the Board of Trust Managers of AIP (the "Managers")
before the Initial Closing Date and of all property acquisitions that are
approved between the Initial Closing Date and the Second Closing Date, by a
majority of the Managers on the executive committee of the Board of Trust
Managers of AIP (the "Executive Committee") that are not affiliates of the
seller of the property or of the assignor that assigned its right to acquire
such property to AIP, divided by (ii) $15.50. It is a condition precedent to
DDRC's obligation to purchase Common Shares at the Second Closing that AIP shall
have borrowed at least 35% of the aggregate purchase price of each such
acquisition from one or more third-party lenders.
From time to time beginning on the Second Closing Date and ending
on the date 180 days after the Second Closing Date (the "180 Day Period"), DDRC
is obligated to purchase, at a price of $15.50 per Common Share, a number of
Common Shares that in the aggregate, when added to the Common Shares purchased
at the Second Closing does not exceed 5,226,583 Common Shares (the "Remaining
Shares"), solely for the purpose of funding property acquisitions approved by a
majority of the members of the Executive Committee that are not affiliates of
the seller of the property or of the assignor that assigned its right to acquire
such property to AIP. It is a condition precedent to DDRC's obligation to
purchase these Common Shares that AIP has borrowed at least 35% of the aggregate
purchase price of each such acquisition approved by the Executive Committee from
one or more third-party lenders.
If, as of the Business Day following the expiration of the 180 Day
Period, DDRC has not purchased all of the Remaining Shares at a price of $15.50
per Common Share, then DDRC has the
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option to purchase a number of Common Shares that when added to the Common
Shares purchased at the Second Closing, equals the total number of the Remaining
Shares.
From time to time during the period commencing on the Second
Closing Date and ending on the second anniversary of that date, AIP has the
option to sell to DDRC the additional shares described in the first sentence of
the following paragraph (the "Additional Purchased Shares") for an aggregate
purchase price that may not exceed $200,000,000 (the "Additional Purchase
Option") solely for the purpose of funding property acquisitions approved by a
majority of the Managers (the "Managers") that are not affiliates of the seller
of the property or of the assignor that assigned its right to acquire such
property to AIP. The Additional Purchase Option may only be exercised by action
of a majority of the Managers, excluding the Managers appointed by DDRC.
The Additional Purchased Shares may consist of any combination of
the following, as AIP elects: (i) Common Shares, at a price of $15.50 per share,
or (ii) Series A Convertible Preferred Shares, $.01 par value per share (the
"Preferred Shares"), that are convertible into Common Shares after the
expiration of the Standstill Period (as defined herein), at a price of $14.00
per share, but if DDRC would own, as a result of any such sale and purchase, in
excess of 49.9% of the outstanding Common Shares (the "Forty-Nine Percent
Threshold"), then AIP may sell only Preferred Shares to DDRC. The price per
share of the Additional Purchased Shares is subject to adjustment if the ten
trading day average price per Common Share on the NYSE falls below $12.12 per
share and in the event of any share split, subdivision, combination, merger,
reclassification or share dividend.
After the aggregate purchase price for the Additional Purchased
Shares reaches $100,000,000, the Additional Purchase Option is not exercisable
on any date on which: (i) the closing price per common share, without par value,
of DDRC (each, a "DDRC Common Share"), was equal to or less than $18.00, or (ii)
the aggregate value of all Common Shares and Preferred Shares purchased by DDRC
in accordance with the Purchase Agreement, determined based upon the amount paid
by DDRC for such shares, exceeds ten percent (10%) of DDRC's Market
Capitalization as of the last trading day prior to such date. "DDRC's Market
Capitalization" means for any date (with the value of DDRC's publicly-traded
securities determined by reference to the reported trading prices for the last
trading day prior to such date when available and, when not available, based
upon a certificate of the chief financial officer of DDRC who will, in good
faith, value such securities): (i) the aggregate value of all of DDRC's equity
securities then issued and outstanding, including DDRC Common Shares, and DDRC's
preferred and convertible securities, determined on a fully-diluted basis, plus
(ii) the then outstanding aggregate principal amount of the indebtedness of DDRC
and any subsidiary of DDRC. The term of the Additional Purchase Option is
extended by one day for each day that the Additional Purchase Option cannot be
exercised because of this limitation. In addition, the purchase price of all
Common Shares and Preferred Shares issued to DDRC under that certain unit
repurchase agreement to be entered into among DDRC, AIP and the investors named
therein, related to the properties known as Tech 29, reduces the amount of the
Additional Purchase Option on a dollar for dollar basis.
Effective as of the Initial Closing Date, Mr. Wolstein was awarded
options to purchase 100,000 Common Shares at a purchase price per Common Share
equal to the closing price on the NYSE of one Common Share on the Initial
Closing Date. Mr. Wolstein's compensation package, including the number of
shares subject to options, is subject to revision by the Board of Trust Managers
of AIP (the "Board"), excluding the Managers appointed by DDRC, after
consultation with an independent compensation consultant. All of Mr. Wolstein's
options vest on the Second Closing Date and terminate if the Purchase Agreement
is terminated prior to the Second Closing.
If the Purchase Agreement is terminated prior to the Second
Closing, depending on the circumstances of such termination: AIP must repurchase
the Common Shares held by DDRC and, at the
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option of DDRC, return the properties acquired under the Merger Agreement; or
AIP may, at its option, return the properties acquired by it under the Merger
Agreement to DDRC, each as described more fully in Item 6(a)(vii) and Item
6(a)(viii).
(b) Under the Merger Agreement, Merger Sub was merged with and
into AIP, with AIP as the survivor of such merger.
(c) To the best of the Reporting Persons' knowledge, no such
transaction is contemplated.
(d) Under the Purchase Agreement, the Board was expanded to 11
members. DDRC has the right to nominate four Managers, including the Chairman of
the Board. At the Initial Closing, DDRC nominated Mr. Wolstein, James A. Schoff,
Albert T. Adams and Robert H. Gidel for election as Managers. The Board elected
each of Messrs. Wolstein, Schoff, Adams and Gidel to the Board, with Mr.
Wolstein serving as its Chairman. If DDRC has purchased all of the Remaining
Shares prior to the expiration of the 180 Day Period, DDRC may continue to
nominate three Managers (of a Board that will comprise 10 Managers commencing in
May 1999) for so long as it retains its Common Share holdings, with reductions
in the number of nominees on a graded scale to zero when it holds less than 25%
of the shares acquired under the Agreements. If DDRC has not purchased all of
the Remaining Shares following the expiration of the 180 Day Period, DDRC has a
right to nominate a number of Managers equal to the percentage of AIP's issued
and outstanding Common Shares on a fully diluted basis held by DDRC (with all
Preferred Shares treated as issued and outstanding Common Shares) times the
authorized number of Managers, with any resulting fraction rounded down. If the
number of Managers DDRC is entitled to nominate under the right described in the
preceding sentence is less that three, then DDRC's right to nominate the
Chairman of the Board of AIP terminates.
DDRC's nominees must resign if the Purchase Agreement is
terminated prior to the Second Closing. One Manager (not nominated by DDRC) has
indicated that he will retire at AIP's next annual meeting of shareholders.
(e) Except as described herein, the Reporting Persons are not
aware of any changes to AIP's present capitalization or dividend policy.
(f) Except as described herein, the Reporting Persons are not
aware of any material changes in AIP's business or corporate structure resulting
from this transaction.
(g) If the Purchase Agreement is terminated by AIP, other than a
termination resulting from a material breach by DDRC, AIP: is obligated to pay a
$3.5 million break-up fee to DDRC; is obligated to repurchase the Common Shares
held by DDRC, as described in Item 6(a)(vii); and may be obligated to return the
properties acquired under the Merger Agreement, as described in Item 6(a)(viii).
In addition, DDRC may make a demand for any amounts owed pursuant to the funding
option described in Item 6(a)(iv). DDRC and the Significant Shareholders (as
defined herein) are parties to voting agreements described in Item 6(b). Under
the Purchase Agreement and those voting agreements, AIP and the Significant
Shareholders may not seek transactions that compete with the Transactions,
subject to certain exceptions. The obligations and agreements described in this
paragraph may impede a change of control of AIP.
(h) The Reporting Persons are not aware of any such plan or
proposal.
(i) The Reporting Persons are not aware of any such plan or
proposal.
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(j) The Reporting Persons are not aware of any such actions other
than those described herein.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) DDRC beneficially owns 2,207,618 Common Shares, representing
approximately 16.6% of the outstanding Common Shares. Mr. Wolstein, as an
individual, beneficially owns six Common Shares, representing less than 1% of
the outstanding Common Shares. As the Chairman of the Board, President and Chief
Executive Officer of DDRC, Mr. Wolstein may be deemed to beneficially own
2,207,624 Common Shares, consisting of all of the Common Shares owned by DDRC
and Mr. Wolstein, representing approximately 16.6% of the outstanding Common
Shares.
The Remaining Shares and the Common Shares and Preferred Shares,
as applicable, to be acquired by DDRC in the Second Purchase and under the
Additional Purchase Option have not been included in determining the beneficial
ownership of DDRC or Mr. Wolstein. The options granted to Mr. Wolstein also have
not been included in determining his beneficial ownership. DDRC and Mr. Wolstein
believe that it will be in excess of 60 days before such Common Shares,
Preferred Shares, or options are received or exercisable, as applicable, because
AIP must convene a special meeting of the Shareholders, prepare a proxy
statement for that special meeting, file that proxy statement with the
Securities and Exchange Commission (the "Commission"), solicit proxies for that
meeting in accordance with the rules of the Commission and the NYSE, and obtain
a favorable vote at that meeting, before those shares or options may be received
or exercised, as applicable.
(b) DDRC has the sole power to vote and dispose of the 2,207,618
Common Shares listed as owned by it in Item 5(a). Mr. Wolstein has the sole
power to vote and dispose of the six Common Shares listed as owned by him in
Item 5(a). As the Chairman of the Board, President and Chief Executive Officer
of DDRC, Mr. Wolstein may be deemed to have the power to vote and dispose of the
2,207,624 Common Shares described in Item 5(a).
(c) Except as described herein, none of the Reporting Persons or
any of the persons identified in Appendix A has effected any transaction in the
Common Shares in the past 60 days.
(d) No other person is known to have the right to receive, or the
power to direct the receipt of dividends from, or the proceeds from the sale of,
the Common Shares described in Item 5(a).
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENT, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
(a) Purchase Agreement.
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(i) Standstill Provisions. From the Initial Closing Date
until the third anniversary of the Second Closing Date (the "Standstill
Period"), DDRC is subject to a standstill provision that limits DDRC's ability
to: acquire Common Shares, other than under the Purchase Agreement; act with
others as a "group," as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended; solicit proxies or submit shareholder proposals in
opposition to a majority of the Board; assist or encourage others in purchasing
in excess of five percent of the Common Shares; and seek to control the
management or policies of AIP.
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(ii) Second Closing. DDRC's obligation to acquire Common
Shares at the Second Closing is described in Item 4(a).
(iii) Remaining Shares. DDRC's obligation or option, as
applicable, to acquire the Remaining Shares is described in Item 4(a).
(iv) Anti-Dilution. If DDRC's beneficial ownership of Common
Shares falls below forty percent (40%) of the outstanding Common Shares on a
fully diluted basis (the "Forty Percent Threshold"), DDRC has the right to
purchase, at a price of $15.50 per Common Share, a number of Common Shares such
that, immediately after such purchase and giving effect thereto, DDRC's
beneficial ownership of Common Shares will be less than or equal to the Forty
Percent Threshold. The purchase price of all Common Shares issued pursuant to
this option will reduce the Additional Purchase Option on a dollar for dollar
basis.
If DDRC's beneficial ownership of Common Shares falls below the
Forty Percent Threshold after the Additional Purchase Option has been exhausted
or otherwise terminated, then, notwithstanding the standstill provisions
described in Item 6(a)(i), DDRC has the right (to the extent permitted by law)
to purchase, in the open market or in one or more privately negotiated
transactions, a number of Common Shares such that, immediately after such
purchase and giving effect thereto, DDRC's beneficial ownership of Common Shares
will be less than or equal to the Forty Percent Threshold.
(v) Funding Prior to the Second Closing Date. From the
Initial Closing Date until the earlier of (x) the Second Closing Date, (y) 180
days after the Initial Closing Date, or (z) the date the Purchase Agreement is
terminated, DDRC is obligated to lend to AIP, at AIP's option (the "Funding
Option"), amounts that cannot in the aggregate exceed $81,012,036.50 (the amount
of the purchase price of the Second Purchase), solely for the purpose of funding
certain property acquisitions. All such loans will be made pursuant to a
promissory note that bears interest at 10.25% annually, with interest payable
quarterly, and with principal and interest payable within 30 days after a demand
by DDRC. Each property acquisition must be approved by a majority of the
Managers that are not affiliates of the seller of the property or of the
assignor of the right to purchase the property at any time between the Initial
Closing Date and the exercise of the option. The Funding Option may only be
exercised by action of a majority of the Managers, excluding the Managers
appointed by DDRC.
(vi) Additional Purchase Option. The Additional Purchase
Option is described in Item 4(a).
(vii) Right to Nominate Managers. DDRC's right to nominate
Managers is described in Item 4(d).
(viii) Repurchase Obligation. On any termination of the
Purchase Agreement prior to the Second Closing Date, AIP must repurchase all
Common Shares issued to DDRC within 30 days after such termination.
(ix) Return of Properties. On any termination by DDRC of the
Purchase Agreement, other than a termination resulting from a material breach by
AIP, prior to the Second Closing Date, AIP may assign the properties acquired
under the Merger Agreement to DDRC in lieu of a portion of the funds required to
be paid under the repurchase obligation described in Item 6(a)(vi). On any
termination by AIP of the Purchase Agreement, other than a termination resulting
from a material breach by DDRC, prior to the Second Closing Date, DDRC has the
option to require AIP to return those properties to DDRC in lieu of a portion of
the funds required to be paid under the repurchase obligation described in Item
6(a)(vi).
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(x) Open Market Purchases. Notwithstanding any other
provision of the Purchase Agreement, DDRC may, from time to time, purchase
Common Shares with an aggregate value (determined based on the price paid by
DDRC in each such transaction) that does not exceed $10,000,000 in one or more
open market transactions, which purchases will reduce the aggregate amount of
the Additional Purchase Option on a dollar for dollar basis after the aggregate
purchase price for the Additional Purchased Shares reaches $100,000,000, but
DDRC shall not make any such purchase if, as a result of such purchase, DDRC
would own in excess of the Forty-Nine Percent Threshold.
(b) VOTING AGREEMENTS. DDRC is a party to separate voting
agreements with each of the following shareholders of AIP (the "Significant
Shareholders"): (i) LaSalle Advisors Limited Partnership and ABKB/LaSalle
Securities Limited Partnership (the "LaSalle Entities"); (ii) Praedium II
Industrial Associates LLC ("Praedium"); (iii) Morgan Stanley Asset Management
Inc., on behalf of certain of its clients with respect to shares of AIP over
which it exercises investment discretion, and MS Real Estate Special Situations,
Inc. (the "Morgan Entities"); and (iv) USAA Real Estate Company ("USAA"). The
voting agreements provide that each Significant Shareholder will (i) either vote
the Common Shares that it beneficially owns, or recommend that such shares,
vote, as applicable, in favor of the transactions contemplated by the Purchase
Agreement and the Merger Agreement, and (ii) not solicit competing transactions
involving AIP. The voting agreement with the LaSalle Entities is subject to the
LaSalle Entities' ability to vote or recommend otherwise for fiduciary duty
reasons. The voting agreements provide that each Significant Shareholder, except
for Praedium, agrees to either vote the Common Shares that it beneficially owns
or recommend that such shares vote, as applicable, in favor of the Managers
nominated by DDRC for so long as DDRC's rights to nominate Managers continues
under the Purchase Agreement. In the Purchase Agreement, DDRC has agreed to vote
its Common Shares in favor of the nominees of each Significant Shareholder for
so long such Significant Shareholder has a right to nominate a Manager.
(c) REGISTRATION RIGHTS AGREEMENT. AIP and DDRC are parties to a
registration rights agreement (the "Registration Rights Agreement") relating to
the Common Shares. The Registration Rights Agreement provides that DDRC may make
up to three demands to have Common Shares registered pursuant to the Securities
Act of 1933, as amended (the "Securities Act"). These demand registration rights
are subject to certain limitations on other stockholders exercising their demand
rights.
DDRC has the right to require that AIP file and have declared
effective a shelf registration statement to remain effective for three years
from the date such registration statement is declared effective. DDRC also has
certain "piggy-back" registration rights. DDRC must be notified prior to the
filing of any registration statement under the Securities Act by AIP. DDRC may
include Common Shares in any such registration statement. AIP must use its best
efforts to include any such Common Shares in that registration statement.
DDRC's rights under the Registration Rights Agreement rank pari
passu with those of the Significant Shareholders under similar agreements with
AIP.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
A. Agreement among the Reporting Persons to file a
joint statement on Schedule 13D
B. Share Purchase Agreement(1)
C. Amendment No. 1 to the Share Purchase Agreement*
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D. Merger Agreement(1)
E. Voting Agreement between DDRC and the LaSalle
Entities(1)
F. Voting Agreement between DDRC and Praedium(1)
G. Voting Agreement between DDRC and the Morgan
Entities(1)
H. Voting Agreement between DDRC and USAA(1)
I. Registration Rights Agreement(1)
J. Credit Facility(2)
* Filed herewith.
(1) Incorporated by reference herein from AIP's Current Report on Form 8-K
filed with the Commission on August 5, 1998, Commission file number
1-9016.
(2) Incorporated by reference herein from DDRC's Annual Report on Form 10-K
filed with the Commission on March 31, 1998, Commission file number
1-11690.
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and
belief, each of the undersigned hereby certifies that the information set forth
in this statement is true, complete and correct.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION, an Ohio corporation
By: /s/ Scott A. Wolstein
-------------------------------------------
Name: Scott A. Wolstein
Title: President and Chief Executive Officer
/s/ Scott A. Wolstein
----------------------------------------------
Scott A. Wolstein
Dated as of September 16, 1998
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APPENDIX A
DIRECTORS AND EXECUTIVE OFFICERS
OF DEVELOPERS DIVERSIFIED REALTY CORPORATION
The following table sets forth the name, business address,
present principal occupation or employment, the name, principal business and
address of the principal office of any corporation or other organization in
which such employment is conducted of each director and executive officer of
Developers Diversified Realty Corporation, an Ohio corporation ("DDRC").
Principal Occupation or Employment and Name,
Principal Business and Address of
Organization in which Employment
Name and Business Address Conducted(1)
- ------------------------- ------------
A. Directors of DDRC
Scott A. Wolstein(2) Chairman of the Board, President and Chief
Executive Officer of DDRC (real estate
investment trust); Chairman of the Board of
American Industrial Properties REIT (real
estate investment trust)
James A. Schoff(2) Vice Chairman of the Board and Chief
Investment Officer of DDRC (real estate
investment trust)
William N. Hulett III Director of DDRC (real estate investment
6127 Chagrin River Road trust)
Bentleyville, OH 44022
Ethan Penner President of Nomura Asset Capital
101 California Street Corporation (real estate financing)
Suite 4225
San Francisco, CA 94111
Albert T. Adams Partner, Baker & Hostetler LLP (law firm)
3200 National City Center
1900 East 9th Street
Cleveland, OH 44114-3485
Dean S. Adler Principal, Lubert-Adler Partners, L.P.
Belgravia, 8th Floor (real estate investments)
1811 Chestnut Street
Philadelphia, PA 19103
Barry A. Sholem Co-Chairman, Donaldson, Lufkin & Jenrett,
2121 Avenue of the Stars Inc. Real Estate Capital Partners (real
Los Angeles, CA 90667 estate investments)
- --------------------------
1 The business address of the organization in which each person's
employment is conducted is the same as such person's business address.
2 The business address of each such person is 34555 Chagrin Boulevard,
Moreland Hills, Ohio 44022.
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B. Executive Officers of DDRC
Scott A. Wolstein(2) See A. above
James A. Schoff(2) See A. above
Vice President and Director of
Development
John R. McGill(2)
Joan U. Allgood(2) Vice President and General Counsel
Loren F. Henry(2) Vice President and Director of Management
William H. Schafer(2) Vice President and Chief Financial Officer
Alan Bobman(2) Regional Vice President of Leasing
Steven M. Dorsky(2) Regional Vice President of Leasing
Robin R. Walker(2) Regional Vice President of Leasing
- ---------------------------
1 The business address of the organization in which each person's
employment is conducted is the same as such person's business address.
2 The business address of each such person is 34555 Chagrin Boulevard,
Moreland Hills, Ohio 44022.
<PAGE> 14
EXHIBIT A
This Exhibit A to Amendment No. 1 to Schedule 13D is filed pursuant to
the requirements of Rule 13d(1)(f)(1)(iii). The undersigned, Developers
Diversified Realty Corporation and Scott A. Wolstein, hereby agree that the
Amendment No. 1 to Schedule 13D to which this Exhibit A is attached is filed on
behalf of each of the undersigned.
DEVELOPERS DIVERSIFIED REALTY CORPORATION,
an Ohio corporation
By: /s/ Scott A. Wolstein
------------------------------------------
Name: Scott A. Wolstein
Title: President and Chief Executive Officer
/s/ Scott A. Wolstein
---------------------------------------------
Scott A. Wolstein
Dated as of September 16, 1998
<PAGE> 15
EXHIBIT C
AMENDMENT NO. ONE
-----------------
TO
--
SHARE PURCHASE AGREEMENT
------------------------
THIS AMENDMENT NO. ONE TO SHARE PURCHASE AGREEMENT (this "Amendment"),
dated as of September 14, 1998, is made between American Industrial Properties
REIT, a Texas real estate investment trust (the "Trust"), and Developers
Diversified Realty Corporation, an Ohio corporation ("Buyer"). Except as
otherwise indicated, capitalized terms used but not defined herein have the
meanings ascribed to them in the Share Purchase Agreement dated as of July 30,
1998 between the Trust and Buyer (the "Purchase Agreement").
RECITALS:
---------
WHEREAS, Buyer and the Trust entered into the Purchase Agreement to
provide for the purchase and sale of Trust Common Shares and to establish
various rights and obligations in connection with the Purchase Agreement and the
Merger Agreement;
WHEREAS, Buyer and the Trust desire to amend the Purchase Agreement in
order to modify the rights and obligations described in the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereby agree as follows:
1. AMENDED AND RESTATED SECTION 6.3(b). Section 6.3(b) of the Purchase
Agreement is hereby deleted and the following Section 6.3(b) is hereby
substituted therefor:
"(b) Subject to Section 6.3(g), at any meeting of the
shareholders of the Trust thereafter held to elect Managers, Buyer is
entitled to nominate four Managers to the Board of Managers, including
the Chairman of the Board of Managers, and Buyer's right to nominate
Managers to the Board of Managers will continue, based on its ownership
of the Purchased Shares, as follows: (i) so long as Buyer holds a
number of Trust Common Shares that is equal to or greater than 75% of
the number of Buyer Shares, Buyer is entitled to nominate four
candidates for the Board of Managers, including the Chairman of the
Board; (ii) so long as Buyer holds a number of Trust Common Shares that
is less than 75%, but equal to or greater than 50%, of the number of
Buyer Shares, Buyer is entitled to nominate three candidates for the
Board of Managers, including the Chairman; (iii) so long as Buyer holds
a number of Trust Common Shares that is less than 50%, but equal to or
greater than 25%, of the number of Buyer Shares, Buyer is entitled to
nominate two candidates for the Board of Managers; and (iv) if Buyer
holds a number of Trust Common Shares that is less than 25% of the
number of Buyer Shares, then Buyer's right to nominate Managers will
terminate. The Trust shall cause such nominees to be included in the
slate of nominees recommended by the Board of Managers to the Trust's
shareholders for election as Managers, and the Trust shall use its
reasonable best efforts to cause the election of such nominees."
<PAGE> 16
2. NEW SECTION 6.3(g). The following Section 6.3(g) is hereby added to
the Purchase Agreement:
"(g) Notwithstanding anything to the contrary in Section
6.3(b), if Buyer has not purchased all of the Remaining Shares by the
end of the fifth Business Day after the expiration of the 180 Day
Period (as defined in Section 6.14) in accordance with Section 6.14 (so
long as Buyer's failure to purchase all or part of the Remaining Shares
is not a result of the Trust's failure to satisfy any condition
precedent or to make any delivery required by this Agreement that has
not been waived, in which case this Section shall not apply), then
Buyer will be entitled to nominate a number of candidates to the Board
of Managers equal to the product of: (a) 10 or the number of Managers
that would constitute the authorized number of Managers, whichever is
lower, times (b) a fraction, the numerator of which is the sum of the
number of the Purchased Shares plus all Trust Common Shares purchased
by Buyer under Sections 6.7 and 6.15, and the denominator of which is
the number of Trust Common Shares then outstanding on a fully diluted
basis, with that product rounded down to the nearest whole number (the
"Product"). In determining the Product, any outstanding Buyer Preferred
Shares will be treated as Purchased Shares when determining the
numerator in clause (b) and will be treated as Trust Common Shares when
determining the denominator in clause (b). If at any time the Product
is less than the number of Buyer representatives then serving on the
Board of Managers, Buyer shall cause a number of Buyer representatives
to resign so that the number of Buyer representatives is equal to the
Product. If at any time the Product is less than three, Buyer's right
to nominate the Chairman of the Board of Managers shall cease (subject
to automatic renewal if the Product is thereafter three or more) and
Mr. Wolstein (or his successor if such successor was nominated by
Buyer) shall resign as Chairman of the Board of Managers. The Trust
shall cause Buyer's nominees to be included in the slate of nominees
recommended by the Board of Managers to the Trust's shareholders for
election as Managers, and the Trust shall use its reasonable best
efforts to cause the election of such nominees."
3. NEW SECTIONS 6.6(e) and (f). The following Sections 6.6(e) and (f)
are hereby added to the Purchase Agreement:
"(e) Notwithstanding anything to the contrary in Section
6.6(a), after the aggregate purchase price for the Additional Purchased
Shares reaches $100,000,000, the Additional Purchase Option is not
exercisable on any date on which: (i) the closing price per common
share, without par value, of Buyer (each, a "Buyer Common Share"), on
the NYSE, as reported in The Wall Street Journal for the last trading
day prior to such date, was equal to or less than $18.00, as adjusted
for any share split, subdivision, combination, merger, reclassification
or share dividend related to the Buyer Common Shares occurring at or
before that date, or (ii) the aggregate value of the Purchased Shares
and all Trust Common Shares purchased by Buyer pursuant to Sections 6.7
and 6.15, determined based upon the amount paid by Buyer for such
shares (with each Merger Share valued at $15.50 per share), exceeds ten
percent (10%) of Buyer's Market Capitalization as of the last trading
day prior to such date. "Buyer's Market
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<PAGE> 17
Capitalization" means for any date (with the value of Buyer's
publicly-traded securities determined by reference to the trading
prices reported in The Wall Street Journal for the last trading day
prior to such date when available and, when not available, based upon a
certificate of the chief financial officer of Buyer who shall, in good
faith, value such securities): (i) the aggregate value of all of
Buyer's equity securities then issued and outstanding, including Buyer
Common Shares, and Buyer's preferred and convertible securities,
determined on a fully-diluted basis, plus (ii) the then outstanding
aggregate principal amount of the indebtedness of Buyer and any
subsidiary of Buyer. The term of the Additional Purchase Option shall
be extended by one day for each day that the Additional Purchase Option
cannot be exercised because of the conditions contained in this Section
6.6(e).
(f) The purchase price of all Trust Common Shares and Buyer
Preferred Shares issued to Buyer pursuant to that certain unit
repurchase agreement to be entered into among Buyer, the Trust and each
investor named on the signature pages thereto related to the properties
known as Tech 29 (the "Unit Agreement"), will reduce the aggregate
amount of the Additional Purchase Option on a dollar for dollar basis.
If Buyer would own, as a result of any sale and purchase under the Unit
Agreement, in excess of the Threshold Amount, the Trust shall only sell
Buyer Preferred Shares to Buyer under the Unit Agreement at a price of
$14.00 per Buyer Preferred Share."
4. NEW SECTION 6.14. The following Section 6.14 is hereby added to the
Purchase Agreement:
"Section 6.14 FUNDING AT THE SECOND CLOSING.
(a) Notwithstanding anything to the contrary in Section 2.2
or 2.3(b), at the Second Closing Buyer is only obligated to purchase,
and the Trust is only obligated to sell, the number of Trust Common
Shares that is equal to (i) the sum of (x) the aggregate principal
balance of and accrued interest on any loans then outstanding under
the Funding Option, and (y) the aggregate purchase price, after
subtracting the value of any debt financing, of all property
acquisitions listed on Schedule 6.12 of the Purchase Agreement that
close prior to the Second Closing or are approved, between the Initial
Closing Date and the Second Closing Date, by a majority of the
Managers on the executive committee of the Board of Managers of the
Trust (the "Executive Committee") that are not Affiliates of the
seller of the property or of the assignor that assigned its right to
acquire such property to the Trust, divided by (ii) $15.50; and it is
a condition precedent to Buyer's obligation to purchase Trust Common
Shares under this paragraph that the Trust shall have borrowed at
least 35% of the aggregate purchase price of each such acquisition
from one or more third-party lenders. The Trust shall initiate the
sale and purchase at the Second Closing by delivering to Buyer a
certificate of the Chief Executive Officer of the Trust identifying
the applicable loan amounts, the properties to be acquired and the
relevant purchase price and debt financing information for each, and
the number of Trust Common Shares to be sold and purchased.
(b) From time to time beginning on the Second Closing
Date and ending on the date 180 days after the Second Closing Date (the
"180 Day Period"), Buyer agrees
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Page 3
<PAGE> 18
to purchase, and the Trust agrees to sell, at a price of $15.50 per
Trust Common Share, a number of Trust Common Shares that in the
aggregate, when added to the Trust Common Shares purchased pursuant to
Section 6.14(a), does not exceed the total number of the Remaining
Shares, solely for the purpose of funding property acquisitions
approved by a majority of the members of the Executive Committee that
are not Affiliates of the seller of the property or of the assignor
that assigned its right to acquire such property to the Trust; but it
is a condition precedent to Buyer's obligation to purchase Trust Common
Shares under this paragraph that the Trust shall have borrowed at least
35% of the aggregate purchase price of each acquisition approved by the
Executive Committee under this Section 6.14(a)(ii) from one or more
third-party lenders. The Trust shall initiate each such sale and
purchase by delivering to Buyer a certificate of the Chief Executive
Officer of the Trust identifying the property to be acquired and the
relevant purchase price and debt financing information therefor, and
the number of Trust Common Shares to be sold and purchased.
(c) If, as of the Business Day following the
expiration of the 180 Day Period, Buyer has not purchased all of the
Remaining Shares at a price of $15.50 per Trust Common Share, then
Buyer has the option to purchase, and the Trust agrees to sell upon the
exercise of this option, a number of Trust Common Shares that when
added to the Trust Common Shares purchased pursuant to Sections 6.14(a)
and (b), equals the total number of the Remaining Shares. Buyer may
exercise this option only by providing notice of such exercise to the
Trust on or before the second Business Day after the expiration of the
180 Day Period. Upon the exercise of this option, Buyer shall purchase,
and the Trust shall sell, all of the Trust Common Shares covered by
this option on the fifth Business Day after the expiration of the 180
Day Period. Each of the conditions precedent to the respective
obligations of the Trust and Buyer and each of the deliveries required
to be made at the Second Closing under this Agreement shall have been
satisfied, waived or made, as applicable, as of the date of purchase
under this paragraph as if such date were the Second Closing Date.
(d) Each of the conditions precedent to the
respective obligations of the Trust and Buyer and each of the
deliveries required to be made at the Second Closing under the Purchase
Agreement shall have been satisfied, waived or made, as applicable, as
of the date of each purchase under Section 6.14 as if such date were
the Second Closing Date."
5. NEW SECTION 6.15. The following Section 6.15 is hereby added to the
Purchase Agreement:
"Section 6.15 OPEN MARKET PURCHASES. Notwithstanding anything
to the contrary in this Agreement, Buyer may, from time to time,
purchase Trust Common Shares with an aggregate value (determined based
on the price paid by Buyer in each such transaction) that does not
exceed $10,000,000 in one or more open market transactions, which
purchases will reduce the aggregate amount of the Additional Purchase
Option on a dollar for dollar basis after the aggregate purchase price
for the Additional Purchased Shares reaches $100,000,000, but Buyer
shall not make any such purchase if, as a result
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<PAGE> 19
of such purchase, Buyer would own in excess of the Threshold Amount.
Buyer covenants that all such purchases will be conducted in accordance
with all applicable federal and state securities laws."
6. FULL FORCE AND EFFECT. Except as expressly provided in this
Amendment, the Purchase Agreement shall continue in full force and effect in
accordance with the provisions thereof and, unless expressly stated otherwise
herein, the terms of the Purchase Agreement shall govern this Amendment.
7. EFFECTIVE DATE. This Amendment shall be effective as of the date
first set forth above and from and after such date all references to the
Purchase Agreement shall be deemed to refer to the Purchase Agreement as amended
by this Amendment.
8. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Amendment.
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<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and year first above written.
BUYER:
DEVELOPERS DIVERSIFIED REALTY CORPORATION,
an Ohio corporation
By: /s/ James A. Schoff
Name: James A. Schoff
Title: Chief Investment Officer
THE TRUST:
AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By: /s/ Marc A. Simpson
Name: Marc A. Simpson
Title: Senior Vice President
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