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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): January 29, 1998
AMERICAN INDUSTRIAL PROPERTIES REIT
(Exact Name of Registrant as Specified in Charter)
TEXAS 1-9016 75-6335572
(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation or Organization) Number) Identification Number)
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 5. OTHER EVENTS.
Effective January 29, 1998, American Industrial Properties REIT (the
"Trust") sold 733,945 common shares of beneficial interest ("Common Shares") to
Praedium II Industrial Associates LLC for $10,000,000 ("Praedium"). Praedium
was granted registration rights with respect to such shares.
In connection with the Praedium closing, ABKB LaSalle Securities
Limited Partnership, LaSalle Advisors Limited Partnership (collectively, the
"LaSalle Entities"), MS Real Estate Special Situations, Inc. and Morgan Stanley
Asset Management Inc. (collectively, the "Morgan Entities") gave notice to the
Trust that they will be exercising their preemptive rights to purchase
additional Common Shares. The LaSalle Entities gave notice that they will
purchase 275,300 Common Shares for $3,750,962.50 and the Morgan Entities gave
notice that they will purchase 367,000 Common Shares for $5,000,375.
In connection with the Praedium transaction, the Trust agreed to
nominate for re-election one nominee for Trust Manager from each of the LaSalle
Entities and the Morgan Entities at future annual meetings of shareholders for
so long as such party shall be a holder of the Trust's Common Shares in an
amount equal to at least 5% of the Trust's outstanding Common Shares.
Effective February 1, 1998, the Board of Trust Managers adopted the
Fifth Amended and Restated Bylaws. Amendments were made to the Bylaws to
conform them with those of other real estate investment trusts and to comply
with the Texas Real Estate Investment Trust Act.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS.
(*)3.1 Fifth Amended and Restated Bylaws.
(*)10.1 Common Share Purchase dated as of January 29, 1998, by and between
American Industrial Properties REIT and Praedium II Industrial
Associates LLC.
(*)10.2 Registration Rights Agreement dated as of January 29, 1998, by and
between American Industrial Properties REIT and Praedium II Industrial
Associates LLC.
(*)10.3 Agreement dated as of January 29, 1998, by and among American
Industrial Properties REIT, USAA Real Estate Company, ABKB/LaSalle
Securities Limited Partnership (as Agent for and for the benefit of
particular clients), MS Real Estate Special Situations, Inc. and
Morgan Stanley Asset Management Inc.
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(*) Filed herewith.
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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
/s/ CHARLES W. WOLCOTT
--------------------------------------
Charles W. Wolcott
President and Chief Executive Officer
Dated: February 9, 1998
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EXHIBIT LIST
* 3.1 Fifth Amended and Restated Bylaws.
* 10.1 Common Share Purchase dated as of January 29, 1998, by and between
American Industrial Properties REIT and Praedium II Industrial
Associates LLC.
* 10.2 Registration Rights Agreement dated as of January 29, 1998, by and
between American Industrial Properties REIT and Praedium II Industrial
Associates LLC.
* 10.3 Agreement dated as of January 29, 1998, by and among American
Industrial Properties REIT, USAA Real Estate Company, ABKB/LaSalle
Securities Limited Partnership (as Agent for and for the benefit of
particular clients), MS Real Estate Special Situations, Inc. and
Morgan Stanley Asset Management Inc.
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* Filed herewith
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EXHIBIT 3.1
FIFTH AMENDED AND RESTATED
BYLAWS
OF
AMERICAN INDUSTRIAL PROPERTIES REIT
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INDEX
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ARTICLE I OFFICES
Section 1.1 Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II MEETINGS OF SHAREHOLDERS
Section 2.1 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.3 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.4 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.5 Business at Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.6 Voting Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.7 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.8 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.9 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.10 Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.11 Voting of Shares by Certain Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.12 Election of Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.13 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.14 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.15 Inspectors and Voting Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III TRUST MANAGERS
Section 3.1 Powers and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.2 Number and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.3 Election and Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.4 Nomination of Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.5 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.6 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.7 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.8 Bond Not Required; Time Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.10 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV MEETINGS OF THE TRUST MANAGERS
Section 4.1 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.2 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.3 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.4 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.5 Quorum and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.6 Presumption of Assent to Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.7 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.8 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
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Section 4.9 Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.10 Interest of Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.11 Right of Trust Managers and Officers
to Own Shares or Other Property and
to Engage in Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.12 Transactions Between Trust Managers and the Trust . . . . . . . . . . . . . . . . . . . . 10
Section 4.13 Persons Dealing with Trust Managers or Officers . . . . . . . . . . . . . . . . . . . . . 10
Section 4.14 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.15 Liability of Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V COMMITTEES OF THE TRUST MANAGERS
Section 5.1 Membership and Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.2 Minutes and Rules of Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.4 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.5 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI OFFICERS
Section 6.1 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.2 Election, Term of Office and Qualification . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.3 Subordinate Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.4 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.5 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.6 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.7 The Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.8 The President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.9 The Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.10 The Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.11 Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.12 The Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.13 Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.14 Treasurer's Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.15 Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.16 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII TRUST SHARES
Section 7.1 Share Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7.2 Lost Certificates, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7.3 Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7.4 Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7.5 Closing of Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.6 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.7 Surplus and Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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ARTICLE VIII GENERAL PROVISIONS
Section 8.1 General Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.2 Limited Liability of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.3 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.4 Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.5 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.6 Checks, Notes, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.7 Examination of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.8 Voting Upon Shares Held by the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.9 Number, Gender, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.10 Annual and Quarterly Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.11 Independent Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IX AMENDMENTS
Section 9.1 Amendment of Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE X SUBJECT TO ALL LAWS
Section 10.1 Subject to All Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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AMERICAN INDUSTRIAL PROPERTIES REIT
FIFTH AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
SECTION 1.1 PRINCIPAL OFFICE. The principal office of the Trust
shall be in the City of Irving, Dallas County, Texas or at such other location
as the Trust Managers may from time to time determine.
SECTION 1.2 OTHER OFFICES. The Trust may also have offices at
such other places, both within and without the State of Texas, as the Trust
Managers may from time to time determine or the business of the Trust may
require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 2.1 PLACE OF MEETINGS. The Trust Managers may designate
any place, either within or without the State of Texas, as the place of meeting
for any annual meeting or for any special meeting called by the Trust Managers.
A waiver of notice signed by all shareholders entitled to vote at a meeting may
designate any place, either within or without the State of Texas, as the place
for the holding of such meeting. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall be the principal office
of the Trust.
SECTION 2.2 ANNUAL MEETING. The annual meeting of shareholders
shall be held at such time, on such day and at such place as may be designated
by the Trust Managers. At the annual meeting, the shareholders shall, subject
to Section 2.5 and Section 3.3 of these Bylaws, elect Trust Managers and
transact such other business as may properly be brought before the meeting.
Failure to hold the annual meeting at the designated time shall not cause the
dissolution of the Trust.
SECTION 2.3 SPECIAL MEETINGS. Special meetings of the
shareholders for any purpose or purposes, unless otherwise prescribed by law or
by the Declaration of Trust, may be called by the Trust Managers, any officer
of the Trust or the holders of at least five percent (5%) of all of the shares
entitled to vote at the meetings. Business transacted at all special meetings
shall be confined to the purpose or purposes stated in the call.
SECTION 2.4 NOTICE OF MEETINGS. Written or printed notice of all
meetings of shareholders stating the place, day and hour thereof, and in the
case of a special meeting the purpose or purposes for which the meeting is
called, shall be personally delivered or mailed, not less than ten (10) days
nor more than sixty (60) days prior to the date of the meeting, to the
shareholders of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States Mail
addressed to the shareholder at his address as it appears on the share transfer
books of the Trust and the postage shall be prepaid. Personal delivery of any
such notice to any officer of a corporation or association, or to any member
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of a partnership, shall constitute delivery of such notice to such corporation,
association or partnership.
SECTION 2.5 BUSINESS AT ANNUAL MEETING. No business may be
transacted at an annual meeting of shareholders, other than business that is
either (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Trust Managers (or any duly authorized committee
thereof), (b) otherwise properly brought before the annual meeting by or at the
direction of the Trust Managers (or any duly authorized committee thereof) or
(c) otherwise properly brought before the annual meeting by any shareholder of
the Trust (i) who is a shareholder of record on the date of the giving of the
notice provided for in this Section 2.5 and on the record date for the
determination of shareholders entitled to vote at such annual meeting, and (ii)
who complies with the notice procedures set forth in this Section 2.5.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a shareholder, such shareholder
must have given timely notice thereof in proper written form to the Secretary
of the Trust. To be timely, a shareholder's notice to the Secretary must be
delivered to or mailed and received at the principal office of the Trust (i)
with respect to the Trust's first annual meeting of shareholders following the
adoption of this bylaw, notice by the shareholder to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which public disclosure of the adoption of this Section 2.5 is first
made and (ii) thereafter, not less than sixty (60) days nor more than ninety
(90) days prior to the date of the applicable annual meeting of shareholders,
provided, however, that in the event that less than seventy (70) days' notice
or prior public disclosure of the date of the meeting be given or made, notice
by the shareholder to be timely must be so received not later than the close of
business on the tenth (10th) day following the day on which such notice of the
date of the applicable annual meeting was mailed or such public disclosure of
the date of such annual meeting was made, whichever first occurs. For purposes
of this Section 2.5, the date of a public disclosure shall include, but not be
limited to, the date on which such disclosure is made in a press release
reported by the Dow Jones News Services, the Associated Press or any comparable
news service or in a document publicly filed by the Trust with the Securities
and Exchange Commission pursuant to Sections 13, 14 or 15(d) (or the rules and
regulations promulgated thereunder) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
To be in proper written form, a shareholder's notice to the Secretary
must set forth as to each matter such shareholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of such shareholder, (iii) the
number of shares of the Trust that are owned beneficially or of record by such
shareholder, (iv) a description of all arrangements or understandings between
such shareholder and any other person or persons (including their names) in
connection with the proposal of such business by such shareholder and any
material interest of such shareholder in such business, and (v) a
representation that such shareholder intends to appear in person or by proxy at
the annual meeting to bring such business before the meeting.
No business shall be conducted at the annual meeting of shareholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 2.5; provided, however, that, once
business has been properly brought before the annual meeting in accordance with
such procedures, nothing in this Section 2.5 shall be deemed to preclude
discussion by any shareholder of any such business. If the presiding officer
of an annual meeting determines that business was not properly brought before
the annual meeting in accordance with the foregoing procedures, the presiding
officer shall declare to the meeting that the business was not properly brought
before the meeting and such business shall not be transacted.
SECTION 2.6 VOTING LISTS. The officer or agent having charge of
the share transfer books for shares of the Trust shall make, at least ten (10)
days before each meeting of the shareholders, a complete list
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of shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of each shareholder and the
number of shares held by each shareholder, which list, for a period of ten (10)
days prior to such meeting, shall be kept on file at the registered office of
the Trust and shall be subject to inspection by any shareholders at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
shareholder for the duration of the meeting. The original share transfer books
shall be prima facie evidence as to who are the shareholders entitled to
examine such list or transfer books or to vote at any meeting of shareholders.
Failure to comply with this Section 2.6 with respect to any meeting of
shareholders shall not affect the validity of any action taken at such meeting.
SECTION 2.7 QUORUM. The holders of a majority of the shares
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at all meetings of the shareholders for the transaction of business,
except as otherwise provided by law or by the Declaration of Trust. If,
however, such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote at such meeting, present in
person or represented by proxy, shall have the power to adjourn the meeting
from time to time without notice other than announcement at the meeting until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented any business may be transacted which
might have been transacted at the meeting as originally convened. The
shareholders present at a duly organized meeting at which a quorum was present
may continue to transact business until adjournment notwithstanding the
withdrawal of enough shareholders to leave less than a quorum present, provided
that there remain at such meeting the holder or holders of at least one-third
(1/3) of the shares issued and outstanding and entitled to vote thereat,
present in person or represented in the manner specified above. A holder of a
share shall be treated as being present at a meeting if the holder of such
share is (i) present in person at the meeting, or (ii) represented at the
meeting by a valid proxy, whether the instrument granting such proxy is marked
as casting a vote or abstaining, is left blank or does not empower such proxy
to vote with respect to some or all matters to be voted upon at the meeting.
SECTION 2.8 ORGANIZATION. (a) The Chief Executive Officer, if
one shall be elected, shall preside at all meetings of the shareholders. In
the absence of the Chief Executive Officer or should one not be elected, the
following officers shall preside in order of priority: President , Chief
Financial Officer, Chief Operating Officer or Secretary. If no such officer is
available, the meeting shall be adjourned until such an officer is available
to preside over the meeting . The presiding officer shall set the agenda for
the meeting, shall conduct all aspects of the meeting and shall establish and
interpret the rules of order for the conduct of the meeting.
(b) The Secretary of the Trust shall act as secretary at all
meetings of the shareholders. In his or her absence an Assistant Secretary
shall so act and in the absence of all of these officers the presiding officer
may appoint any person to act as secretary of the meeting .
SECTION 2.9 PROXIES. (a) At any meeting of the shareholders
every shareholder entitled to vote at such meeting shall be entitled to vote in
person or by proxy executed in writing by such shareholder or by his duly
authorized attorney in fact. Proxies shall be filed with the Secretary or
Trust Managers immediately after the meeting has been called to order.
(b) No proxy shall be valid after eleven (11) months from the date
of its execution unless such proxy otherwise provides.
(c) A proxy shall be revocable unless the proxy form conspicuously
states that the proxy is irrevocable and the proxy is coupled with an interest
but in no event shall it remain irrevocable for a period of more than eleven
(11) months. A proxy which is revocable as aforesaid may be revoked at any
time by
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filing with the Secretary an instrument revoking it or a duly executed proxy
bearing a later date. Any revocable proxy which is not so revoked shall,
subject to paragraph (b) above, continue in full force and effect.
(d) In the event that any instrument in writing shall designate
two (2) or more persons to act as proxies, a majority of such persons present
at the meeting or, if only one shall be present, then that one, shall have and
may exercise all of the powers conferred by such written instrument upon all
the persons so designated unless the instrument shall otherwise provide.
SECTION 2.10 VOTING OF SHARES. Except as otherwise provided by
law, the Declaration of Trust or these Bylaws, each shareholder shall be
entitled at each meeting of shareholders to one (1) vote on each matter
submitted to a vote at such meeting for each share having voting rights
registered in his name on the books of the Trust at the time of the closing of
the share transfer books (or at the record date) for such meeting. When a
quorum is present at any meeting (and notwithstanding the subsequent withdrawal
of enough shareholders to leave less than a quorum present) in accordance with
Section 2.7 of these Bylaws, the votes of holders of a majority of the shares
entitled to vote, present in person or represented by proxy, shall decide any
matter submitted to such meeting, unless the matter is one upon which by law or
by express provision of the Declaration of Trust or of these Bylaws the vote of
a greater number is required, in which case the vote of such greater number
shall govern and control the decision of such matter. In determining the
number of shares entitled to vote, shares abstaining from voting or not voted
on a matter (including elections) will not be treated as entitled to vote. The
provisions of this Section 2.10 will govern with respect to all votes of
shareholders except as otherwise provided for in these Bylaws or in the
Declaration of Trust or by some specific statutory provision superseding the
provisions contained in these Bylaws or the Declaration of Trust.
SECTION 2.11 VOTING OF SHARES BY CERTAIN HOLDERS. (a) Shares
standing in the name of another business organization may be voted by such
officer, agent or proxy as the organizational documents of such organization
may authorize or, in the absence of such authorization, as may be determined by
the governing body of such organization.
(b) Shares held by an administrator, executor, guardian or
conservator may be voted by him, either in person or by proxy, without a
transfer of such shares into his name so long as such shares forming a part of
an estate are in the possession and form a part of the estate being served by
him. Shares standing in the name of a trustee may be voted by him, either in
person or by proxy, but no trustee shall be entitled to vote shares held by him
without a transfer of such shares into his name as trustee.
(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority to do so
is contained in an appropriate order of the court by which such receiver was
appointed.
(d) A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote the shares so
transferred.
SECTION 2.12 ELECTION OF TRUST MANAGERS. At each election for
Trust Managers, each shareholder entitled to vote at such election shall,
unless otherwise provided by the Declaration of Trust or by applicable law,
have the right to vote the number of shares owned by him for as many persons as
there are to be elected and for whose election he has a right to vote. No
shareholder shall have the right or be permitted to cumulate his votes on any
basis.
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SECTION 2.13 TELEPHONE MEETINGS. Shareholders may participate in
and hold a meeting of the shareholders by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to
this Section shall constitute presence in person at such meeting, except where
a person participates in the meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called or convened.
SECTION 2.14 ACTION WITHOUT MEETING. Any action required by any
provision of law or of the Declaration of Trust or these Bylaws to be taken at
a meeting of the shareholders or any action which may be taken at a meeting of
the shareholders may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof, and such consent
shall have the same force and effect as a unanimous vote of the shareholders.
SECTION 2.15 INSPECTORS AND VOTING PROCEDURES.
(a) The Trust shall, in advance of any meeting of shareholders,
appoint one or more inspectors to act at the meeting and make a written report
thereof. The Trust may designate one or more persons as alternate inspectors
to replace any inspector who fails to act. If no inspector or alternate is
able to act at a meeting of shareholders, the person presiding at the meeting
shall appoint one or more inspectors to act at the meeting. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his ability.
(b) The inspectors shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the shares represented
at a meeting and the validity of proxies and ballots, (iii) count all votes and
ballots, (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors, and
(v) certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The inspectors may appoint
or retain other persons or entities to assist the inspectors in the performance
of the duties of the inspectors.
(c) The date and time of the opening and closing of the polls for
each matter upon which the shareholders will vote at a meeting shall be
announced at the meeting. No ballots, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the inspectors after the
closing of the polls unless a court of appropriate jurisdiction, upon
application by a shareholder, shall determine otherwise.
(d) In determining the validity and counting of proxies and
ballots, the inspectors may examine and consider such records or factors as
allowed by the Texas Real Estate Investment Trust Act (the "Texas REIT Act").
ARTICLE III
TRUST MANAGERS
SECTION 3.1 POWERS AND RESPONSIBILITIES. The business and
affairs of the Trust shall be managed under the direction of its Trust Managers
who may exercise all such powers of the Trust and do all such lawful acts and
things as are not by statute, the Declaration of Trust or these Bylaws directed
or required to be exercised or done by the shareholders. The enumeration of
any specific power or authority herein shall not be construed as limiting the
aforesaid powers or the general powers or authority or any other specified
power or authority conferred herein upon the Trust Managers.
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SECTION 3.2 NUMBER AND QUALIFICATION. There shall at all times
be no less than two (2) nor more than eight (8) Trust Managers who, subject to
Section 3.3 below, shall be elected annually by the shareholders. Subject to
any limitations specified by law or in the Declaration of Trust, the number of
Trust Managers may be fixed from time to time by resolution adopted by a
majority of the Trust Managers. No decrease in the number of Trust Managers
shall have the effect of shortening the term of any incumbent Trust Manager. A
majority of the Trust Managers shall be natural persons. Trust Managers need
not be shareholders, must be at least eighteen (18) years of age and must not
be subject to any legal disability. At least two (2) of the Trust Managers
shall at all times be Independent Trust Managers. For purposes of these
Bylaws, the term "Independent Trust Manager" shall mean a Trust Manager who (i)
does not perform any services for the Trust (except in the capacity of a Trust
Manager) whether as an agent, advisor, consultant, employee, property manager
or in any other capacity whatsoever (other than as a Trust Manager), and (ii)
is not an "affiliate" of any person or entity that performs any services for
the Trust (other than as a Trust Manager). The term "affiliate" as used in
these Bylaws means any individual, corporation, partnership, trust,
unincorporated organization, association or other entity that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with any person or entity that performs any services
for the Trust (other than as a Trust Manager).
SECTION 3.3 ELECTION AND TERM OF OFFICE. The Trust Manager
nominees who have not been previously elected as Trust Managers by the
shareholders of the Trust shall be elected at the annual meeting of the
shareholders (except as provided in Section 3.7) by the affirmative vote of the
holders of majority of the outstanding shares of the Trust. Trust Managers who
have been previously elected as Trust Managers by the shareholders of the Trust
shall be re-elected at the annual meeting of the shareholders by the
affirmative vote of the holders of a majority of the outstanding shares of the
Trust present in person or represented by proxy at such meeting; provided,
however, that any Trust Manager that has been previously elected as a Trust
Manager by the shareholders who is not re-elected by such majority vote at a
subsequent annual meeting shall nevertheless remain in office until his
successor is elected and qualified. Each Trust Manager shall hold office until
his successor is elected and qualified, or until his death, resignation or
removal in the manner provided in these Bylaws.
SECTION 3.4 NOMINATION OF TRUST MANAGERS. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as Trust Managers of the Trust. Nominations of persons for election
as Trust Managers may be made at any annual meeting of shareholders (a) by or
at the direction of the Trust Managers (or any duly authorized committee
thereof) or (b) by any shareholder of the Trust (i) who is a shareholder of
record on the date of the giving of the notice provided for in this Section 3.4
and on the record date for the determination of shareholders entitled to vote
at such annual meeting, and (ii) who complies with the notice procedures set
forth in this Section 3.4.
In addition to any other applicable requirements, for a nomination to
be made by a shareholder, such shareholder must have given timely notice
thereof in proper written form to the Secretary of the Trust. To be timely, a
shareholder's notice to the Secretary must be delivered to or mailed and
received at the principal offices of the Trust (i) with respect to the Trust's
first annual meeting of shareholders following the adoption of this bylaw,
notice by the shareholder to be timely must be so received not later than the
close of business on the tenth (10th) day following the day on which public
disclosure of the adoption of this Section 3.4 is first made and (ii)
thereafter, not less than sixty (60) days nor more than ninety (90) days prior
to the date of the applicable annual meeting of shareholders; provided,
however, that in the event that less than seventy (70) days' notice or prior
public disclosure of the date of the meeting is given or made, notice by the
shareholder to be timely must be so received not later than the close of
business on the tenth (10th) day following the day on which such notice of the
date of the applicable annual meeting was mailed or such public disclosure of
the date of such annual meeting was made, whichever first occurs. For purposes
of this Section 3.4, the date of
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a public disclosure shall include, but not be limited to, the date on which
such disclosure is made in a press release reported by the Dow Jones News
Services, the Associated Press or any comparable national news service or in a
document publicly filed by the Trust with the Securities and Exchange
Commission pursuant to Sections 13, 14 or 15(d) (or the rules and regulations
promulgated thereunder) of the Exchange Act.
To be in proper written form, a shareholder's notice to the Secretary
must set forth (a) as to each person whom the shareholder proposes to nominate
for election as a Trust Manager (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or employment of
the person, (iii) the number of shares of the Trust that are owned beneficially
or of record by the person, and (iv) any other information relating to the
person that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitation of proxies for
election of Trust Managers pursuant to Section 14 of the Exchange Act, and (b)
as to the shareholder giving the notice (i) the name and record address of such
shareholder, (ii) the number of shares of the Trust that are owned beneficially
or of record by such shareholder, (iii) a description of all arrangements or
understandings between such shareholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the nomination(s)
are to be made by such shareholders, (iv) a representation that such
shareholder intends to appear in person or by proxy at the meeting to nominate
the persons named in the notice, and (v) any other information relating to such
shareholder that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with solicitations of proxies
for election of Trust Managers pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder. Such notice must be
accompanied by a written consent of each proposed nominee to being named as a
nominee and to serve as a Trust Manager if elected.
No person shall be eligible for election as a Trust Manager of the
Trust unless nominated in accordance with the procedures set forth in this
Section 3.4. If the presiding officer of the meeting determines that a
nomination was not made in accordance with the foregoing procedures, the
presiding officer shall declare to the meeting that the nomination was
defective and such defective nomination shall be disregarded.
SECTION 3.5 RESIGNATION. Any Trust Manager may resign at any
time by giving written notice to the remaining Trust Managers. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. A Trust Manager judged incompetent or for whom
a guardian or conservator has been appointed, shall be deemed to have resigned
as of the date of such adjudication or appointment.
SECTION 3.6 Removal. A Trust Manager may be removed at any time
with or without cause by the vote of holders of shares representing two-thirds
(2/3) of the total votes authorized to be cast by shares then outstanding and
entitled to vote thereon. Upon the resignation or removal of any Trust
Manager, or his otherwise ceasing to be a Trust Manager, he shall execute and
deliver such documents as the remaining Trust Managers shall require for the
conveyance of any Trust property held in his name, shall account to the
remaining Trust Managers as they require for all property which he holds as
Trust Manager and shall thereupon be discharged as Trust Manager. Upon the
incapacity or death of any Trust Manager, his legal representative shall
perform the acts set forth in the preceding sentence and the discharge
mentioned therein shall run to such legal representative and to the
incapacitated Trust Manager or the estate of the deceased Trust Manager, as the
case may be.
SECTION 3.7 VACANCIES. If there is an increase in the number of
Trust Managers or if any or all of the Trust Managers cease to be Trust
Managers hereunder, whether by reason of resignation, removal, incapacity,
death or otherwise, such event shall not terminate the Trust or affect its
continuity. Until vacancies are filled, the remaining Trust Manager or Trust
Managers may exercise the powers of the Trust Managers
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hereunder. Vacancies may be filled by successor Trust Managers either
appointed by a majority of the remaining Trust Managers or elected by the vote
of the holders of at least a majority of the outstanding shares at an annual or
special meeting of the shareholders. Any Trust Manager elected to fill a
vacancy shall hold office until the next annual meeting for the election of
Trust Managers. The election of a successor Trust Manager shall be considered
an amendment to the Declaration of Trust.
SECTION 3.8 BOND NOT REQUIRED; TIME COMMITMENT. Unless otherwise
required by law, no Trust Manager shall be required to give bond, surety or
security in any jurisdiction for the performance of his duties or obligations
to the Trust. No Trust Manager shall be required to devote his entire time to
the business and affairs of the Trust.
SECTION 3.9 COMPENSATION. Trust Managers shall receive
compensation for their services to the Trust as may be determined from time to
time by the Trust Managers; provided, however, that the cash compensation of
the Trust Managers shall not be increased by more than 20% over the prior year
without the approval of the holders of a majority of the shares cast at the
annual meeting of shareholders of the Trust. The Trust Managers may delegate
to any committee the power to fix from time to time the compensation of Trust
Managers. Officers of the Trust who also serve as Trust Managers shall not
receive compensation for their service as Trust Managers.
SECTION 3.10 EXECUTION OF DOCUMENTS. Each Trust Manager and any
one of them is authorized to execute on behalf of the Trust any document or
instrument of any nature whatsoever, provided that the execution by the Trust
of any such document or instrument shall have been previously authorized by
such action of the Trust Managers as may be required by statute, the
Declaration of Trust or these Bylaws.
ARTICLE IV
MEETINGS OF THE TRUST MANAGERS
SECTION 4.1 PLACE OF MEETINGS. The Trust Managers of the Trust
may hold their meetings, both regular and special, either within or without the
State of Texas.
SECTION 4.2 ANNUAL MEETING. The annual meeting of the Trust
Managers shall be held immediately following the adjournment of the annual
meeting of the shareholders and no notice of such meeting shall be necessary to
the Trust Managers in order to legally constitute the meeting, provided a
quorum shall be present, or they may meet at such time and place as shall be
fixed by the consent in writing of all of the Trust Managers.
SECTION 4.3 REGULAR MEETINGS. Regular meetings of the Trust
Managers, in addition to the annual meetings referred to in Section 4.2, may be
held without notice at such time and place as shall from time to time be
determined by the Trust Managers.
SECTION 4.4 SPECIAL MEETINGS. Special meetings of the Trust
Managers may be called by the Chief Executive Officer, if one shall be elected,
or by the President, if a Chief Executive Officer is not elected, on ten (10)
business day's notice (oral or written) to each Trust Manager. Special
meetings shall be called by the Chief Executive Officer (if one shall be
elected), the President or the Secretary on like notice on the oral or written
request of any Trust Manager. Neither the purpose of, nor the business to be
transacted at, any special meeting of the Trust Managers need be specified in
the notice or waiver of notice of such meeting. Attendance of a Trust Manager
at a meeting shall constitute a waiver of notice of such meeting except where a
Trust Manager attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to
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the transaction of any business on the grounds that the meeting is not lawfully
called or convened.
SECTION 4.5 QUORUM AND ACTION. At all meetings of the Trust
Managers, the presence of a majority of the Trust Managers shall be necessary
and sufficient to constitute a quorum for the transaction of business and the
act of a majority of the Trust Managers at any meeting at which a quorum is
present shall be the act of the Trust Managers unless the act of a greater
number is required by law, the Declaration of Trust or these Bylaws. If a
quorum shall not be present at any meeting of Trust Managers, the Trust
Managers present may adjourn the meeting from time to time without notice other
than announcement at the meeting until a quorum shall be present. If there are
only two Trust Managers, the presence of both Trust Managers shall be necessary
to constitute a quorum.
SECTION 4.6 PRESUMPTION OF ASSENT TO ACTION. A Trust Manager who
is present at a meeting of the Trust Managers at which action on any Trust
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the Secretary of the meeting
before the adjournment thereof or shall forward such dissent by registered mail
to the Secretary of the Trust immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Trust Manager who voted in favor of
such action.
SECTION 4.7 TELEPHONE MEETINGS. Trust Managers may participate
in and hold a meeting of the Trust Managers by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
SECTION 4.8 ACTION WITHOUT MEETING. Any action required or
permitted to be taken at a meeting of the Trust Managers may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed
by all the Trust Managers, and such consent shall have the same force and
effect as a unanimous vote at a meeting.
SECTION 4.9 MINUTES. The Trust Managers shall keep regular
minutes of their proceedings. The minutes shall be placed in the minute book
of the Trust.
SECTION 4.10 INTEREST OF TRUST MANAGERS. With respect to the
actions of the Trust Managers, Trust Managers who have any direct or indirect
interest in connection with any matter being acted upon may be counted for all
quorum purposes under this Article IV.
SECTION 4.11 RIGHT OF TRUST MANAGERS AND OFFICERS TO OWN SHARES OR
OTHER PROPERTY AND TO ENGAGE IN OTHER BUSINESS. Any Trust Manager or officer
of the Trust may acquire, own, hold and dispose of shares of the Trust for his
individual account, and may exercise all rights of a shareholder to the same
extent and in the same manner as if he were not a Trust Manager or officer of
the Trust. Except as provided specifically to the contrary in a written
agreement with the Trust, any Trust Manager may, in a capacity other than that
of Trust Manager, have business interests and engage in business activities
similar to or in addition to those relating to the Trust, which interests and
activities may be similar to and competitive with those of the Trust and may
include the acquisition, syndication, holding, management, development,
operation or disposition, for his own account or for the account of others, of
interests in mortgages, interests in real property, or interests in entities
engaged in the real estate business. Except as provided specifically to the
contrary in a written agreement with the Trust, each Trust Manager shall be
free of any obligation to present to the Trust any investment opportunity which
comes to him in any capacity other than solely as Trust Manager
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of the Trust, even if such opportunity is of a character which, if presented to
the Trust, could be exploited by the Trust. Subject to the provisions of
Article III hereof, any Trust Manager or officer of the Trust may be a trustee,
officer, director, shareholder, partner, member, advisor or employee of, or
otherwise have a direct or indirect interest in any person who may be engaged
to render advice or services to the Trust, and may receive compensation from
such person as well as compensation as Trust Manager or officer or otherwise
hereunder.
SECTION 4.12 TRANSACTIONS BETWEEN TRUST MANAGERS AND THE TRUST.
Except as otherwise provided by the Declaration of Trust or these Bylaws, and
in the absence of fraud, a contract, act or other transaction, between the
Trust and any other person, or in which the Trust is interested, shall be valid
and no Trust Manager or officer of the Trust shall have any liability as a
result of entering into any such contract, act or transaction, even though (a)
one or more of the Trust Managers, directly or indirectly is interested in or
connected with, or is a trustee, partner, director, shareholder, member,
employee, officer or agent of such other person, or (b) one or more of the
Trust Managers, individually or jointly with others, is a party to, or directly
or indirectly is interested in, or connected with, such contract, act or
transaction, provided that (i) such interest or connection is disclosed in
reasonable detail or known to the Trust Managers and thereafter the Trust
Managers authorize or ratify such contract, act or other transaction by
affirmative vote of a majority of the Trust Managers who are not interested in
the transaction, or (ii) such interest or connection is disclosed in reasonable
detail or known to the shareholders, and thereafter such contract, act or
transaction is approved by shareholders holding a majority of the shares then
outstanding and entitled to vote thereon.
SECTION 4.13 PERSONS DEALING WITH TRUST MANAGERS OR OFFICERS. Any
act of the Trust Managers or officers of the Trust purporting to be done in
their capacity as such shall, as to any person dealing with such Trust Managers
or officers, conclusively be deemed to be within the purposes of the Trust and
within the powers of the Trust Managers or officers. No person dealing with
the Trust Managers or any of them or with the officers of the Trust or any of
them, shall be bound to see to the application of any funds or property passing
into their hands or control. The receipt of the Trust Managers or any of the
officers of the Trust of moneys or other consideration shall be binding upon
the Trust.
SECTION 4.14 RELIANCE. Trust Managers and officers of the Trust
shall not be liable for any claims or damages that may result from their acts
in the discharge of any duty imposed or power conferred upon them by the Trust,
if, in the exercise of ordinary care, they acted in good faith and in reliance
upon the written opinion of an attorney for the Trust. In discharging their
duties, Trust Managers and officers of the Trust, when acting in good faith and
exercising ordinary care, may rely upon financial statements of the Trust,
stated in a written report by an independent certified public accountant, to
fairly present the financial position of the Trust. The Trust Managers and
officers of the Trust may rely upon any instrument or other document reasonably
believed by them to be genuine.
SECTION 4.15 LIABILITY OF TRUST MANAGERS. No Trust Manager of the
Trust shall be liable to the Trust for any act, omission, loss, damage or
expense arising from the performance of his duty under the Trust, except to the
extent specifically required by statute, the Declaration of Trust or these
Bylaws.
ARTICLE V
COMMITTEES OF THE TRUST MANAGERS
SECTION 5.1 MEMBERSHIP AND AUTHORITIES. The Trust Managers, by
resolution adopted by a majority of the Trust Managers, may designate one (1)
or more Trust Managers to constitute such committees as the Trust Managers may
determine, including, but not limited to, a Compensation Committee and an Audit
Committee, each of which committees to the extent provided in such resolution
shall have and may exercise
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all of the authority of the Trust Managers in the business and affairs of the
Trust, except in those cases where the authority of the Trust Managers is
specifically denied to the committee or committees by the Trust Managers,
applicable law, the Declaration of Trust or these Bylaws. No committee shall
have the power to alter or to repeal any resolution adopted by the Trust
Managers. The designation of a committee and the delegation thereto of
authority shall not operate to relieve the Trust Managers, or any member
thereof, of any responsibility imposed upon each of them by law. The members
of each such committee shall serve at the pleasure of the Trust Managers. A
majority of the members of each committee shall be Independent Trust Managers;
provided, however, that if a committee shall consist of two (2) members, only
one (1) of such members shall be required to be an Independent Trust Manager.
SECTION 5.2 MINUTES AND RULES OF PROCEDURE. Each committee
designated by the Trust Managers shall keep regular minutes of its proceedings
and report the same to the Trust Managers when required. Subject to the
provisions of these Bylaws, the members of any committee may fix such
committee's own rules of procedure.
SECTION 5.3 VACANCIES. The Trust Managers shall have the power
at any time to fill vacancies in, to change the membership of, or to dissolve,
any committee.
SECTION 5.4 TELEPHONE MEETINGS. Members of any committee
designated by the Trust Managers may participate in or hold a meeting by use of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this Section shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the grounds that the
meeting is not lawfully called or convened.
SECTION 5.5 ACTION WITHOUT MEETING. Any action required or
permitted to be taken at a meeting of any committee designated by the Trust
Managers may be taken without a meeting if a consent in writing, setting forth
the action so taken, is signed by all the members of the committee, and such
consent shall have the same force and effect as a unanimous vote at a meeting.
ARTICLE VI
OFFICERS
SECTION 6.1 NUMBER. The officers of the Trust shall include a
President and a Secretary. The Trust Managers may also elect a Chief Executive
Officer, one (1) or more Vice Presidents, a Treasurer, one (1) or more
Assistant Secretaries and one (1) or more Assistant Treasurers. One (1) person
may hold any two (2) or more of these offices.
SECTION 6.2 ELECTION, TERM OF OFFICE AND QUALIFICATION. The
Trust Managers shall elect officers, none of whom need be a Trust Manager,
except for the Chief Executive Officer, if one shall be elected, at any time
and from time to time as they deem necessary. Each officer so elected shall
hold office until his successor shall have been duly elected and qualified or
until his death, resignation or removal in the manner hereinafter provided.
SECTION 6.3 SUBORDINATE OFFICERS. The Trust Managers may appoint
such other officers and agents as it shall deem necessary who shall hold their
offices for such terms, have such authority and perform such duties as the
Trust Managers may from time to time determine. The Trust Managers may
delegate to any committee or officer the power to appoint any such subordinate
officer or agent. No subordinate officer
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appointed by any committee or superior officer as aforesaid shall be considered
as an officer of the Trust, the officers of the Trust being limited to the
officers elected or appointed as such by the Trust Managers.
SECTION 6.4 RESIGNATION. Any officer may resign at any time by
giving written notice thereof to the Trust Managers or to the President or
Secretary of the Trust. Any such resignation shall take effect at the time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 6.5 REMOVAL. Any officer elected or appointed by the
Trust Managers may be removed by the Trust Managers at any time with or without
cause by majority vote of the entire Board of Trust Managers. Any other
officer may be removed at any time with or without cause by the Trust Managers
or by any committee or superior officer upon whom such power of removal may be
conferred by the Trust Managers. The removal of any officer shall be without
prejudice to the contract rights, if any, of the person so removed. Election
or appointment of an officer or agent shall not of itself create any contract
rights.
SECTION 6.6 VACANCIES. A vacancy in any office shall be filled
for the unexpired portion of the term by the Trust Managers, but in case of a
vacancy occurring in an office filled by a committee or superior officer in
accordance with the provisions of Section 6.3, such vacancy may be filled by
such committee or superior officer.
SECTION 6.7 THE CHIEF EXECUTIVE OFFICER. The Chief Executive
Officer, if one shall be elected, shall be the chief executive officer of the
Trust, shall preside at all meetings of the shareholders and Trust Managers,
shall be an ex officio member of all standing committees, shall have general
and active management of the business of the Trust, shall have the general
supervision and direction of all other officers of the Trust with full power to
see that their duties are properly performed and shall see that all orders and
resolutions of the Trust Managers are carried into effect. He may sign, with
any other proper officer, certificates for shares of the Trust and any deeds,
bonds, mortgages, contracts and other documents which the Trust Managers have
authorized to be executed, except where required by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Trust Managers or these Bylaws, to some other
officer or agent of the Trust. In addition, the Chief Executive Officer shall
perform whatever duties and shall exercise all powers that are given to him by
the Trust Managers.
SECTION 6.8 THE PRESIDENT. If no Chief Executive Officer shall
be elected, the President shall be the chief executive officer of the Trust and
shall have the powers and duties of the Chief Executive Officer as set forth in
Section 6.7. In the absence of the Chief Executive Officer, if one shall be
elected, the President shall preside at all meetings of the shareholders and
Trust Managers. He may sign, with any other proper officer, certificates for
shares of the Trust and any deeds, bonds, mortgages, contracts and other
documents which the Trust Managers have authorized to be executed, except where
required by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Trust
Managers or these Bylaws to some other officer or agent of the Trust. In
addition, the President shall perform whatever duties and shall exercise
whatever powers given to him by the Trust Managers or by the Chief Executive
Officer, if one shall be elected.
SECTION 6.9 THE VICE PRESIDENTS. The Vice Presidents shall
perform such duties as are given to them by these Bylaws and as may from time
to time be assigned to them by the Trust Managers, by the Chief Executive
Officer, if one shall be elected, or by the President, if a Chief Executive
Officer is not elected, and may sign, with any other proper officer,
certificates for shares of the Trust. At the request of the President, or in
his absence or disability, the Vice President designated by the President (or
in the absence of such designation, the Vice President who has served the
longest term of office with the Trust) shall perform the
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duties and exercise the powers of the President.
SECTION 6.10 THE SECRETARY. The Secretary, when available, shall
attend all meetings of the Trust Managers and all meetings of the shareholders
and record all votes and the minutes of all proceedings in a book to be kept
for that purpose and shall perform like duties for the Trust Manager
committees when required. The Secretary shall give, or cause to be given,
notice of all meetings of the shareholders and of the Trust Managers as
required by law or these Bylaws, be custodian of the Trust records and have
general charge of the share books of the Trust and shall perform such other
duties as may be prescribed by the Trust Managers, by the Chief Executive
Officer, if one shall be elected, or by the President, if a Chief Executive
Officer is not elected, under whose supervision he shall be. The Secretary may
sign, with any other proper officer, certificates for shares of the Trust and
shall keep in safe custody the seal of the Trust, and, when authorized by the
Trust Managers, affix the same to any instrument requiring it and, when so
affixed, it shall be attested by his signature or by the signature of the
Treasurer or an Assistant Secretary.
SECTION 6.11 ASSISTANT SECRETARIES. The Assistant Secretaries
shall perform such duties as are given to them by these Bylaws or as may from
time to time be assigned to them by the Trust Managers or by the Secretary. At
the request of the Secretary, or in his absence or disability, the Assistant
Secretary designated by the Secretary (or in the absence of such designation
the Assistant Secretary who has served the largest term of office with the
Trust), shall perform the duties and exercise the powers of the Secretary.
SECTION 6.12 THE TREASURER. The Treasurer shall have the custody
and be responsible for all Trust funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the Trust
and shall deposit all monies and other valuable effects in the name and to the
credit of the Trust in such depositories as may be designated by the Trust
Managers. The Treasurer shall disburse the funds of the Trust as may be
ordered by the Trust Managers, taking proper vouchers for such disbursements,
and shall render to the Chief Executive Officer, if one shall be elected, the
President and the Trust Managers, at the regular meetings of the Trust
Managers, or whenever they may require it, an account of all his transactions
as Treasurer and of the financial condition of the Trust. The Treasurer may
sign, with any other proper officer, certificates for shares of the Trust.
SECTION 6.13 ASSISTANT TREASURERS. The Assistant Treasurers shall
perform such duties as are given to them by these Bylaws or as may from time to
time be assigned to them by the Trust Managers or by the Treasurer. At the
request of the Treasurer, or in his absence or disability, the Assistant
Treasurer designated by the Treasurer (or in the absence of such designation,
the Assistant Treasurer who has served the longest term of office with the
Trust), shall perform the duties and exercise the powers of the Treasurer.
SECTION 6.14 TREASURER'S BOND. If required by the Trust Managers,
the Treasurer and any Assistant Treasurer shall give the Trust a bond in such
sum and with such surety or sureties as shall be satisfactory to the Trust
Managers for the faithful performance of the duties of his office and for the
restoration to the Trust, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property
of whatever kind in his possession or under his control belonging to the Trust.
SECTION 6.15 SALARIES. The salary or other compensation of
officers shall be fixed from time to time by the Trust Managers. The Trust
Managers may delegate to any committee or officer the power to fix from time to
time the salary or other compensation of subordinate officers and agents
appointed in accordance with the provisions of Section 6.3.
SECTION 6.16 EXECUTION OF DOCUMENTS. Each officer of the Trust
and any one of them is authorized to execute on behalf of the Trust any
document or instrument of any nature whatsoever, provided
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that the execution by the Trust of any such document or instrument shall have
been previously authorized by such action of the Trust Managers as may be
required by statute, the Declaration of Trust or these Bylaws.
ARTICLE VII
TRUST SHARES
SECTION 7.1 SHARE CERTIFICATES. (a) The certificates
representing shares of beneficial interest of the Trust shall be in such form,
not inconsistent with statutory provisions and the Declaration of Trust, as
shall be approved by the Trust Managers. The certificates shall be signed by
the Chief Executive Officer, if one shall be elected, the President or a Vice
President and a Secretary or Assistant Secretary, or such other or additional
officers as may be prescribed from time to time by the Trust Managers. The
signatures of such officer or officers upon a certificate may be facsimiles if
the certificate is countersigned by a transfer agent or registered by a
registrar, either of which is other than the Trust itself or an employee of the
Trust. In case any officer who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued with the same effect as if he were such
officer at the date of its issuance.
(b) In the event the Trust has, by its Declaration of Trust,
limited or denied the preemptive right of shareholders, there shall be set
forth on the face or back of the certificates, which the Trust shall issue to
represent beneficial interests such legends or statements, if any, as shall be
required by applicable law or the Declaration of Trust or as may be approved by
the Trust Managers.
(c) All certificates shall be consecutively numbered and the name
of the person owning the shares represented thereby, with the number of such
shares and the date of issue, shall be entered on the Trust's books.
(d) All certificates surrendered to the Trust shall be canceled
and, except as provided in Section 7.2 with respect to lost, destroyed or
mutilated certificates, no new certificate shall be issued until the former
certificate for the same number of shares has been surrendered and canceled.
SECTION 7.2 LOST CERTIFICATES, ETC. The Trust Managers may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Trust alleged to have
been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed. In
authorizing such issue of a new certificate or certificates, the Trust Managers
may, in their discretion and as a condition precedent to the issue thereof,
require the owner of such lost or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as the Trust
Managers shall require and/or indemnify the Trust as the Trust Managers may
prescribe.
SECTION 7.3 TRANSFER OF SHARES. Subject to any restrictions upon
transfer, upon surrender to the Trust or the transfer agent of the Trust of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer and satisfaction of the Trust
that the requested transfer complies with the provisions of applicable state
and federal laws and regulations, the Declaration of Trust and any agreements
to which the Trust is a party, the Trust shall issue a new certificate to the
person entitled thereto, cancel the old certificate and record the transaction
upon its books.
SECTION 7.4 OWNERSHIP OF SHARES. The Trust shall be entitled to
treat and recognize the holder of record of any share or shares as the holder
in fact thereof and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of the State of Texas.
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SECTION 7.5 CLOSING OF TRANSFER BOOKS. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive a distribution
by the Trust (other than a distribution involving a purchase or redemption by
the Trust of its own shares) or a share dividend, or in order to make a
determination of shareholders for any other proper purpose, the Trust Managers
may provide that the share transfer books shall be closed for a stated period
but not to exceed, in any case, sixty (60) days. If the share transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten (10) days immediately preceding such meeting. In lieu of closing the
share transfer books, the Trust Managers may fix in advance a date as the
record date for any such determination of shareholders, such date in any case
to be not more than sixty (60) days and, in case of a meeting of shareholders,
not less than ten (10) days prior to the date on which the particular action
requiring such determination of shareholders is to be taken, and the
determination of shareholders on such record date shall apply with respect to
the particular action requiring the same notwithstanding any transfer of shares
on the books of the Trust after such record date.
SECTION 7.6 DIVIDENDS. The Trust Managers may, from time to
time, declare, and the Trust may pay, dividends on its outstanding shares in
the manner and upon the terms and conditions provided by the Declaration of
Trust and by law, such dividends to be paid in cash or in property or in shares
of beneficial interest of the Trust, except no dividends shall be paid when the
Trust is insolvent or when the payment thereof would render the Trust
insolvent. When making a determination of whether to declare a dividend, the
Trust Managers shall make the determination consistent with their fiduciary
duties as Trust Managers.
SECTION 7.7 RESERVES. By resolution the Trust Managers may
create such reserve or reserves of the Trust as the Trust Managers from time to
time, in their absolute discretion, determine to be proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the Trust, or for such other purpose as the
Trust Managers shall determine to be beneficial to the interest of the Trust.
The Trust Managers may modify or abolish any such reserve in the manner in
which it was created.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 GENERAL POLICIES. The Trust intends to make
investments that are consistent with the applicable requirements of the
Internal Revenue Code of 1986, as amended, and the Texas REIT Act, as amended,
and related regulations with respect to the composition of the Trust's
investments and the derivation of its income.
SECTION 8.2 LIMITED LIABILITY OF SHAREHOLDERS. A shareholder
shall not be personally or individually liable in any manner whatsoever for any
debt, act, omission or obligation incurred by the Trust or the Trust Managers.
A shareholder shall be under no obligation to the Trust or to its creditors
with respect to such shares other than the obligation to pay to the Trust the
full amount of the consideration for which such shares were issued or to be
issued. Upon the payment of such consideration, such shares shall be fully
paid and non-assessable by the Trust.
SECTION 8.3 WAIVER OF NOTICE. (a) Whenever, under the provisions
of applicable law or of the Declaration of Trust or of these Bylaws, any notice
is required to be given to any shareholder or Trust Manager, a waiver thereof
in writing signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be equivalent to the giving of
such notice.
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(b) Attendance of a Trust Manager at a meeting shall constitute a
waiver of notice of such meeting except where a Trust Manager attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened.
SECTION 8.4 SEAL. If one be adopted, the Trust seal shall have
inscribed thereon the name of the Trust and shall be in such form as may be
approved by the Trust Managers. Said seal shall be kept in the custody of the
Secretary and may be used by causing it or a facsimile of it to be impressed or
affixed or in any manner reproduced.
SECTION 8.5 FISCAL YEAR. The fiscal year of the Trust shall be
fixed by resolution of the Trust Managers.
SECTION 8.6 CHECKS, NOTES, ETC. All checks or demands for money
and notes of the Trust shall be signed by such officer or officers or such
other person or persons as the Trust Managers may from time to time designate.
The Trust Managers may authorize any officer or officers or such other person
or persons to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Trust, and such authority may be general or
confined to specific instances.
SECTION 8.7 EXAMINATION OF BOOKS AND RECORDS. The Trust Managers
shall determine from time to time whether, and if allowed, when and under what
conditions and regulations the accounts and books of the Trust (except such as
may by statute be specifically opened to inspection) or any of them shall be
open to inspection by the shareholders, and the shareholders' rights in this
respect are and shall be restricted and limited accordingly.
SECTION 8.8 VOTING UPON SHARES HELD BY THE TRUST. Unless
otherwise ordered by the Trust Managers, the Chief Executive Officer, or if no
Chief Executive Officer shall be elected, the President, acting on behalf of
the Trust, shall have full power and authority to attend and to act and to vote
at any meeting of shareholders of any corporation or other entity in which the
Trust may hold shares and at any such meeting, shall possess and may exercise
any and all of the rights and powers incident to the ownership of such shares
which, as the owner thereof, the Trust might have possessed and exercised, if
present. The Trust Managers by resolution from time to time may confer like
powers upon any other person or persons.
SECTION 8.9 NUMBER, GENDER, ETC. WHENEVER the singular number is
used in these Bylaws and when required by the context, the same shall include
the plural, and the masculine gender shall include the feminine and neuter
genders. The term "person," as used herein and as the context requires shall
mean and include individuals, corporations, limited partnerships, general
partnerships, joint stock companies or associations, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, or other entities and governments and agencies and political
subdivisions thereof.
SECTION 8.10 ANNUAL AND QUARTERLY REPORTS. The Trust shall
furnish to its shareholders annual reports containing audited financial
statements with a report thereon by its independent accountants. The Trust
shall also furnish to its shareholders quarterly reports for each of the first
three quarters of each fiscal year containing unaudited financial information.
SECTION 8.11 INDEPENDENT COMMITTEE. If the Trust receives an
offer to purchase all or substantially all of the assets of the Trust, or if
the Trust receives a proposal for a merger transaction in which the Trust will
not be the surviving entity, the Trust Managers shall create a committee
consisting entirely of Independent Trust Managers (as defined in the
Declaration of Trust) who shall, consistent with their fiduciary
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duties, review any such offer and make a recommendation to all of the Trust
Managers.
ARTICLE IX
AMENDMENTS
SECTION 9.1 AMENDMENT OF BYLAWS. Except as otherwise provided by
applicable law or the Declaration of Trust, the power to alter, amend or repeal
these Bylaws or to adopt new Bylaws shall be vested in the Trust Managers and
(to the extent not inconsistent with the Texas REIT Act and the Declaration of
Trust and specified in the notice of the meeting) the shareholders. Such
action to amend the Bylaws shall be taken (i) with respect to all Bylaw
provisions, by the affirmative vote of a majority of the Trust Managers , or
(ii)(a) with respect to Section 2.5, Section 3.3, Section 3.4, Section 3.6,
Section 3.7 or Article X of these Bylaws, by the affirmative vote of the
holders of two-thirds (2/3) of the Trust's outstanding shares, or (b) with
respect to all other Bylaws, by the affirmative vote of the holders of a
majority of the Trust's outstanding shares.
ARTICLE X
SUBJECT TO ALL LAWS
The provisions of these Bylaws shall be subject to all valid and
applicable laws, including, without limitation, the Texas REIT Act as now or
hereafter amended, and in the event that any of the provisions of these Bylaws
are found to be inconsistent with or contrary to any such valid laws, the
latter shall be deemed to control and these Bylaws shall be deemed modified
accordingly, and, as so modified, shall continue in full force and effect.
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EXHIBIT 10.1
COMMON SHARE PURCHASE AGREEMENT
dated as of January 29, 1998
Between
AMERICAN INDUSTRIAL PROPERTIES REIT
and
PRAEDIUM II INDUSTRIAL ASSOCIATES LLC
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.2 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
SECTION 2. PURCHASE AND SALE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
2.1 Purchase and Sale of the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
2.2 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
2.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
3.1 Organization and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
3.2 Capital Stock; Title to Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
3.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
3.4 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
3.5 Authorization; No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
3.6 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
3.7 Compliance with Law and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
3.8 Dividends and Other Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
3.9 Certain Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
3.10 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.12 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
3.13 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
3.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
3.15 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
3.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
3.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
3.18 Trust Records; Accounting Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
3.19 New York Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
3.20 Disclosure of Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
3.21 Pension-Held REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
3.22 Real Estate Operating Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
4.1 Organization and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
4.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.4 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.5 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.6 Investment Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.7 Legends; Stop-Transfer Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.8 Status for REIT Ownership and Income Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
</TABLE>
-i-
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<TABLE>
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SECTION 5. CONTINUING COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
5.1 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
5.2 Board Observation Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
5.3 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
5.4 Status for REIT Ownership and Income Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
5.5 Prohibited Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
5.6 Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
5.7 REIT Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
5.8 Furnish Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
5.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
5.10 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
5.11 Listing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
5.12 Additional Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 6. SURVIVAL AND DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
6.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
6.2 Deliveries of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
6.3 Deliveries of Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 7. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
7.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
7.2 Obligations of Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
7.3 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
7.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
7.5 Notice by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
SECTION 8. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
8.1 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
8.2 Schedules; Exhibits; Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
8.3 Best Efforts; Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
8.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
8.5 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
8.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
8.8 Publicity and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
8.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
8.10 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
8.11 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
8.12 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
8.13 Remedies; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
8.14 Representation By Counsel; Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
8.15 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
8.16 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
</TABLE>
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<PAGE> 4
EXHIBITS
EXHIBIT A Registration Rights Agreement
EXHIBIT B Confidentiality Agreement
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<PAGE> 5
SCHEDULES
SCHEDULE 3.1 Jurisdictions; Officers and Trust Managers
SCHEDULE 3.2 Capital Stock; Title to Shares
SCHEDULE 3.3 Additional Liabilities or Contingencies
SCHEDULE 3.5 Permits and Approvals
SCHEDULE 3.6 Litigation
SCHEDULE 3.7 Compliance with Law and Permits
SCHEDULE 3.8 Dividends and Other Distributions
SCHEDULE 3.9 Certain Interests
SCHEDULE 3.11 Seller Benefit Plans
SCHEDULE 3.13 Properties and Encumbrances
SCHEDULE 3.14 Taxes
SCHEDULE 3.15 Material Contracts
SCHEDULE 3.16 Insurance
SCHEDULE 3.17 Environmental Compliance
SCHEDULE 3.18 Trust Records
SCHEDULE 5.3 Conduct of Business
SCHEDULE 8.5 List of Opinions of Seller's Counsel
SCHEDULE 9.4 List of Opinions of Investor's Counsel
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<PAGE> 6
COMMON SHARE PURCHASE AGREEMENT
THIS COMMON SHARE PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of January 29, 1998, by and between AMERICAN INDUSTRIAL
PROPERTIES REIT, a Texas real estate investment trust ("SELLER"), and Praedium
II Industrial Associates LLC, a Delaware limited liability company (the
"INVESTOR").
R E C I T A L S
A. Seller qualifies and operates as a real estate investment
trust for federal income tax purposes.
B. Seller desires to sell to Investor, and Investor desires to
purchase from Seller 733,945 Common Shares for a purchase price of
$10,000,000.62 upon the terms and subject to the conditions set forth in this
Agreement.
C. The proceeds from the sale of the Shares to Investor are to be
used for the purposes set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION
1.1 DEFINITIONS. The capitalized terms used in this Agreement, the
Exhibits and the Schedules attached hereto shall have the meanings set forth
below:
"ACTION" means any action, complaint, investigation, suit or
other proceeding, whether civil or criminal, in law or in equity, or before any
mediator, arbitrator or Governmental Entity.
"ABKB" means ABKB/LaSalle Securities Limited Partnership, a
registered investment advisor.
"ABKB AGREEMENTS" means, collectively, the two Common Share
Purchase Agreements dated as of July 3, 1997 between Seller and ABKB (as agent
for and for the benefit of particular clients) and the Common Share Purchase
Agreement dated as of July 3, 1997 between Seller and LaSalle Advisors (as
agent for and for the benefit of a particular client).
"AFFILIATE" means a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, a specified Person.
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<PAGE> 7
"ANCILLARY AGREEMENTS" means collectively, all documents
related to the consummation of the transactions contemplated hereby and
thereby, including the Registration Rights Agreement and the Confidentiality
Agreement.
"APPROVAL" means any approval, authorization, consent,
qualification or registration, or any waiver of the foregoing, or any notice,
statement or other communication required to be filed with or delivered to any
Governmental Entity or any other Person.
"ASSOCIATE" of a Person means
(i) a corporation, partnership or organization (other than
Seller or Investor) of which such Person is an officer or partner or is,
directly or indirectly, the beneficial owner ), if the Associate is a
corporation, of 10% or more of any class of equity securities (by vote or
value, whichever is more restrictive) of such Associate, and if the Associate
is a partnership or organization, of 10% or more in the assets or net profits
of the Associate, in both cases pursuant to Section 856(d)(2)(B) of the Code;
(ii) any trust or estate in which such Person has a beneficial
interest of 10% or more in the assets or net profits of such trust or estate
pursuant to Section 856 (d)(2)(C) of the Code; and
(iii) any relative or spouse of such Person who has the same
residence as such Person.
"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.3(a) of this Agreement.
"AUDITORS" means Ernst & Young, LLP, independent public accountants to Seller.
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy," as now and hereafter in effect, and any successor
statute, as well as any existing or future law of any jurisdiction, foreign or
domestic, relating to bankruptcy, insolvency, reorganization, conservatorship
or relief of debtors.
"BUSINESS DAY" means a day other than a Saturday, a Sunday or
a day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"CAPITALIZED LEASE" means any lease of property, real or
personal, the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the lessee.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the
obligation of such Person to pay rent or other amounts under a Capitalized
Lease and, for purposes of this Agreement, the amount of such obligation shall
be the capitalized amount thereof, determined in accordance with GAAP.
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<PAGE> 8
"CAPITAL STOCK" means any capital stock, beneficial interest
or other equity interest, or any securities convertible into or exchangeable or
exercisable for capital stock, beneficial interests or other equity interests,
or any other rights, warrants or options to acquire any of the foregoing
securities.
"CHARTER DOCUMENTS" means Seller's Third Amended and Restated
Declaration of Trust and Fourth Amended and Restated Bylaws as in effect as of
the date of this Agreement.
"CLOSING" has the meaning set forth in Section 2.3(a) of this
Agreement.
"CLOSING AGREEMENT" shall mean a written and legally binding
agreement with a taxing authority relating to Taxes.
"CLOSING DATE" means the date specified in Section 2.3(a) of
this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended,
and, as applicable, the regulations promulgated thereunder.
"COMMISSION" means the United States Securities and Exchange
Commission or any successor entity.
"COMMON SHARES" means common shares of beneficial interest,
par value $0.10 per share, of Seller.
"CONTRACT" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license, arrangement or
understanding, whether or not in writing.
"DEBT" means, with respect to any Person, without duplication,
and without regard to whether it is contingent or direct, (a) all indebtedness
of such Person for borrowed money, (b) any obligation incurred for all or any
part of the purchase price of property or services, other than accounts
payable and accrued expenses included in current liabilities in accordance with
GAAP and incurred in respect of property or services purchased in the ordinary
course of business, (c) indebtedness or obligations evidenced by bonds, notes
or similar written instruments, (d) all reimbursement obligations of such
Person (whether contingent or otherwise) in respect of letters of credit,
banker's acceptances, surety or other bonds and similar instruments, (e) any
obligation (whether or not such Person has assumed or becomes liable for the
payment of such obligation) secured by a lien on any property of such Person,
(f) all Capitalized Lease Obligations of such Person and (g) all Guarantees by
such Person of obligations of any other Person of the types referred to in the
foregoing clauses (a) through (f), inclusive, excluding, (i) the payment of
commissions to Prudential Securities Incorporated in connection with the
transactions contemplated herein and (ii) a secured line of credit with
Prudential Securities Credit Corporation.
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<PAGE> 9
"ENCUMBRANCE" means any claim, charge, easement, encumbrance,
lease, covenant, security interest, lien, option, pledge, warrant, rights of
others, preferential right, right of first refusal or restriction (whether on
voting, sale, transfer, disposition or otherwise), whether imposed by
agreement, understanding, law, equity or otherwise, except that "Encumbrance"
does not include any such item that (i) is reflected in the Audited Financial
Statements or (ii) constitutes a statutory lien arising in the ordinary course
of business.
"ENVIRONMENTAL CLAIMS" means any of the following to the
extent they relate to, or arise out of, directly or indirectly, Environmental
Noncompliance with respect to the Properties or actual or alleged Environmental
Conditions or any Notification which may lead to: (i) claims, demands, suits,
causes of action for personal injury, death or property damage; (ii) claims for
actual or threatened damages to natural resources; (iii) claims for the
recovery of response costs, or administrative or judicial orders directing the
performance of investigations, response or remedial actions under any
Environmental Law; (iv) a requirement to implement "corrective action" pursuant
to any restitution, contribution or equitable indemnity to third parties or any
Governmental Entity; (v) fines, penalties, liens against the Properties; (vi)
claims for injunctive relief or other orders or notices of violation from any
Governmental Entity; or (vii) with regard to any present or former employees,
tenants or guests, exposure to or injury from Environmental Conditions.
"ENVIRONMENTAL CONDITIONS" means conditions of the
environment, including the ocean, natural resources (including flora and
fauna), soil, surface water, ground water, any actual or potential drinking or
water supply, subsurface strata, or air, including ambient air, relating to or
arising out of the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal, dumping or threatened
release of Hazardous Materials from, in, on, or onto the Properties.
"ENVIRONMENTAL NONCOMPLIANCE" means any of the following to
the extent they are applicable to the Properties or alleged to be applicable to
the Properties or to Seller, Subsidiaries or a Seller Partnership: (i) the
Release of any Hazardous Material into the environment, any storm drain, sewer,
septic system or publicly-owned treatment works, in violation of any effluent
or emission limitations, standards or other criteria or guidelines established
by any Environmental Law; (ii) any noncompliance of physical structure,
equipment, process or premises with the requirements of building or fire codes,
zoning or land use regulations or ordinances or conditional use permits; (iii)
any noncompliance with federal, state or local requirements governing
occupational safety and health; (iv) any operations, procedures and designs at
or on the Properties which do not conform to the statutory or regulatory
requirements of any Law (including land use regulations and ordinances)
intended to protect public health, welfare and the environment; (v) the failure
to have obtained permits, licenses, variances or other governmental
authorizations necessary for the legal use or operation of any equipment,
process or any activity at the Properties; or (vi) the operation or use of any
process or equipment in violation of any permit condition, schedule of
compliance, administrative or court order.
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<PAGE> 10
"ENVIRONMENTAL PERMITS" has the meaning set forth in Section
3.17(a) of this Agreement.
"EQUITABLE REMEDIES" has the meaning set forth in Section 3.5
of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles as in
effect from time to time and consistently applied by Seller.
"GOVERNMENTAL ENTITY" means any agency, bureau, commission,
court, department, official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state or local, domestic or
foreign.
"GUARANTEE" means, with respect to any Person, any guarantee
or other contingent liability (other than any endorsement for collection or
deposit in the ordinary course of business and performance bonds, indemnities
and similar obligations not guaranteeing or otherwise insuring payment of any
Debt or other financial obligation), direct or indirect, of such Person with
respect to any Debt or other obligation of another Person (including
obligations under leases), through an agreement or otherwise, including (a) any
other endorsement or discount with recourse or undertaking substantially
equivalent to or having economic effect similar to a guarantee in respect of
any such Debt or other obligations and (b) any agreement (i) to purchase, or to
advance or supply funds for the payment or purchase of, any such obligations,
(ii) to purchase, sell or lease property, products, materials or supplies, or
transportation or services, in respect of enabling such other Person to pay any
such obligation or to assure the owner thereof against loss regardless of the
delivery or nondelivery of the property, products, materials or supplies or
transportation or services or (iii) to make any loan, advance or capital
contribution to or other investment in, or to otherwise provide funds to or
for, such other Person in respect of enabling such Person to satisfy any
obligation (including any liability for a dividend, stock liquidation payment
or expense) or to assure a minimum equity, working capital or other balance
sheet condition in respect of any such obligation. The amount of any Guarantee
shall be equal to the outstanding amount of the obligations of such other
Person directly or indirectly guaranteed.
"HAZARDOUS MATERIALS" means any substance, matter, material,
waste, solid, liquid, gas, or pollutant, the generation, storage, disposal,
handling, recycling, Release (or threatened Release) or treatment of which is
regulated, prohibited, or limited under: (1) the Resource Conservation and
Recovery Act, as amended by the Hazardous and Solid Waste Amendments of 1984,
as now or hereafter amended ("RCRA") (42 U.S.C. Sections 6901 et seq.); (ii)
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act of 1986, as now or
hereafter amended ("CERCLA") (42 U.S.C. Sections 9601 et seq.); (iii) the Clean
Water Act, as now or hereafter amended ("CWA") (33
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<PAGE> 11
U.S.C. Sections 1251 et seq.); (iv) the Toxic Substances Control Act, as now or
hereafter amended ("TSCA") (15 U.S.C. Sections 2601 et seq.); (v) the Clean
Air Act, as now or hereafter amended ("CAA") (42 U.S.C. Sections 7401 et seq.)
(RCRA, CERCLA, CWA, TSCA and CAA are collectively referred to herein as the
"FEDERAL ENVIRONMENTAL LAWS"); (vi) any local, state or foreign law, statute,
regulation, or ordinance analogous to any of the Federal Environmental Laws; or
(vii) any other federal, state, local, or foreign law (including any common
law), statute, regulation, or ordinance regulating, prohibiting, or otherwise
restricting the placement, Release, threatened Release, generation, treatment,
or disposal upon or into any environmental media of any substance, pollutant,
or waste which is now or hereafter classified or considered to be hazardous or
toxic to human health or the environment. All of the laws, statutes,
regulations and ordinances referred to in subsections (vi) and (vii) above,
together with the Federal Environmental Laws, are collectively referred to
herein as "ENVIRONMENTAL LAWS." The term "HAZARDOUS MATERIALS" shall also
include: (a) gasoline, diesel fuel, fuel oil, motor oil, waste oil, and any
other petroleum hydrocarbons, including any additives or other by-products
associated therewith; (b) "friable" asbestos (as the term "friable" is defined
under 40 C.F.R. Section 61.141) and friable asbestos-containing materials in
any form; (c) polychlorinated biphenyls; or (d) any substance the presence of
which on the Properties, (x) requires reporting or remediation under any
Environmental Law, (y) causes or threatens to cause a nuisance on the
Properties or poses or threatens to pose a hazard to the health or safety of
persons on the Properties, or (z) which, if it emanated or migrated from the
Properties, could constitute a trespass, nuisance or health or safety hazard to
persons on adjacent property.
"INDEMNIFIABLE CLAIM" means any Loss for or against which any
Person is entitled to indemnification under this Agreement.
"INDEMNIFIED PERSON" shall mean each Investor Indemnified
Person and each Seller Indemnified Party.
"INDEMNIFYING PARTY" has the meaning set forth in Section
7.3(a) of this Agreement.
"INITIAL REIT YEAR" has the meaning set forth in Section
3.14(c) of this Agreement.
"INVESTMENT COMMITTEE" means the investment committee of the
Seller's Board of Trust Managers.
"INVESTOR" means Praedium II Industrial Associates LLC.
"INVESTOR INDEMNIFIED PERSON" has the meaning set forth in
Section 7.1 of this Agreement.
"LASALLE ADVISORS" means LaSalle Advisors Limited Partnership,
a registered investment advisor.
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<PAGE> 12
"LAW" means any constitutional provision, statute or other
law, rule, regulation or interpretation of any thereof and any Order of any
Governmental Entity (including, without limitation, Environmental Laws and the
Americans with Disabilities Act).
"LOSS" means any claim, amount paid in settlement, cost,
damage (including, without limitation, consequential damage), disbursement,
expense (including legal fees and expenses), liability, loss, deficiency,
diminution in value or obligation.
"MATERIAL ADVERSE EFFECT" has the meaning set forth in Section
3.3(c)(i) of this Agreement.
"MATERIAL CONTRACT" means any Contract to which Seller, any
Subsidiary or any Seller Partnership is a party or by which any such Person or
any of their respective Properties are bound that currently is in effect and
(a) after December 31, 1997 obligates Seller, any Subsidiary or any Seller
Partnership to pay an amount equal to $100,000 or more, individually or in the
aggregate over any 12 month period, (b) is one of the group of Tenant Leases
that produced 66 2/3% of Seller's gross income during the fiscal year ended
December 31, 1997, such group of Tenant Leases calculated beginning with the
Tenant Lease that produced the most gross income during such period and
thereafter in descending order of magnitude of gross income earned during such
period under each other Tenant Lease until such percentage of gross income is
reached, (c) is a Tenant Lease involving the lease of space in excess of 10,000
square feet for any Property, (d) other than any Tenant Lease, has an unexpired
term as of December 31, 1997 in excess of five (5) years, (e) other than any
Tenant Lease, contains a covenant not to compete, a covenant of
non-solicitation, a covenant protecting confidential or proprietary information
or otherwise significantly restricts business activities of Seller, any
Subsidiary or any Seller Partnership, (f) provides for the extension of credit
by Seller, any Subsidiary or any Seller Partnership or a line of credit to
Seller, any Subsidiary or any Seller Partnership in excess of $50,000, (g)
provides for a guaranty or indemnity by Seller, any Subsidiary or any Seller
Partnership, (h) grants a power of attorney, agency or similar authority to
another Person, (i) contains an option to purchase or a right of first refusal
relating to any of the Properties, (j) relates to the sale or issuance of any
equity securities of Seller or securities exercisable for or convertible into
any equity securities of Seller, or (k) any other Contract that is not within
the general descriptions of clauses (a) through (j) (i.e., is not a Tenant
Lease or within any of the other general categories listed above) but is, or is
reasonably likely to be, material to the business, financial condition, assets,
results of operations or prospects of Seller, Subsidiaries or Seller
Partnerships.
"MSAM" means Morgan Stanley Asset Management Inc., a Delaware
corporation.
"MSAM AGREEMENT" means the Common Share Purchase Agreement
dated as of June 20, 1997, by and among Seller, MSRE and MSAM (as agent and
attorney-in-fact on behalf of certain clients).
"MSRE" means MS Real Estate Special Situations Inc., a
Delaware corporation.
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<PAGE> 13
"NOTIFICATION" means any summons, citation, directive, order,
claim, litigation, pleading, investigation, proceeding, judgment, letter or any
other written or oral communication from any Governmental Entity, any entity or
any individual, concerning any intentional or unintentional act or omission
which has resulted in or which may result in any Environmental Noncompliance or
Environmental Claim.
"NYSE" means the New York Stock Exchange.
"OBSERVATION RIGHTS" has the meaning set forth in Section
5.2(a) of this Agreement.
"ORDER" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"PERMIT" means any license, permit, franchise, certificate of
authority or order, or any waiver of the foregoing, required to be issued by
any Governmental Entity.
"PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, an unincorporated organization,
government or any department or agency thereof, estate, trust, association, or
private foundation within the meaning of Section 509(a) of the Code, or joint
stock company.
"PREFERRED SHARES" means preferred shares of beneficial
interest, par value $0.10 per share, of Seller.
"PREFERRED STOCK" means any class of capital stock of a Person
which is entitled to a preference or priority over any other class of capital
stock of such Person with respect to any distribution of such Person's assets,
whether with respect to dividends, or upon liquidation or dissolution, or both.
"PROPERTIES" means the real property owned or leased by
Seller, Subsidiaries and Seller Partnerships listed on Schedule 3.13 hereto.
"PURCHASE PRICE" means, with respect to the Closing Date, the
aggregate price paid for the Common Shares purchased by Investor on the Closing
Date.
"REALCO" means USAA Real Estate Company, a Delaware
corporation.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement between Seller and Investor to be executed contemporaneously with the
execution of this Agreement.
"REIT" has the meaning set forth in Section 3.14(b) of this
Agreement.
"RELEASE" means releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, ejecting, escaping, leaching,
disposing, seeping, infiltrating, draining or dumping of any
-8-
<PAGE> 14
Hazardous Material. This term shall be interpreted to include both the present
and past tense, as appropriate.
"SCHEDULE" means any schedule attached to this Agreement.
"SEC FILINGS" has the meaning set forth in Section 3.4 of this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" means American Industrial Properties REIT, a Texas
real estate investment trust.
"SELLER BENEFIT PLANS" has the meaning set forth in Section
3.11 of this Agreement.
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in
Section 7.2 of this Agreement.
"SELLER PARTNERSHIPS" has the meaning set forth in Section 3.1
of this Agreement.
"SELLER PERMITS" has the meaning set forth in Section 3.7(b)
of this Agreement.
"SHARE PRICE" has the meaning set forth in Section 2.1 of this
Agreement.
"SHARES" has the meaning set forth in Section 2.1 of this
Agreement.
"SUBSIDIARIES" has the meaning set forth in Section 3.1 of
this Agreement.
"TAXES" has the meaning set forth in Section 3.14(a) of this
Agreement.
"TAX RETURN" has the meaning set forth in Section 3.14(b) of
this Agreement.
"TENANT LEASES" has the meaning set forth in Section 3.13(b)
of this Agreement.
"TRUST MANAGERS" means the Trust Managers of Seller.
"UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.3(b) of this Agreement.
1.2 RULES OF CONSTRUCTION. This Agreement shall be construed in
accordance with the following rules of construction:
(a) the terms defined in this Agreement include the plural as well
as the singular;
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<PAGE> 15
(b) all accounting terms not otherwise defined herein have the
meanings given such terms under GAAP;
(c) all references in the Agreement to designated "Sections" and
other subdivisions are to the designated Sections and other subdivisions of the
body of this Agreement;
(d) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms;
(e) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision;
(f) the words "includes" and "including" are not limiting; and
(g) knowledge of any Subsidiary or any Seller Partnership shall be
deemed to be knowledge of Seller.
SECTION 2. PURCHASE AND SALE
2.1 PURCHASE AND SALE OF THE SHARES. Subject to the terms and
conditions set forth herein, Seller shall issue to Investor, and Investor shall
purchase from Seller, an aggregate of 733,945 Shares at a price of $13.625
per Share (the "Share Price").
2.2 USE OF PROCEEDS. The proceeds from the issuance of Shares
hereunder shall be used by Seller to purchase real property as approved by the
Investment Committee or to pay down secured debt.
2.3 CLOSING.
(a) CLOSING DATE. The purchase and sale of the Shares (the
"CLOSING") shall immediately follow the execution of this Agreement (the
"CLOSING DATE"), and the Investor shall purchase the aggregate number of Shares
specified in Section 2.1.
(b) DELIVERY OF CERTIFICATE. At the Closing, Seller shall
deliver to Investor the certificate or certificates evidencing the Shares,
registered in the name of Investor or its nominee. Such certificates shall
bear the legend set forth in Section 4.7 and the legend restricting
acquisitions or transfers of Common Shares that would result in a person owning
in excess of a certain percentage of the Trust's outstanding Common Shares, a
copy of which legend has been previously delivered to Investor and its counsel.
All other actions shall be taken and all other documents shall be delivered
which are necessary to consummate the purchase and sale of the Shares.
(c) PAYMENT OF PURCHASE PRICE. In full consideration of the
Shares, and the covenants and obligations of Seller hereunder and in the
documents related hereto, upon execution of this
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<PAGE> 16
Agreement and the Ancillary Agreements, Investor shall pay and deliver to
Seller, by wire transfer of immediately available funds to an account
designated by Seller, the Purchase Price for the Shares.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to, and agrees with Investor as
follows:
3.1 ORGANIZATION AND RELATED MATTERS. Seller is duly organized
and validly existing under the laws of the State of Texas. Seller has all
necessary power and authority to execute, deliver and perform this Agreement
and the Ancillary Agreements. Schedule 3.1 lists all subsidiaries (the
"SUBSIDIARIES") and all partnerships of Seller (the "SELLER PARTNERSHIPS") and
correctly sets forth Seller's ownership interest therein, the jurisdiction in
which each Subsidiary and each Seller Partnership is organized and each
jurisdiction in which Seller, each Subsidiary and each Seller Partnership is
and is required to be qualified or licensed to do business as a foreign Person.
Each Subsidiary and each Seller Partnership is duly organized, validly existing
and is in good standing under the laws of the jurisdiction of its
incorporation, organization or formation. Seller, Subsidiaries and Seller
Partnerships have all necessary power (whether corporate, partnership or other
power, as applicable) and authority to own their respective properties and
assets and to carry on their respective businesses as now conducted. Seller,
Subsidiaries and Seller Partnerships are duly qualified or licensed to do
business as foreign Persons and are in good standing in all jurisdictions in
which the character or the location of the assets owned or leased by any of
them or the nature of the business conducted by any of them requires licensing
or qualification, except where the failure to be so qualified or licensed is
not and will not be material to their respective businesses, financial
condition, assets, results of operations or prospects. Schedule 3.1 correctly
lists the current Trust Managers, directors, general partners and executive
officers of each of Seller, Subsidiaries and Seller Partnerships. True,
correct and complete copies of the Charter Documents and the charter or
organizational documents of Subsidiaries and Seller Partnerships (including the
declaration of trust, articles or certificate of incorporation, bylaws and
partnership agreements, as applicable) as in effect on the date hereof have
been made available to Investor. Seller is registered and is a reporting
company under the Exchange Act. No Subsidiary or any Seller Partnership is
registered or is a reporting company under the Exchange Act. Except as listed
on Schedule 3.1, Seller does not directly or indirectly own or control any
equity interest in any Person.
3.2 CAPITAL STOCK; TITLE TO SHARES. The authorized Capital
Stock of Seller consists of 500,000,000 Common Shares, of which 9,778,000 are
issued and outstanding, and 50,000,000 Preferred Shares, none of which are
issued or outstanding. Seller owns all of the outstanding Capital Stock of
Subsidiaries free and clear of any Encumbrances, equities and claims except as
specified in Schedule 3.2. Seller owns the equity interest in each Seller
Partnership free and clear of any Encumbrances, equities and claims except as
specified in Schedule 3.2. No Common Shares or Capital Stock of any Subsidiary
are held in treasury. Except as set forth in Schedule 3.2 or as contemplated in
this Agreement, there are no outstanding Contracts or other rights to subscribe
for or purchase, or Contracts or other obligations to issue or grant any rights
to acquire, any Common Shares, any Capital Stock of any Subsidiary or any
Seller Partnership or to restructure or recapitalize Seller, any Subsidiary or
any Seller Partnership. Except as set forth in Schedule 3.2, there are no
outstanding
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Contracts of Seller, any Subsidiary or any Seller Partnership to repurchase,
redeem or otherwise acquire any of their respective Common Shares or Capital
Stock, as applicable. No bonds, debentures, notes or other indebtedness having
general voting rights (or convertible into securities having general voting
rights) of Seller, any Subsidiary or any Seller Partnership are issued or
outstanding. Except with respect to agreements with ABKB, LaSalle Advisors,
MSAM and MSRE, there are no voting trusts or other agreements or understandings
to which Seller, any Subsidiary or any Seller Partnership is a party or is
bound, or to the knowledge of Seller, to which any other Person is a party or
is bound, with respect to the voting of the Common Shares or the Capital Stock
of any Subsidiary or any Seller Partnership. All issued and outstanding Common
Shares and Capital Stock of all Subsidiaries and Seller Partnerships were duly
authorized and validly issued at the time of issuance and are fully paid and
nonassessable. Except as set forth in Schedule 3.2, there are no preemptive
rights in respect of any Common Shares or Capital Stock of any Subsidiary or
any Seller Partnership. Upon the issuance of Shares to Investor, the Shares
will have been duly authorized, validly issued and be outstanding, and fully
paid and nonassessable. Investor shall receive good and marketable title to
the Shares, free and clear of any and all Encumbrances created by Seller,
except for restrictions on the transferability of the Shares set forth in the
Charter Documents or generally imposed on securities under federal and state
securities laws. The Shares will rank equally with all other Common Shares of
Seller with respect to priority in payment of dividends and the distribution of
assets upon any liquidation of Seller, and except for the Preferred Shares,
none of which are issued and outstanding as of the date hereof, there are no
shares of any class of Capital Stock of Seller having any priority in respect
thereof.
3.3 FINANCIAL STATEMENTS.
(a) AUDITED FINANCIAL STATEMENTS. Seller has delivered to
Investor the consolidated balance sheets of Seller (which reflect the financial
position of all Subsidiaries and Seller Partnerships), for the fiscal years
ended December 31, 1994, 1995 and 1996, and the respective related consolidated
statements of operations, cash flows and shareholders' equity for the periods
then ended (collectively, the "AUDITED FINANCIAL STATEMENTS"). The Audited
Financial Statements have been examined by the Auditors whose report thereon is
attached to such financial statements. All Audited Financial Statements have
been prepared in conformity with GAAP applied on a consistent basis (except for
changes, if any, disclosed therein). The Audited Financial Statements present
fairly, in all material respects, the consolidated financial condition and
results of operations of Seller, Subsidiaries and Seller Partnerships as of
their respective dates and periods. Since December 31, 1996, there has been no
change in the significant accounting policies or procedures of Seller, any
Subsidiary or any Seller Partnership. Seller has not received any annual
management letters from the Auditors since March 5, 1997.
(b) UNAUDITED FINANCIAL STATEMENTS. Seller has delivered to
Investor the consolidated balance sheets of Seller (which reflect the financial
position of all Subsidiaries and Seller Partnerships), for the nine-month
period ended September 30, 1997 and the related consolidated statements of
operations, cash flows and shareholders' equity for the period then ended (the
"UNAUDITED FINANCIAL STATEMENTS"). The Unaudited Financial Statements have
been prepared in conformity with GAAP (except for changes, if any, disclosed
therein). The Unaudited Financial
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<PAGE> 18
Statements present fairly, in all material respects, the consolidated financial
condition and results of operations of Seller, Subsidiaries and Seller
Partnerships as of September 30, 1997.
(c) NO MATERIAL ADVERSE CHANGES. Since September 30, 1997,
except as set forth in Schedule 3.3, or specifically disclosed in any SEC
Filings filed since September 30, 1997 and prior to the date of this Agreement
(copies of which have been provided to Investor), Seller, Subsidiaries and
Seller Partnerships have conducted their respective businesses only in the
ordinary course and in a manner consistent with past practice and, whether or
not in the ordinary course of business, there has not been, occurred or arisen:
(i) any change in or event affecting, or reasonably
likely to affect, the business of Seller, Subsidiaries or Seller
Partnerships that has had, or reasonably likely to have a material
adverse effect on such business or any materially adverse change or
trend in the business, financial condition, assets, results of
operations or prospects (a "Material Adverse Effect") of Seller,
Subsidiaries or Seller Partnerships, or
(ii) any casualty, loss, damage or destruction of any
assets, including, without limitation, any real property, of Seller,
any Subsidiary or any Seller Partnership that has involved or may
involve a Loss (whether or not covered by insurance) to Seller, any
Subsidiary or any Seller Partnership of more than $100,000
individually, or $300,000 in the aggregate.
(d) NO OTHER LIABILITIES OR CONTINGENCIES. Neither Seller nor
any Subsidiary nor any Seller Partnership has any material liability of any
nature (including any material liabilities for Taxes), whether accrued,
absolute, contingent or otherwise, and whether due or to become due, probable
of assertion or not, except liabilities that (i) were incurred after September
30, 1997 in the ordinary course of business in a manner consistent with past
practice and are not material in amount, or (ii) are set forth in Schedule 3.3
hereto.
3.4 SEC REPORTS. Seller has filed with the Commission all
forms, reports, statements, including registration statements, and other
material documents, together with any amendments required to be made with
respect thereto, that were required to be filed with the Commission since
December 31, 1994. Such forms, reports, statements, including registration
statements, and other material documents required to be filed with the
Commission by Seller since December 31, 1994 are collectively referred to in
this Agreement as the "SEC FILINGS." Seller has made available to Investor all
SEC Filings. As of their respective dates, (x) each of the SEC Filings,
including the financial statements contained therein, was true and complete in
all material respects, (y) each of the SEC Filings, including the financial
statements contained therein, complied in all material respects with the
Securities Act and Exchange Act, as applicable, and the rules and regulations
promulgated thereunder, and (z) none contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Except with respect to the
management agreements with Realco, all agreements with MSAM, MSRE, Realco, ABKB
and LaSalle Advisors are filed as exhibits to SEC Filings.
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<PAGE> 19
3.5 AUTHORIZATION; NO CONFLICTS. Seller has the requisite power
and authority to enter into this Agreement and the Ancillary Agreements and to
carry out its obligations hereunder and thereunder. The execution, delivery
and performance of this Agreement and the Ancillary Agreements by Seller has
been duly and validly authorized by the Trust Managers and by the shareholders
of the Trust and by all other necessary action on the part of Seller, and no
other proceedings on the part of Seller (including Trust Manager and
shareholder approval) are necessary to authorize this Agreement or the
Ancillary Agreements or to consummate the transactions contemplated hereby or
thereby. This Agreement and the Ancillary Agreements have been duly executed
and delivered by Seller and each document constitutes the legally valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally (collectively, "EQUITABLE
REMEDIES"). Except as set forth in Schedule 3.5, the execution, delivery and
performance of this Agreement and the Ancillary Agreements by Seller and the
consummation by Seller of the transactions contemplated under this Agreement
and the Ancillary Agreements will not (i) conflict with or result in the breach
of any provisions of, or trigger any preferential rights under, the Charter
Documents or the charter or organizational documents of Subsidiaries or Seller
Partnerships, (ii) result in a breach or violation of, a default under, or the
triggering of any payment or other material obligations pursuant to, or
accelerate vesting under, any Seller Benefit Plans or any grant or award
thereunder or any employment or consulting agreement or arrangement of Seller,
any Subsidiary or any Seller Partnership, (iii) violate, conflict with, result
in a breach of any provision of, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, result in
the termination or in a right of termination or cancellation of, accelerate the
performance required by, result in the creation of any Encumbrance upon any
Properties under, result in the triggering of any rights under, or result in
being declared void, voidable or without further binding effect, any of the
terms or provisions of any Material Contract of Seller, any Subsidiary or any
Seller Partnership or (iv) violate any Law. Schedule 3.5 lists all Permits and
Approvals required to be obtained by Seller, Subsidiaries and Seller
Partnerships to consummate the transactions contemplated hereby. Except for
matters identified in Schedule 3.5 as requiring that certain actions be taken
by or with respect to a third party or Governmental Entity, the execution and
delivery of this Agreement and the Ancillary Agreements by Seller and the
consummation of the transactions contemplated hereby and thereby will not
require the consent, authorization or approval or filing or registration with,
or the issuance of any Permit by, any other third party or Governmental Entity
under the terms of any applicable Laws or Material Contracts of Seller,
Subsidiaries or Seller Partnerships.
3.6 LEGAL PROCEEDINGS. Except as set forth in Schedule 3.6,
there is no Order or Action pending, or, to the knowledge of Seller,
threatened, against , affecting, or reasonably likely to affect, Seller, any
Subsidiary, any Seller Partnership, any Trust Manager in his capacity as a
Trust Manager of Seller or any of the Properties which (i) questions the
validity of this Agreement or any of the Ancillary Agreements, or (ii)
individually or when aggregated with one or more other Orders or Actions has,
or if determined adversely will have, or is reasonably likely to have, a
Material Adverse Effect on Seller, any Subsidiary or any Seller Partnership or
on Seller's ability to perform this Agreement or any of the Ancillary
Agreements. To Seller's knowledge, Schedule 3.6 lists each Order and each
Action that (i) involves a claim or potential claim of aggregate liability in
excess of $50,000
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<PAGE> 20
against Seller, any Subsidiary or any Seller Partnership that is not covered by
insurance (ii) involves, or is reasonably likely to involve, a claim or
potential claim of aggregate liability brought by Seller, any Subsidiary or any
Seller Partnership against a tenant under any Tenant Lease which Tenant Lease
obligated such tenant to pay rent to Seller, any Subsidiary or any Seller
Partnership during the year ended December 31, 1997 in an amount equal to or in
excess of $150,000, or (iii) that enjoins, seeks to enjoin, or is reasonably
likely to enjoin or seek to enjoin, any activity by Seller, any Subsidiary or
any Seller Partnership. There is no matter as to which Seller, any Subsidiary
or any Seller Partnership has received any notice, claim or assertion in
connection with which any such Person has or may reasonably be expected to have
any right to be indemnified by Seller, any Subsidiary or any Seller Partnership
nor, to Seller's knowledge, is there any valid basis for such a notice, claim
or assertion.
3.7 COMPLIANCE WITH LAW AND PERMITS.
(a) Seller, Subsidiaries and Seller Partnerships are organized,
have conducted and continue to conduct their respective businesses in
accordance with applicable Laws, neither Seller nor any Subsidiaries or Seller
Partnerships has received any notice of violation of any Laws which remains
uncorrected, and the respective forms, procedures and practices of Seller,
Subsidiaries and Seller Partnerships are in compliance with all such Laws, to
the extent applicable, the violation of which would have a Material Adverse
Effect on Seller, Subsidiaries and Seller Partnerships.
(b) Except as set forth in Schedule 3.7, Seller, Subsidiaries
and Seller Partnerships hold all permits, licenses, variances, exemptions,
authorizations, orders and approvals of all Governmental Entities necessary for
the lawful conduct of their respective businesses (the "SELLER PERMITS") and
Seller, Subsidiaries and Seller Partnerships are in compliance with the terms
of the Seller Permits relating to each such Person, except where the failure to
hold such Seller Permits or be in compliance therewith would not, individually
or in the aggregate, have , or is reasonably likely to have, a Material Adverse
Effect on Seller, Subsidiaries or Seller Partnerships. Seller has made
available to Investor correct and complete copies of all Seller Permits. Except
as set forth in Schedule 3.7, to the knowledge of the Seller, no investigation
or review by any Governmental Entity with respect to the Seller Permits is
pending or threatened.
3.8 DIVIDENDS AND OTHER DISTRIBUTIONS. Except as set forth in
Schedule 3.8, there has been no dividend or other distribution of assets or
securities by Seller or Seller Partnerships (other than Seller Partnerships in
which Seller owns 100% beneficial interest) whether consisting of money,
property or any other thing of value, declared, issued or paid to or for the
benefit of Seller subsequent to December 31, 1996.
3.9 CERTAIN INTERESTS. Except as set forth in Schedule 3.1 and
Schedule 3.9, no Affiliate of Seller, any Subsidiary or any Seller Partnership,
nor any of their respective officers, Trust Managers, directors or partners,
nor any Associate of any such individual, has any material interest in any
property used in or pertaining to the respective businesses of Seller, any
Subsidiary or any Seller Partnership. Except as set forth in Schedule 3.1 and
Schedule 3.9, no such Person is indebted or otherwise obligated to Seller, any
Subsidiary or any Seller Partnership. Except as set forth in Schedule 3.9,
Seller, Subsidiaries and Seller Partnerships are not indebted or otherwise
obligated to
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any such Person, except for amounts due under normal arrangements applicable to
all employees generally as to salary or reimbursement of ordinary business
expenses not unusual in amount or significance. Except as set forth in Schedule
3.1 and Schedule 3.9 and except with respect to the property management
agreements with Realco, there are no material transactions whether currently
existing or existing since January 1, 1994 between Seller, any Subsidiary or
any Seller Partnership and any current Affiliate (including MSAM, MSRE, ABKB
and LaSalle Advisors) of Seller, any Subsidiary or any Seller Partnership or
any Associate of any such Affiliate. Except as set forth in Schedule 3.9, the
consummation of the transactions contemplated by this Agreement will not, and
is not reasonably likely to (either alone, or upon the occurrence of any act or
event, or with the lapse of time, or both), result in any compensation or
severance or other payment or benefit arising or becoming due from Seller, any
Subsidiary or any Seller Partnership or any of its assigns to any Person.
3.10 NO BROKERS OR FINDERS. No agent, broker, finder, or
investment or commercial banker, or other Person or firm engaged by or acting
on behalf of Seller or any of its Affiliates in connection with the
negotiation, execution or performance of this Agreement or the transactions
contemplated by this Agreement, is or will be entitled to any brokerage or
finder's or similar fee or other commission as a result of this Agreement or
the Ancillary Agreements or the transactions contemplated hereby and thereby,
or such transactions except for a fee payable to Prudential Securities
Incorporated.
3.11 EMPLOYEE BENEFIT PLANS. Schedule 3.11 lists all employee
benefit plans within the meaning of Section 3(3) of ERISA and collective
bargaining, labor and employment agreements and any other similar benefit
arrangements to which either Seller, any Subsidiary, or any Seller Partnership
is a party or by which either Seller, any Subsidiary, or any Seller Partnership
is bound (collectively, the "SELLER BENEFIT PLANS"), including (i) any profit-
sharing, deferred compensation, bonus, stock option, stock purchase, pension,
retainer, consulting, retirement, severance, welfare or incentive plan,
agreement or arrangement, (ii) any plan, agreement or arrangement providing for
"fringe benefits" or perquisites to employees, officers, directors, trust
managers or agents, including benefits relating to automobiles, clubs,
vacation, child care, parenting, sabbatical, sick leave, medical, dental,
hospitalization, life insurance and other types of insurance, or (iii) any
employment agreement not terminable on 30 days (or less) written notice . True
and complete copies of the Seller Benefit Plans, current descriptive booklets
and summary plan descriptions of the Seller Benefit Plans, any relevant trust
agreements or insurance policies or contracts and, if applicable, the most
recent annual return on Form 5500 (or equivalent form) have been made available
to Investor. To the extent applicable, the Seller Benefit Plans comply with
their terms and in all material respects with the requirements of ERISA , the
Code and other applicable federal and state laws. Except as set forth in
Schedule 3.11, no Seller Benefit Plan is or is intended to be a stock bonus,
pension or profit-sharing plan within the meaning of Section 401(a) of the
Code. Neither any Seller Benefit Plan nor Seller, any Subsidiary, or any Seller
Partnership or any employer of the foregoing has incurred any liability or
penalty under Section 4975 of the Code or Section 502(i) of ERISA. Each Seller
Benefit Plan has been maintained and administered in all material respects in
compliance with its terms and with ERISA and the Code to the extent applicable
thereto. Except as set forth in Schedule 3.11, there are no pending, or to the
knowledge of Seller threatened, claims (other than pursuant to the terms of any
such plan) against or otherwise involving any of the Seller Benefit Plans and
no Action has been brought or threatened
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<PAGE> 22
against or with respect to any Seller Benefit Plan, and neither Seller nor any
Subsidiary nor any Seller Partnership has incurred any liability to any party
with respect to any Seller Benefit Plan. All contributions required to be made
to the Seller Benefit Plans have been made or provided for. Except as set forth
in Schedule 3.11, neither Seller nor any Subsidiary nor any Seller Partnership
maintains or contributes to any plan or arrangement which provides or has any
liability to provide life insurance or medical or other employee welfare
benefits to any employee or former employee upon his retirement or termination
of employment and neither Seller nor any Subsidiary nor any Seller Partnership
has represented, promised or contracted (whether in oral or written form) to
any employee or former employee that such benefits would be provided. Except as
set forth in Schedule 3.11, the execution of, and performance of the
transactions contemplated by, this Agreement and the Ancillary Agreements will
not (either alone or upon the occurrence of any additional or subsequent event)
constitute an event under any Seller Benefit Plan or other policy, arrangement
or any trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits with
respect to any employee. No Seller Benefit Plan is subject to Title IV of ERISA
and neither Seller nor any Subsidiary nor any Seller Partnership has, within
six years prior to the date of this Agreement, contributed to or had any
obligation to contribute to any employee benefit plan subject to Title IV of
ERISA. For purposes of this Section 3.11, (i) the term "Seller" includes any
entity required to be aggregated with the Seller pursuant to Code Section
414(b), (c), (m) or (o) and (ii) provisions of ERISA or the Code include
regulations prescribed under such provisions.
3.12 LABOR MATTERS. Neither Seller nor any Subsidiary nor any
Seller Partnership is a party to or bound by any collective bargaining or other
labor union contracts. There is no pending or, to the knowledge of Seller,
threatened, labor dispute, strike or work stoppage against Seller, any
Subsidiary, or any Seller Partnership. Neither Seller nor any Subsidiary nor
any Seller Partnership, nor their respective representatives or employees, has
committed any unfair labor practices in connection with the operation of the
respective businesses of Seller, each Subsidiary, and each Seller Partnership,
and there is no pending or, to the knowledge of Seller, threatened charge or
complaint against Seller, any Subsidiary, or any Seller Partnership by the
National Labor Relations Board or any comparable state agency. Seller,
Subsidiaries, and Seller Partnerships are in compliance with all applicable
Laws respecting employment, consulting, employment practices, wages, hours, and
terms and conditions of employment.
3.13 PROPERTIES.
(a) Schedule 3.13 contains a complete and correct list of all
real property owned or leased by Seller, each Subsidiary and each Seller
Partnership (collectively, the "PROPERTIES") as of the date hereof. Except as
set forth in Schedule 3.13, Seller, Subsidiary or Seller Partnership, as
applicable, owns good and indefeasible title to each Property, including the
land and all improvements, all personalty and the Tenant Leases (as hereinafter
defined). Except as set forth in Schedule 3.13, the Properties are free and
clear of all Encumbrances of any nature, except for (i) liens for real property
taxes or similar assessments not yet due and payable, (ii) easements for
utilities servicing the Properties and (iii) such Encumbrances as do not
materially detract from or interfere with the present
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<PAGE> 23
use of the Properties subject thereto or affected thereby, or otherwise
materially impair the use or value of such Properties.
(b) Seller has made available to Investor a true, correct and
complete copy of a rent roll with respect to each Property as of the date
hereof setting forth, among other matters, the term (commencement or renewal
date and expiration date) of each lease with respect to the Properties
(collectively, the "TENANT LEASES"), the square feet for each of the Tenant
Leases, the monthly base rental rates for each of the Tenant Leases and the
security deposits for each of the Tenant Leases. Other than the Tenant Leases,
no party has been granted any license, lease or other material right relating
to the use or possession of the Properties which is material to the use or
value of the Properties. Except as set forth in Schedule 3.13, all of the
Tenant Leases are valid and subsisting and in full force and effect with
respect to Seller, Subsidiaries and Seller Partnerships and, to Seller's
knowledge, with respect to any other party thereto, and no tenant of the
Properties is more than 30 days delinquent on its rental as of January 31,
1998, except as set forth in Schedule 3.13. To Seller's knowledge, no tenant
of the Properties has initiated or threatened bankruptcy since January 1, 1997.
No tenant of the Properties is an Affiliate or Associate of Seller, any
Subsidiary or any Seller Partnership. Except as set forth in Schedule 3.13,
there are no contracts or other material obligations outstanding for the sale,
exchange or transfer of the Properties or any portion thereof. There are no
attachments, executions, assignments for the benefit of creditors,
receiverships, conservatorship or voluntary or involuntary proceedings in
bankruptcy or pursuant to any other debtor relief laws filed by, or pending
against, Seller, Subsidiaries, Seller Partnerships or the Properties. Except
as set forth in Schedule 3.13, since January 1, 1997, no tenants have
terminated their leases prior to expiration and, to Seller's knowledge, have no
intent to do so.
(c) Except as set forth in Schedule 3.13, there is no pending or
threatened condemnation or similar proceeding affecting the land, the
improvements or the personalty situated at the Properties or any portion
thereof, and none of Seller, any Subsidiary or any Seller Partnership has
received any oral or written notice or has any knowledge that any such
proceeding is contemplated nor to Seller's knowledge, is there any valid basis
for such a proceeding.
(d) The continued ownership, operation, use and occupancy of the
land or the improvements thereon do not violate any zoning, building,
administrative or other law, ordinance, order or regulation or any restrictive
covenant applicable to the Properties, the violation of which would have a
Material Adverse Effect on Seller, Subsidiaries or Seller Partnerships, as
applicable, and no oral or written notice of any such violation has been
received by Seller, any Subsidiary or any Seller Partnership from any
Governmental Entity, nor to Seller's knowledge, is there any valid basis for
such a notice to be given.
(e) Seller, Subsidiaries or Seller Partnerships, as applicable,
currently has in place title, liability, casualty and other insurance coverage
with respect to the Properties in such amounts as are reasonable and customary
for properties similar to the Properties. Each of such policies is in full
force and effect, and all premiums due and payable thereunder have been, and on
the Closing Date will be, fully paid when due. No notice of cancellation has
been received, or to the knowledge of Seller, threatened, with respect thereto.
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<PAGE> 24
(f) Except as set forth in Schedule 3.13, there is no Action
pending, or to the knowledge of Seller, contemplated or threatened, by any
Governmental Entity or third party to levy any special assessments against the
Properties that, if successful, would have a Material Adverse Effect on Seller,
any Subsidiary or any Seller Partnership, nor to Seller's knowledge, is there
any valid basis for such an Action.
(g) To Seller's knowledge, each unsatisfied brokerage obligation
that is in excess of $25,000 with respect to the Properties is set forth on
Schedule 3.13.
(h) To Seller's knowledge and except as set forth on Schedule
3.13, no capital expenditures are contemplated by Seller to be incurred, or
reasonably likely to be incurred, by Seller, any Subsidiary or any Seller
Partnership within twelve months after the date of this Agreement in excess of
$50,000 per Property with respect to any Property.
(i) Except as set forth in Schedule 3.13, all property
management contracts with respect to the Properties are terminable by Seller on
30 days notice.
(j) To Seller's knowledge, except for customary easements for
access to building systems or utilities and except as set forth in Schedule
3.13, each Property is an independent unit which does not now rely on any
facilities (other than facilities of municipalities or public utilities)
located on any property that is not part of the Property for the furnishing to
the Property of any essential building systems or utilities (including drainage
facilities, catch basins and retention ponds) that if the owner of the Property
could not avail the use of which, would materially detract from the value of
the Property or materially interfere with the use of the Property.
3.14 TAX MATTERS.
(a) For purposes of this Agreement, "TAXES" means any federal
(including, without limitation, tax on its undistributed taxable income,
alternative minimum tax, tax on certain sale proceeds or other nonqualifying
income from foreclosure property or on income from prohibited transactions, and
any taxes imposed upon Seller, Subsidiaries or Seller Partnerships under
Section 857, 860(c), 857(b)(6) or Section 4981 of the Code), state, county,
local or foreign taxes, charges, fees, levies, or other assessments, including,
without limitation, all net income, gross income, sales and use, ad valorem,
transfer, gains, profits, excise, franchise, real and personal property, gross
receipt, capital stock, business and occupation, disability, employment,
payroll, license, estimated, or withholding taxes or charges imposed by any
Governmental Entity, and includes any interest and penalties (civil or
criminal) on or additions to any such taxes.
(b) For purposes of this Agreement, "TAX RETURN" means a report,
return or other information required to be filed with or supplied to a
Governmental Entity with respect to Taxes including, without limitation, any
notices or information reports or returns required to be filed by Seller,
Subsidiaries or Seller Partnerships with respect to their respective
operations, income, assets and shareholders or partners in order to maintain
Seller's status as a real estate investment trust ("REIT") under the Code.
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<PAGE> 25
(c) Seller elected to be taxed as a REIT under Sections 856
through 859 of the Code effective for its taxable year ended December 31, 1985
(the "INITIAL REIT YEAR"). Seller, since the Initial REIT Year through the end
of the immediately preceding taxable year, has always qualified as a REIT under
the Code. At all times from and after the Initial REIT Year to the date hereof,
Seller has complied with, and through the Closing Date will comply with, all
applicable Code and regulatory requirements necessary to maintain its
qualification as a REIT under the Code and has otherwise operated, and through
the Closing Date will have otherwise operated, in the manner necessary to
maintain its qualification as a REIT under the Code. Seller has not taken or
omitted to take any action which would reasonably be expected to result in a
challenge to its status as a REIT, and to Seller's knowledge, no such challenge
is pending or threatened. For purposes of this representation, "knowledge"
shall refer to the actual knowledge of Seller or any of Seller's executive
officers.
(d) Except as disclosed in Schedule 3.14, Seller, Subsidiaries
and Seller Partnerships have (i) filed all Tax Returns required to be filed by
applicable Law since December 31, 1990, and all such Tax Returns were in all
material respects (and, as to Tax Returns not filed as of the date hereof but
filed on or before the Closing Date, will be in all material respects) true,
complete and correct and filed on a timely basis and (ii) within the time and
in the manner prescribed by law, paid (and until the Closing Date will pay
within the time and in the manner prescribed by law) all material Taxes that
were or are due and payable.
(e) Except as set forth in Schedule 3.14, Seller, Subsidiaries
and Seller Partnerships have established (and until the Closing Date will
maintain) on their respective books and records reserves adequate to pay all
Taxes of Seller, Subsidiaries and Seller Partnerships not yet due and payable
in accordance with GAAP which are reflected in the Audited Financial Statements
and Unaudited Financial Statements to the extent required by GAAP.
(f) Except as disclosed in Schedule 3.14, as of the date hereof,
there are no, and, as of the Closing Date, there will be no, material Tax liens
upon the assets of Seller, Subsidiaries and Seller Partnerships, except liens
for Taxes not yet due.
(g) Except as disclosed in Schedule 3.14, Seller, Subsidiaries
and Seller Partnerships have complied (and until the Closing Date will comply)
in all material respects with the provisions of the Code relating to the
payment and withholding of Taxes, including the withholding and reporting
requirements under Code Sections 1441 through 1464, 3401 through 3406, and 6041
through 6049, as well as similar provisions under any other laws, and have,
within the time and in the manner prescribed by law, withheld from employee
wages and paid over to the proper governmental authorities all material amounts
required by applicable Law.
(h) Except as disclosed in Schedule 3.14, Seller, Subsidiaries
and Seller Partnerships have not executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with respect
to any Taxes or Tax Returns.
(i) No notice of any material deficiency for any Taxes has been
received by Seller, any Subsidiary or any Seller Partnership that has not been
resolved and paid in full or otherwise settled,
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no audits or other administrative proceedings or court proceedings are
presently pending or, to Seller's knowledge, threatened with regard to any
Taxes or Tax Returns of Seller, Subsidiaries or Seller Partnerships, and no
notice of any material claim has been received by Seller, any Subsidiary or any
Seller Partnership from any authority in a jurisdiction where Seller,
Subsidiaries or Seller Partnerships do not file Tax Returns that Seller, any
Subsidiary or any Seller Partnership is or may be subject to Tax in that
jurisdiction.
(j) Seller, Subsidiaries and Seller Partnerships have not
received a Tax Ruling or entered into a Closing Agreement with the Internal
Revenue Service that would have any continuing effect after the Closing Date.
(k) Seller has made available (or, with respect to all Tax
Returns filed after the date hereof, will make available) to Investor complete
and accurate copies of all Tax Returns, and amendments thereto, filed by
Seller, any Subsidiary or any Seller Partnership for all taxable periods or
years ending on or prior to the Closing Date.
(l) Neither Seller nor any Subsidiary nor any Seller Partnership
is required to include in income any adjustment pursuant to Code Section 481(a)
by reason of a voluntary change in federal income tax accounting method (other
than a change of federal income tax accounting method required as a result of a
change in law) initiated by Seller, and the Internal Revenue Service has not
proposed any such adjustment or change in accounting method.
(m) Seller has made available to Investor all relevant
information with respect to the federal income tax net operating loss
carryovers of Seller as of December 31, 1996, based on the federal income Tax
Returns filed by Seller as of such date.
(n) For all taxable years from and including its Initial REIT
Year through the Closing Date, (i) Seller has maintained permanent records
containing the information required to be maintained by Code Section 857(a)(2)
and Treasury Regulation Sections 1.857-(8)(a), 1.857-8(c) and 1.857-8(e) and
(ii) Seller has demanded the written statements from its shareholders required
by Treasury Regulation Section 1.857-8(d) in accordance with Treasury
Regulation Section 1.857-8(e).
3.15 MATERIAL CONTRACTS. Schedule 3.15 sets forth an accurate
list of all Material Contracts of Seller, Subsidiaries and Seller Partnerships.
Seller has made available to Investor complete and correct copies of all
Material Contracts. All Material Contracts are in full force and effect.
Except as set forth in Schedule 3.15, Seller, Subsidiaries and Seller
Partnerships are not in violation of or default in any material respect (nor is
there any waiver in effect of any event that would constitute a default but for
such waiver) under, and no event has occurred that (with notice or the lapse of
time or both) would constitute a violation of or default under, any Material
Contract. Except as set forth in Schedule 3.15, to the knowledge of Seller, no
other party to any Material Contract is in breach of the terms, provisions and
conditions of such Material Contract and no other party to any Material
Contract has notified Seller, any Subsidiary or any Seller Partnership that it
intends to terminate or modify a Material Contract.
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3.16 INSURANCE. Schedule 3.16 sets forth a complete and correct
list of all insurance policies, except for title insurance policies, currently
in force insuring against risks of Seller, Subsidiaries and Seller
Partnerships. Seller, Subsidiaries and Seller Partnerships are in compliance
with the terms of such policies applicable to them and there are no claims by
Seller, any Subsidiary or any Seller Partnership under any such policy as to
which any insurance company is denying liability or defending under a
reservation of rights clause.
3.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth in the documentation provided to Seller
pursuant to Section 3.17(b) and in Schedule 3.17, there is no material
Environmental Noncompliance with respect to any Property and there are no
material Environmental Claims, nor to Seller's knowledge are there any claims
reasonably likely to result in a material Environmental Claim, with respect to
any Property or the Seller, any Subsidiary or any Seller Partnership or, to the
knowledge of Seller, any tenants under any of the Tenant Leases. All material
permits, consents, licenses, certificates, approvals, registrations, and
authorizations in connection with environmental matters (collectively,
"ENVIRONMENTAL PERMITS") which are required by any Law have been obtained and
are valid. The Properties (and all uses thereof and operations conducted
thereon) comply in all material respects with all Environmental Permits. All
operations on or at the Properties conducted by Seller are and have been
conducted in all material respects in compliance with applicable Environmental
Laws. Except as set forth in the documentation provided to Seller pursuant to
Section 3.17(b) and in Schedule 3.17, Seller has not received any Notification
from any Governmental Entity seeking any information or alleging any violation
of any Law regarding Environmental Conditions, nor to Seller's knowledge is
there any valid basis for such notification. Except as set forth in the
documentation provided to Seller pursuant to Section 3.17(b) and in Schedule
3.17, Seller has not caused or given its oral or written authorization to
cause, and has no knowledge of, any Release of any Hazardous Materials on-site
or off-site of the Properties in violation of any Environmental Law.
(b) Seller has made available to Investor true, correct, and
complete copies of all written reports of any environmental assessment,
compliance or regulatory audit, inspection, or investigation of the Properties
in its possession, and Seller has not received any other written report
containing any evidence of Environmental Noncompliance.
(c) Except as set forth in the documentation provided to Seller
pursuant to Section 3.17(b) and in Schedule 3.17, there is not now, nor has
there been in the past, any "friable" asbestos (as the term "friable" is
defined under 40 C.F.R. Section 61.141) or friable asbestos containing
materials located on, incorporated in, or otherwise contained in the Properties
or any portion thereof, and there are not now, and have not in the past been,
any underground storage tanks located on the Properties or any portion thereof.
(d) Except as set forth in the documentation provided to Seller
pursuant to Section 3.17(b), and in Schedule 3.17, none of the tenants under
any Tenant Lease handle or store any Hazardous Material as a principal or
primary business.
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3.18 TRUST RECORDS; ACCOUNTING RECORDS. The minute books of
Seller accurately reflect in all material respects all actions taken to the
date of this Agreement by the holders of Common Shares, the Trust Managers and
committees of the Trust Managers, except for those matters set forth in
Schedule 3.18 for which minutes of such actions have not yet been prepared or
approved. The share certificate books and records of Seller accurately reflect
the ownership of the Common Shares. Seller maintains accounting records which
fairly reflect, in all material respects, Seller's transactions. All such
books and records of Seller have been made available to Investor for Investor's
review
3.19 NEW YORK STOCK EXCHANGE LISTING. The outstanding Common
Shares are listed on the NYSE. The issuance or sale and delivery of the Shares
to Investor pursuant to this Agreement will not violate any listing
requirements of the NYSE for the listing of Common Shares, including the
Shares.
3.20 DISCLOSURE OF FACTS. There are no facts peculiar to Seller,
Subsidiaries or the Seller Partnerships that Seller has not disclosed to
Investor that materially adversely affect, or may be reasonably likely to
materially adversely affect, the business, financial condition, assets, results
of operations or prospects of Seller, Subsidiaries or Seller Partnerships.
3.21 PENSION-HELD REIT. For purposes of Section 856(h)(3) of the
Code, Seller hereby represents that at any time during the shorter of (i) the
two-year period ending immediately prior to the Closing Date or (ii) the period
during which Seller was in existence, to the best of Seller's knowledge, no
"qualified trust" has held, directly or indirectly, more than 10% (by value) of
the interests in Seller, nor to Seller's knowledge is there any valid reason
for Seller to believe otherwise.
3.22 REAL ESTATE OPERATING COMPANY. Since the time of its
formation, Seller has been a "real estate operating company," as such term is
used in 29 C.F.R. Section 2510.3-101(e).
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Investor represents and warrants to, and agrees with, Seller as
follows:
4.1 ORGANIZATION AND RELATED MATTERS. It is a Delaware limited
liability company duly organized and validly existing under the laws of the
state of its organization. It has all necessary power and authority to carry
on its business as now being conducted. It has all necessary power and
authority to execute, deliver and perform this Agreement, the Ancillary
Agreements and the transactions contemplated hereby and thereby.
4.2 AUTHORIZATION. The execution, delivery and performance of
this Agreement and the Ancillary Agreements have been duly and validly
authorized by it and by all other necessary action on its part and no other
company proceedings on its part are necessary to authorize this Agreement and
the Ancillary Agreements or consummate the transactions contemplated hereby and
thereby. This Agreement and the Ancillary Agreements have been duly executed
and delivered by it and constitute its legally valid and binding obligation,
enforceable against it in accordance with their terms, except
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as such enforceability may be limited by Equitable Remedies. The execution and
delivery of this Agreement and the Ancillary Agreements by it and the
consummation of the transactions contemplated hereby and thereby will not
require filing or registration with, or the issuance of any Permit by, any
other third party or Governmental Entity under the terms of any applicable Law
or its material Contracts, other than any filing required under the Exchange
Act.
4.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by it will not violate the
provisions of, or constitute a breach or default (whether upon lapse of time
and/or the occurrence of any act or event or otherwise) under, (a) its
organizational documents, pursuant to which it was organized and by which it is
governed, (b) any Law to which it is subject or (c) any Contract to which it is
a party that is material to the financial condition, results of operations or
conduct of its business.
4.4 NO BROKERS OR FINDERS. No agent, broker, finder or
investment or commercial banker, or other Person or firms engaged by or acting
on its behalf or on behalf of any of its Affiliates in connection with the
negotiation, execution or performance of this Agreement and the Ancillary
Agreements or the transactions contemplated by this Agreement and the Ancillary
Agreements, is or will be entitled to any broker's or finder's or similar fees
or other commissions as a result of this Agreement, the Ancillary Agreements or
such transactions contemplated hereby and thereby.
4.5 LEGAL PROCEEDINGS. There is no Order or Action pending
against or, to its knowledge, affecting it that individually or when aggregated
with one or more other Actions has, or if determined adversely would have, a
Material Adverse Effect on Investor or on Investor's ability to perform this
Agreement or the Ancillary Agreements.
4.6 INVESTMENT REPRESENTATION. Investor is acquiring the Shares
from Seller for its own account, for investment purposes only and not with a
view to or for sale in connection with the distribution thereof. It agrees to
execute any further certificate or other document representing such investment
intent or as to any other matter reasonably requested by Seller to assure
compliance with applicable securities laws.
4.7 LEGENDS; STOP-TRANSFER ORDERS.
(a) The certificate for Shares will bear a legend in
substantially the following form:
THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY
STATE AND, ACCORDINGLY, MAY BE OFFERED, SOLD, TRANSFERRED OR
PLEDGED ONLY IN A TRANSACTION WHICH IS REGISTERED UNDER SUCH
ACT AND UNDER
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SUCH LAWS OR IS EXEMPTED FROM SUCH REGISTRATION
REQUIREMENTS.
(b) The certificates for Shares may also bear any legend
required by any applicable state blue sky law.
(c) Any certificates for Shares will also bear a legend relating
to restrictions on transfer imposed pursuant to the percentage ownership
limitation contained in the Charter Documents and described in Section 2.3(b).
(d) Seller may impose appropriate stop-transfer instructions
relating to the restrictions set forth herein.
4.8 STATUS FOR REIT OWNERSHIP AND INCOME TESTS. To the best of
Investor's knowledge, the Common Shares that Investor will own on the Closing
Date will not be considered to be owned by any individual (or entity treated as
an individual under Section 856(h) of the Code, other than through the
operation of Section 856(h)(3)(A)(ii)) who after application of the stock
ownership rules of Section 856(h) of the Code would own more than 9.8% of the
lesser of the number or value of any outstanding class of Capital Stock of
Seller, unless, at the time of the Closing, such individual or entity is
already considered to own, under Section 856(h) of the Code, 9.8% or more of
the lesser of the number or value of such class of Capital Stock.
SECTION 5. CONTINUING COVENANTS AND AGREEMENTS
5.1 USE OF PROCEEDS. The proceeds from the sale of the Shares
to Investor, net of any costs (including any accounting, legal and fairness
opinion costs and expenses) associated with the transactions contemplated by
this Agreement, shall be applied by Seller to the purchase of real property as
approved by the Investment Committee or to pay debt in accordance with Section
2.2.
5.2 BOARD OBSERVATION RIGHTS.
(a) Investor shall have full observation rights with respect to
Seller's Board of Trust Managers ("OBSERVATION RIGHTS"), including the right to
obtain full and timely notice of all meetings of the Board of Trust Managers
and of each of its committees, to obtain copies of all written and other
materials disseminated to the Board of Trust Managers and to designate a person
to attend in person or by telephone all meetings of the Board of Trust Managers
or its committees. Contemporaneously with the execution of this Agreement,
Investor and its designee in respect of such Observation Rights shall each
execute a confidentiality agreement in form and substance attached hereto as
Exhibit B.
(b) Investor's Observation Rights shall terminate upon the
earlier of (i) the occurrence of Seller's annual meeting in 1999, or (ii) such
time that Investor owns less than 50% of the Shares acquired pursuant to the
terms of this Agreement.
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5.3 ENVIRONMENTAL MATTERS. Seller will advise Investor promptly
(a) upon obtaining knowledge that a Release has occurred at or upon the
Properties or (b) upon receipt of a Notification pertaining to the Properties.
5.4 STATUS FOR REIT OWNERSHIP AND INCOME TESTS. Following the
Closing Date, and at all subsequent times during which Investor owns any Common
Shares, to the best of Investor's knowledge, the Common Shares that Investor
will own will not be considered to be owned by any individual (or entity
treated as an individual under Section 856(h) of the Code, other than through
the operation of Section 856(h)(3)(A)(ii)) who after application of the stock
ownership rules of Section 856(h) of the Code would own more than 9.8% of the
lesser of the number or value of any outstanding class of Capital Stock of
Seller.
5.5 PROHIBITED TRANSACTIONS. Seller shall not effect any
business transactions, or agree to effect any business transactions, with
Affiliates, Trust Managers or employees of Seller except in the ordinary course
of business and unless the consideration paid by Seller in any such business
transaction is fair value at market rates, or approved by Seller's shareholders
in accordance with applicable state law.
5.6 REGISTRATION RIGHTS AGREEMENT. On the Closing Date,
Investor and Seller shall enter into a Registration Rights Agreement
substantially in the form of Exhibit A.
5.7 REIT QUALIFICATION. Seller shall take all actions necessary
to maintain Seller's qualification as a REIT and, without the written consent
of Investor, shall take no action that would cause Seller not to qualify as a
REIT or fail to take any action that would preserve Seller's qualification as a
REIT. Seller covenants and agrees that (i) it will duly and promptly notify
Investor upon becoming aware that any "qualified trust" holds or is expected to
hold, directly or indirectly, more than 10% of the interests in Seller, and
(ii) it will provide Investor such information or verification as Investor
shall reasonably request in order to verify whether Seller constitutes a
"pension-held REIT" as defined under Section 856(h)(3)(D) of the Code.
5.8 FURNISH DOCUMENTS.
(a) Seller shall furnish or cause to be furnished to
Investor within five Business Days after Seller is required to file the same
with the Commission, copies of the periodic information, documents and other
reports which Seller is required to file with the Commission pursuant to
Section 13(a) of the Exchange Act. If Seller ceases to be required to file
information, documents and other reports pursuant to Section 13 of the Exchange
Act, it shall remain obligated to furnish the same information, documents and
reports otherwise required under Section 13(a) of the Exchange Act to Investor
within five Business Days after Seller would have been required to file the
same with the Commission; and
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(b) Seller shall furnish or cause to be furnished to
Investor, within five Business Days after the effective date thereof, copies of
any amendment or modification to its Charter Documents.
5.9 TAXES. Seller shall, and shall cause each Subsidiary and
Seller Partnership to, pay, when due, all taxes, assessments and governmental
charges or levies imposed upon it and all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and any other like person or
entity which, if unpaid, might result in the creation of a lien upon the income
of Seller or its assets; provided that items of the foregoing description need
not be paid while being contested in good faith and by appropriate proceedings
and adequate reserves with respect thereto have been provided on the books of
Seller, such Subsidiary of such Seller Partnership, as the case may be.
5.10 ADDITIONAL INFORMATION. Seller shall execute and deliver or
cause to be executed and delivered to Investor upon Investor's request such
other and further instruments or documents as in the reasonable judgment of
Investor and Seller are necessary to conform, create, evidence, preserve or
maintain Investor's rights in the Shares, and Seller shall do all such
additional acts, give such assurances and execute such instruments as Investor
may require to vest more completely in and assure to Investor its rights in
the Shares.
5.11 LISTING OF SHARES. Seller shall cause the Shares to be
listed on the NYSE within 10 Business Days from the date of execution of this
Agreement.
5.12 ADDITIONAL RIGHTS. Whether or not Investor has Observation
Rights pursuant to this Agreement, Seller hereby agrees that, for so long as
Investor has an ownership interest in Seller, Investor shall have the following
rights:
(a) the right to receive the same information and
documents as provided to Seller's Trust Managers;
(b) the right to receive income statements, balance
sheets, budgets, business plans and other financial
information, and to inspect the books and records of
Seller, upon reasonable request by Investor and at
reasonable times; and
(c) the right to meet and consult with senior management
with respect to the business of Seller, upon
reasonable request by Investor and at reasonable
times.
The rights described in clauses (a) through (c) above are
intended to satisfy the requirements of management rights for purposes of
qualifying Investor's ownership interest in Seller as a venture capital
investment for purposes of the Department of Labor "plan asset" regulations, 29
C.F.R. Section 2510.3-101, and in the event such rights are not satisfactory
for such purposes, Seller and Investor shall reasonably cooperate in good faith
to agree upon mutually satisfactory management rights which satisfy such
regulations.
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SECTION 6. SURVIVAL AND DELIVERIES
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. (a) The
representations and warranties contained in or made pursuant to this Agreement
shall expire on the second anniversary of the Closing Date except that (i) the
representations and warranties contained in Section 3.2 shall continue forever
(subject to all defenses of Seller available under applicable Law, including
the expiration of the applicable statute of limitations period), (b) the
representations and warranties contained in Section 3.14 shall continue through
the applicable statute of limitations, (c) representations and warranties which
are intentionally misrepresented shall continue through the later of the second
anniversary of the Closing Date and one year following the date of actual
discovery of such intentional misrepresentation, and (d) if a claim or notice
is given under Section 7 with respect to the breach of any representation or
warranty prior to the applicable expiration date, such representation or
warranty shall continue indefinitely until such claim is finally resolved.
(b) All covenants and agreements of the parties hereto shall be
continuing and shall survive the Closing Date pursuant to the terms thereof.
6.2 DELIVERIES OF SELLER. Concurrently with the execution of
this Agreement, Seller shall deliver the following, unless such conditions are
waived in writing by Investor:
(a) OPINION OF SELLER'S COUNSEL. Investor shall receive from
counsel for Seller an opinion, dated as of the date hereof, in form and
substance reasonably satisfactory to Investor.
(b) SCHEDULES. Seller shall have delivered to Investor updated
Schedules, if any, to this Agreement.
(c) CERTAIN CONSENTS. Seller shall have received and delivered
to Investor copies of all necessary consents or waivers from Realco, MSRE,
MSAM, ABKB and LaSalle Advisors in connection with the matters contemplated by
this Agreement and the Ancillary Agreements.
6.3 DELIVERIES OF INVESTOR. Concurrently with the execution of
this Agreement, Investor shall deliver the following unless such condition is
waived in writing by Seller:
(a) OPINION OF INVESTOR'S COUNSEL. Seller shall receive from
counsel for Investor an opinion, dated as of the date hereof, in form and
substance reasonably satisfactory to Seller.
SECTION 7. INDEMNIFICATION
7.1 INDEMNIFICATION. Seller agrees to indemnify and hold
harmless Investor and its Affiliates, directors, officers, agents and employees
(each an "INVESTOR INDEMNIFIED PERSON") from and against any losses, claims,
damages or liabilities (or actions in respect thereof) to which such Investor
Indemnified Person may become subject in connection with the matters which are
the subject of the commitment made hereunder (including any use or proposed use
of the proceeds from the sale
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of the Common Shares) and will reimburse any Investor Indemnified Person for
all reasonable expenses (including the reasonable fees of counsel) as they are
incurred by any such Investor Indemnified Person in connection with
investigating, preparing or defending any such action or claim pending or
threatened, whether or not such Investor Indemnified Person is a party hereto.
Seller shall not be responsible for any losses, claims, damages, liabilities or
expenses resulting from such Investor Indemnified Person's gross negligence or
willful misconduct. Seller also agrees that no Investor Indemnified Person
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to Seller for or in connection with this Agreement except for
losses, claims, damages, liabilities or expenses to the extent that a court of
competent jurisdiction or arbitration panel shall have finally determined that
such losses, claims, damages, liabilities or expenses resulted from such
Investor Indemnified Person's gross negligence or willful misconduct. In the
event that the foregoing indemnity is unavailable or insufficient to hold an
Investor Indemnified Person harmless, Seller shall contribute to amounts paid
or payable by such Investor Indemnified Person in respect of such losses,
claims, damages, liabilities and expenses in such proportion as appropriately
reflects the relative benefits received by, and fault of Seller, on the one
hand, and the Investor, on the other hand, in connection with the matters as to
which such losses, claims, damages, liabilities or expenses relate. The
agreement of Seller in this paragraph shall be in addition to any other
liability that Seller may otherwise have.
7.2 OBLIGATIONS OF INVESTOR. Investor agrees to indemnify,
defend and hold harmless Seller and its Trust Managers, officers, employees,
agents, directors and Affiliates (collectively, the "SELLER INDEMNIFIED
PARTIES") from and against any and all Losses of the Seller Indemnified Parties
as a result of, or based upon or arising out of, directly or indirectly, (a)
any material inaccuracy in, or material breach or material nonperformance of,
any of the representations, warranties, covenants or agreements made by
Investor in this Agreement, or (b) any pending or threatened Action brought by
Investor's shareholders or creditors relating to, or arising out of or in
connection with, directly or indirectly, the transactions contemplated by this
Agreement; provided, however, that Investor shall not be obligated to
indemnify, defend or hold harmless any of the Seller Indemnified Parties for
any claims based solely on actions taken by any of the Seller Indemnified
Parties other than the performance of the covenants and agreements to be
undertaken by Seller pursuant to the terms and conditions of this Agreement and
any other action authorized in writing by Investor. As a condition to the
rights of any of the Seller Indemnified Parties under this Section 7, Investor
may require that any such Person provide a written undertaking that such Person
will repay to Investor any amount expended by Investor to indemnify, defend or
hold harmless such Person in the event and to the extent a court determines
that Investor's indemnification or defense of such Person is prohibited by
applicable Law. The agreement of Investor in this paragraph shall be in
addition to any other liability that Investor may otherwise have.
Notwithstanding anything in this Agreement or any of the Ancillary Agreements
to the contrary, in no event shall Investor be required to indemnify any Seller
Indemnified Party in an aggregate amount in excess of $5,000,000.
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7.3 PROCEDURE.
(a) NOTICE. Any party seeking indemnification with respect to
any Loss shall give notice to the party required to provide indemnity hereunder
(the "INDEMNIFYING PARTY") on or before the date specified in Section 7.4.
(b) DEFENSE OF CLAIM. If any claim, demand or liability is
asserted by any third party against any Indemnified Party, the Indemnifying
Party shall have the right, unless otherwise precluded by applicable law, to
conduct and control the defense, compromise or settlement of any Action or
threatened Action brought against the Indemnified Party in respect of matters
embraced by the indemnity set forth in this Section 7. The Indemnified Party
shall have the right to employ counsel separate from counsel employed by the
Indemnifying Party in connection with any such Action or threatened Action and
to participate in the defense thereof, but the fees and expenses of such
counsel employed by the Indemnified Party shall be at the sole expense of the
Indemnified Party unless (i) the Indemnifying Party shall have elected not, or,
after reasonable written notice of any such Action or threatened Action, shall
have failed, to assume or participate in the defense thereof, (ii) the
employment thereof has been specifically authorized by the Indemnifying Party
in writing, or (iii) the parties to any such Action or threatened Action
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and the Indemnified Party shall have been advised in writing
by counsel for the Indemnified Party that there may be one or more defenses
available to the Indemnified Party that are not available to the Indemnifying
Party or legal conflicts of interest pursuant to applicable rules of
professional conduct between the Indemnifying Party and the Indemnified Party
(in any which case, the Indemnifying Party shall not have the right to assume
the defense of such Action on behalf of the Indemnified Party), in either of
which events referred to in clauses (i), (ii) and (iii) the fees and expenses
of such counsel employed by the Indemnified Party shall be at the expense of
the Indemnifying Party. The Indemnifying Party shall not, without the written
consent of the Indemnified Party, settle or compromise any such Action or
threatened Action or consent to the entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party a release from all liability in respect of
such Action or threatened Action. Unless the Indemnifying Party shall have
elected not, or shall have after reasonable written notice of any such Action
or threatened Action failed, to assume or participate in the defense thereof,
the Indemnified Party may not settle or compromise any Action or threatened
Action without the written consent of the Indemnifying Party. If, after
reasonable written notice of any such Action or threatened Action, the
Indemnifying Party neglects to defend the Indemnified Party, a recovery against
the latter suffered by it in good faith, is conclusive in its favor against the
Indemnifying Party; provided, however, that no such conclusive presumption
shall be made if the Indemnifying Party has not received reasonable written
notice of the Action against the Indemnified Party.
7.4 SURVIVAL. The indemnity set forth in this Section 7 shall
survive the Closing or any termination of this Agreement or any Ancillary
Agreement and shall remain in effect for a period of (a) with respect to a
breach of a representation or warranty, for the period through which such
representation or warranty shall continue pursuant to Section 6.1 (including
such period of time
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through which such representation or warranty shall be extended until
resolution of a claim with respect thereto) and (b) with respect to a breach of
a covenant or agreement or an Action referred to in Sections 7.1 or 7.2, for a
period of two years from the Closing Date.
7.5 NOTICE BY SELLER. Seller and Investor agree to notify in
writing the other party of any liabilities, claims or misrepresentations,
breaches or other matters covered by this Section 7 upon discovery or receipt
of notice thereof (other than from such other party), whether before or after
the Closing Date.
SECTION 8. GENERAL
8.1 AMENDMENTS; WAIVERS. This Agreement and any Schedule or
Exhibit attached hereto or referenced herein may be amended only by agreement
in writing of both parties. No waiver of any provision nor consent to any
exception to the terms of this Agreement shall be effective unless in writing
and signed by the party to be bound and then only to the specific purpose,
extent and instance so provided.
8.2 SCHEDULES; EXHIBITS; INTEGRATION. Each Exhibit and
Schedule delivered pursuant to the terms of this Agreement shall be in writing
and shall constitute a part of the Agreement. This Agreement, together with
such Exhibits and Schedules, constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings of the parties in connection therewith.
8.3 BEST EFFORTS; FURTHER ASSURANCES. Each party will use its
best efforts to cause all conditions to its obligations to be timely satisfied
and to perform and fulfill all obligations on its part to be performed and
fulfilled under this Agreement. The parties shall cooperate with each other in
such actions and in securing requisite Approvals. Each party shall execute and
deliver such further certificates, agreements and other documents and take such
other actions as the other party may reasonably request to consummate or
implement the transactions contemplated hereby or to evidence such events or
matters, including the seeking of any necessary shareholder approvals.
8.4 GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION (WHETHER OF THE
STATE OF TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.
8.5 NO ASSIGNMENT. Except as otherwise specifically provided
herein, neither this Agreement nor any rights or obligations under it are
assignable by any party.
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8.6 HEADINGS. The descriptive headings of the Sections and
subsections of this Agreement are for convenience only and do not constitute a
part of this Agreement.
8.7 COUNTERPARTS. This Agreement and any other agreement or
document delivered pursuant hereto may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.8 PUBLICITY AND REPORTS. Seller and Investor shall
coordinate all publicity relating to the transactions contemplated by this
Agreement and no party shall issue any press release, publicity statement or
other public notice relating to this Agreement, or the transactions
contemplated by this Agreement, without obtaining the prior consent of the
other party, except to the extent that independent legal counsel to Seller or
Investor, as the case may be, shall advise the other party in writing that a
particular action is required by applicable Law (in which event the party
taking such action shall cooperate with the other party in connection with any
disclosure or publicity resulting from such action).
8.9 CONFIDENTIALITY. All information disclosed by any party
(or its representatives) to the other party whether before or after the date
hereof, in connection with the transactions contemplated by, or the discussions
and negotiations preceding, this Agreement to the other party (or its
representatives) shall be kept confidential by such other party and its
representatives and shall not be used by any such Persons other than as
contemplated by this Agreement, except (a) to the extent that such information
(i) was known by the recipient when received, (ii) is or hereafter becomes
lawfully obtainable from other public sources or (iii) is necessary or
appropriate to be disclosed to a Governmental Entity having jurisdiction over
the parties, (b) as may otherwise be required by Law to be disclosed or (c) to
the extent such duty as to confidentiality is waived in writing by the other
party.
8.10 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure to the benefit of each party, and nothing in this Agreement, express
or implied, is intended to confer upon any other Person any rights or remedies
of any nature whatsoever under or by reason of this Agreement. Nothing in this
Agreement is intended to relieve or discharge the obligation of any third
Person to or to confer any right of subrogation or action over or against any
party to this Agreement.
8.11 NOTICES. Any notice or other communication hereunder must
be given in writing and (a) either delivered in person, (b) transmitted by
telex, telefax or telecopy mechanism, (c) mailed by first class mail, return
receipt requested, or (d) delivered by overnight mail or courier service, as
follows:
If to Investor, addressed to:
Praedium II Industrial Associates LLC
Credit Suisse-First Boston Corporation
11 Madison Avenue
New York, New York 10010-3626
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Attention: Christopher Hughes
Telecopy: (212) 325-8258
with a copy to:
Gibson, Dunn & Crutcher, L.L.P.
200 Park Avenue
New York, New York 10166
Attention: Andrew H. Levy
Telecopy: (212) 351-4035
If to Seller, addressed to:
American Industrial Properties REIT
6210 N. Beltline Road, Suite 170
Irving, Texas 75063
Attention: Mr. Charles W. Wolcott
President and Chief Executive Officer
Telecopy: (972) 756-6000
or to such other address or to such other person as any party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in this Section 8.11 and an
appropriate answer back is received, (ii) if given by mail, three days after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when actually
delivered at such address.
8.12 EXPENSES. Each of the parties hereto shall pay its own
respective expenses incident to the negotiation, preparation and performance of
this Agreement and the transactions contemplated hereby, including but not
limited to the fees, expenses and disbursements of its respective financial
advisers, accountants and counsel.
8.13 REMEDIES; WAIVER. All rights and remedies existing under
this Agreement and any related agreements or documents are cumulative to and
not exclusive of any rights or remedies otherwise available under applicable
Law. No failure on the part of any party to exercise or delay in exercising any
right hereunder shall be deemed a waiver thereof, nor shall any single or
partial exercise preclude any further or other exercise of such or any other
right. Each of the parties hereto shall be entitled to seek any equitable
remedy to the extent such remedy is available under applicable Law.
8.14 REPRESENTATION BY COUNSEL; INTERPRETATION. Each of the
parties hereto acknowledges that each party to this Agreement has been
represented by counsel in connection with this Agreement and the transactions
contemplated by this Agreement. Accordingly, any rule of Law or any legal
decision that would require interpretation of any claimed ambiguities in this
Agreement against the party that drafted it has no application and is expressly
waived. The provisions of this
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Agreement shall be interpreted in a reasonable manner to effect the intent of
the parties hereto, and no rule of strict construction shall be applied against
any party to this Agreement.
8.15 SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any current or future law, and if
the rights or obligations of the parties under this Agreement would not be
materially and adversely affected thereby, such provision shall be fully
separable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
and the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance therefrom. In lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement, a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible, and the parties
hereto request the court or any arbitrator to whom disputes relating to this
Agreement are submitted to reform the otherwise illegal, invalid or
unenforceable provision in accordance with this Section 8.15.
8.16 ARBITRATION. In the event of a dispute hereunder which
cannot be resolved by the parties, such dispute shall be settled by arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association and judgment on the award rendered by the arbitration panel may be
entered in any court or tribunal of competent jurisdiction. Any arbitration
occurring under this Section 8.16 shall be held in Dallas, Texas.
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INVESTOR
By: PRAEDIUM II INDUSTRIAL ASSOCIATES LLC,
a Delaware limited liability company
By: THE PRAEDIUM OPPORTUNITY FUND II, L.P.,
its member
By: PRAEDIUM ADVISORS, INC., its managing
general partner
By: /s/ Christopher Hughes
-----------------------------------
Name: Christopher Hughes
------------------------------
Title: Vice President
-----------------------------
By: PRAEDIUM PARTNERS, LLC, its investment
general partner
By: /s/ Christopher Hughes
-----------------------------------
Name: Christopher Hughes
------------------------------
Title: Vice President
-----------------------------
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SELLER
AMERICAN INDUSTRIAL PROPERTIES REIT
/s/ Charles W. Wolcott
-----------------------------------------------
Charles W. Wolcott
President and Chief Executive Officer
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<PAGE> 1
EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made
and entered into as of January 29, 1998, by and among American Industrial
Properties REIT, a Texas real estate investment trust (the "COMPANY"), and
Praedium II Industrial Associates LLC, a Delaware limited liability company
(the "Investor").
WITNESSETH:
WHEREAS, pursuant to certain Common Share Purchase Agreement,
dated as of January 29, 1998, between the Company and the Investor (the
"PURCHASE AGREEMENT"), the Investor agreed to purchase 733,945 Common Shares
(the "SHARES") of the Company; and
WHEREAS, pursuant to the terms of the Purchase Agreement, the
Company and the Investor agreed that the Company would grant certain
registration rights to the Investor with respect to the Shares;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Closing Date: The closing date as defined in the Purchase
Agreement.
Common Shares: The common shares of beneficial interest, $0.10
par value per share, of the Company.
Exchange Act: The Securities Exchange Act of 1934, as amended
from time to time.
Person: An individual, partnership corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
Prospectus: The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
Purchase Agreement: As defined in the Recitals to this
Agreement.
<PAGE> 2
Purchasers: See Section 2(b) hereof.
Registrable Securities: (a) The Shares and (b) any securities
issued or issuable with respect to the Shares by way of share dividend or share
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. Any Registrable Security
will cease to be a Registrable Security when (i) a registration statement
covering such Registrable Security has been declared effective by the SEC and
the Registrable Security has been disposed of pursuant to such effective
registration statement, (ii) the Registrable Security is sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met, or (iii)
the Registrable Security has been otherwise transferred, the Company has
delivered a new certificate or other evidence of ownership for it not bearing a
legend restricting further transfer, and it may be resold without subsequent
registration under the Securities Act.
Registration Expenses: See Section 5 hereof.
Registration Statement: The Registration Statement of the
Company that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus included therein, all
amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated by
reference in such Registration Statement.
SEC: The Securities and Exchange Commission or any successor
entity.
Securities Act: The Securities Act of 1933, as amended from
time to time.
Shares: As defined in the Recitals to this Agreement.
Shelf Registration: See Section 2(a) hereof.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Registration Rights.
(a) Shelf Registration. Upon the written request of the
Investor, the Company will file a "shelf" registration statement on any
appropriate form pursuant to Rule 415 (or similar rule that may be adopted by
the SEC) under the Securities Act (a "SHELF REGISTRATION"), which Shelf
Registration will cover the Registrable Securities that the Company has been so
requested to register by the Investor.
The Company hereby agrees to file such registration statement
as promptly as practicable following the request therefor, and in any event
within 60 days following the date such
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<PAGE> 3
request is received by the Company, and thereafter to use its commercially
reasonable efforts to cause such Shelf Registration to become effective and
thereafter to keep it continuously effective, and to prevent the happening of
any event of the kind described in Section 4(c)(3), (4), (5) or (6) hereof that
requires the Company to give notice pursuant to the last paragraph of Section 4
hereof, for a period terminating on the third year anniversary of the date on
which the SEC declares the Shelf Registration effective, or such shorter period
as shall terminate on the date on which all the Registrable Securities covered
by the Shelf Registration have been sold pursuant to such Shelf Registration.
The Company shall be obligated to file only one Shelf Registration and shall
not be obligated to file a Shelf Registration if three Demand Registrations
(hereinafter defined) have been effected under Section 2(b).
The Company further agrees to promptly supplement or make amendments
to the Shelf Registration, if required by the rules, regulations or
instructions applicable to the registration form utilized by the Company or by
the Securities Act or rules and regulations thereunder for shelf registration
or if requested by the Investor.
If the Investor so elects, the offering of Registrable Securities
pursuant to such registration shall be in the form of an Underwritten Offering.
(b) Demand Registration. At any time during the five
year period following the Closing Date, the Investor may make a written
request (the "DEMAND NOTICE") for registration under the Securities Act (a
"DEMAND REGISTRATION") of its Registrable Securities. The Demand Notice will
specify the number of shares of Registrable Securities proposed to be sold and
will also specify the intended method of disposition thereof. Following
receipt of a Demand Notice from the Investor, the Company promptly will file a
registration statement on any appropriate form which will cover the Registrable
Securities that the Company has been so requested to register by the Investor.
Unless the Investor shall consent in writing, no party (including the
Company) other than USAA Real Estate Company ("Realco"), MS Real Estate
Special Situations Inc. ("MRSE"), certain clients of Morgan Stanley Asset
Management Inc. who have purchased Common Shares of the Company (such clients
together with MRSE, the "Morgan Entities"), LaSalle Advisors Limited
Partnership acting as agent for and on behalf of certain clients ("LaSalle"),
or ABKB/LaSalle Securities Limited Partnership ("ABKB" and together with
LaSalle, the "LaSalle Entities") shall be permitted to offer securities under
any such Demand Registration. The Company shall not be required to effect more
than three Demand Registrations under this Section 2(b). A registration
requested pursuant to this Section 2(b) will not be deemed to have been
effected (and it shall not count as one of the three Demand Registrations)
unless the Registration Statement relating thereto has become effective under
the Securities Act; provided, however that if, after such Registration
Statement has become effective, the offering of the Registrable Securities
pursuant to such registration is interfered with by any stop order, injunction
or other order or requirement of the SEC or any other governmental agency or
court, such registration will be deemed not to have been effected (and it shall
not count as one of the three Demand Registrations). The Investor may at any
time prior to the effective date of the Registration Statement relating to such
registration revoke a
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<PAGE> 4
Demand Notice by providing a written notice to the Company (in which case such
Demand Registration shall not count as one of the three Demand Registrations).
If the Investor so elects, the offering of Registrable Securities
pursuant to such registration shall be in the form of an Underwritten Offering.
If the managing underwriter or underwriters of such offering advise the Company
and the Investor in writing that in their opinion the number of shares of
Registrable Securities and shares of Realco, the Morgan Entities or the LaSalle
Entities, if any, requested to be included in such offering is sufficiently
large to materially and adversely affect the success of such offering, the
Company will include in such registration the aggregate number of Registrable
Securities and shares of Realco, the Morgan Entities or the LaSalle Entities,
if any, requested to be included, which in the opinion of such managing
underwriter or underwriters can be sold without any such material adverse
effect; provided, however, that no Registrable Securities or shares of Realco,
the Morgan Entities or the LaSalle Entities, if any, may be excluded before all
shares proposed to be sold by other parties, including the Company, have been
excluded. If any Registrable Securities are excluded, such registration shall
not count as one of the three Demand Registrations. If the amount of
Registrable Securities proposed to be registered hereunder are required to be
excluded pursuant to this paragraph, the number of Registrable Securities of
the Investor and the number of shares of Realco, the Morgan Entities or the
LaSalle Entities, if any, to be included in such Registration shall be reduced
pro rata (according to the total number of Registrable Securities or shares, as
the case may be, beneficially owned by each such holder), to the extent
necessary to reduce the total amount necessary to be included in the Offering
to the amount recommended by such managing underwriter or underwriters.
No registration pursuant to a request or requests referred to in this
subsection 2(b) shall be deemed to be a Shelf Registration.
(c) Incidental Registration. If at any time during the
five year period following the Closing Date, the Company proposes to file a
registration statement under the Securities Act (other than in connection with
a Registration Statement on Form S-4 or S-8, or any form that is substituting
therefor or is a successor thereto) with respect to an offering of any class of
security by the Company for its own account or for the account of any of its
security holders, then the Company shall give written notice of such proposed
filing to the Investor as soon as practicable (but in no event less than 30
days before the anticipated filing date), and such notice shall (i) offer the
Investor the opportunity to register such number of Registrable Securities as
it may request and (ii) describe such securities and specify the form and
manner and other relevant facts involved in such proposed registration
(including, without limitation, (x) whether or not such registration will be in
connection with an Underwritten Offering and, if so, the identity of the
managing underwriter and whether such Underwritten Offering will be pursuant to
a "best efforts" or "firm commitment" underwriting and (y) the price (net of
any underwriting commissions, discounts and the like) at which the Registrable
Securities are reasonably expected to be sold, if such disclosure is acceptable
to the managing underwriter). The Investor shall advise the Company in writing
within 20 days after the date of receipt of such notice from the Company of the
number of Registrable Securities for which registration is requested. The
Company shall include in such Registration Statement all such
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<PAGE> 5
Registrable Securities so requested to be included therein, and, if such
registration is an Underwritten Registration, the Company shall use its
commercially reasonable efforts to cause the managing underwriter or
underwriters to permit the Registrable Securities requested to be included in
the registration statement for such offering to be included (on the same terms
and conditions as similar securities of the Company included therein to the
extent appropriate); provided, however, that if the managing underwriter or
underwriters of such offering deliver a written opinion to the Investor that
either because of (i) the kind of securities which the Investor, the Company,
or any other Persons intend to include in such offering or (ii) the size of the
offering which the Investor, the Company, or such other Persons intend to make,
the success of the offering would be materially and adversely affected by
inclusion of the Registrable Securities requested to be included, then (A) in
the event that the size of the offering is the basis of such managing
underwriter's opinion, the amount of securities to be offered for the account
of the Investor and other holders registering securities of the Company
pursuant to similar incidental registration rights shall be reduced pro rata
(according to the Registrable Securities beneficially owned by each such
holder) to the extent necessary to reduce the total amount of securities to be
included in such offering to the amount recommended by such managing
underwriter or underwriters; and (B) in the event that the combination of
securities to be offered is the basis of such managing underwriter's opinion,
(x) the Registrable Securities and other securities to be included in such
offering shall be reduced as described in clause (A) above or, (y) if the
actions described in clause (A) would, in the judgment of the managing
underwriter and pursuant to a written opinion delivered to the Investor, be
insufficient to substantially eliminate the adverse effect that inclusion of
the Registrable Securities requested to be included would have on such
offering, such Registrable Securities will be excluded from such offering.
Notwithstanding the foregoing, if the Investor exercises an incidental
registration in connection with Realco's or the Morgan Entities' or LaSalle
Entities' demand registration rights, then the managing underwriter's cutback
provision under the demand registration right set forth in Section 2(b) shall
govern with respect to the Investor and not the managing underwriter's cutback
provision in this Section 2(c).
No registration pursuant to a request or requests referred to in this
subsection 2(c) shall be deemed to be a Shelf Registration.
3. Hold-Back Agreements.
(a) Restrictions on Public Sale by Holder of Registrable
Securities. The Investor agrees, if reasonably requested by the managing
underwriters in an Underwritten Offering, not to effect any public sale or
distribution of securities of the Company of the same class as the securities
included in the Registration Statement relating to such Underwritten Offering,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such Underwritten Offering), during the 10-day period prior to the filing of
such Registration Statement, and during the 90-day period beginning on the
closing date of each Underwritten Offering made pursuant to such Registration
Statement, to the extent timely notified in writing by the Company or the
managing underwriters.
(b) Restrictions on Sale of Securities by the Company.
The Company agrees not to effect any public sale or distribution of any
securities similar to those being registered, or any
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<PAGE> 6
securities convertible into or exchangeable or exercisable for such securities
(except pursuant to a registration statement on Form S-4 or S-8, or any
substitute form that may be adopted by the SEC) during the ten days prior to
the filing of a registration statement with respect to an Underwritten
Offering, and during the 90-day period beginning on the effective date of such
Registration Statement (except as part of such registration statement (x) where
the Investor participating in such registration statement consents, (y) where
the Investor is participating in such registration statement pursuant to
Section 2(c) hereof, such registration statement was filed by the Company with
respect to the sale of securities by the Company, and the Investor is not
simultaneously participating in a registration statement pursuant to Section
2(b) hereof), or (z) with respect to Realco, the Morgan Entities or the LaSalle
Entities, if such parties are participating in a Demand Registration pursuant
to Section 2(b) hereof), or the commencement of a public distribution of
Registrable Securities pursuant to such registration statement.
4. Registration Procedures. In connection with the Company's
registration obligations pursuant to Section 2 hereof, the Company will use its
commercially reasonable efforts to effect such registration to permit the sale
of such Registrable Securities in accordance with the intended method or
methods of distribution thereof, and pursuant thereto the Company will use
commercially reasonable efforts to as expeditiously as possible:
(a) prepare and file with the SEC, as soon as
practicable, and in any event within 60 days from the date of request, a
Registration Statement relating to the applicable registration on any
appropriate form under the Securities Act, which forms shall be available for
the sale of the Registrable Securities in accordance with the intended method
or methods of distribution thereof and shall include all financial statements
of the Company, and use its commercially reasonable efforts to cause such
Registration Statement to become effective; provided that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the initial filing of the
Registration Statement, the Company will furnish the Investor and the
underwriters, if any, copies of all such documents proposed to be filed, which
documents will be subject to the review of the Investor and the underwriters,
if any, and the Company will not file any Registration Statement or amendment
thereto or any Prospectus or any supplement thereto (including such documents
incorporated by reference) to which the Investor or the underwriters, if any,
shall reasonably object (except in the case of a filing pursuant to Section
2(c) hereof);
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period, or such
shorter period, which will terminate when all Registrable Securities included
in such Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of all securities included in such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus; the Company shall not be deemed to have used
commercially
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<PAGE> 7
reasonable efforts to keep a Registration Statement effective during the
applicable period if it voluntarily takes any action that would result in the
Investor not being able to sell its Registrable Securities during that period
unless such action is required under applicable law; provided that the
foregoing shall not apply to actions taken by the Company in good faith and for
valid business reasons, including without limitation the acquisition or
divestiture of assets, so long as the Company promptly thereafter complies with
the requirements of Section 4(k) hereof, if applicable;
(c) notify the Investor and the managing underwriters, if
any, promptly (and in no event more than three days after the occurrence of any
of the following events), and (if requested by any such Person) confirm such
advice in writing, (l) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment, when the same has become effective,
(2) of any request by the SEC for amendments or supplements to the Registration
Statement or the Prospectus or for additional information, (3) of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose, (4) if at any
time the representations and warranties of the Company contemplated by
paragraph (m) below cease to be true and correct, (5) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and (6) of the happening of any
event which makes any statement made in the Registration Statement, the
Prospectus or any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement, the
Prospectus or any document incorporated therein by reference in order to make
the statements therein not misleading;
(d) obtain the withdrawal of any order suspending the
effectiveness of the Registration Statement at the earliest possible moment;
(e) if reasonably requested by the managing underwriter
or underwriters or by the Investor, promptly incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriters and the Investor agree should be included therein relating to the
sale of the Registrable Securities, including, without limitation, information
with respect to the number of Registrable Securities being sold to such
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the Underwritten (or best efforts
underwritten) Offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such Prospectus supplement or post-effective amendment;
(f) furnish to the Investor and each managing
underwriter, if any, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
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<PAGE> 8
(g) deliver to the Investor and the underwriters, if any,
without charge, as many copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as such Persons may
reasonably request; the Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Investor and the underwriters, if any,
in connection with the offering and sale of the Registrable Securities covered
by the Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable
Securities, register or qualify or cooperate with the Investor, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as the Investor or
any underwriter reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by the Registration Statement;
(i) cooperate with the Investor and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends (except as reasonably required to protect the Company's
status as a REIT); and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(j) cause the Registrable Securities covered by the
applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
Investor or the underwriters, if any, to consummate the disposition of such
Registrable Securities;
(k) upon the occurrence of any event contemplated by
Section 4(c)(6) above, prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the Prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(l) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed;
(m) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of such Registrable Securities and in
connection therewith, whether or not an underwriting agreement is entered into
and whether or not the registration is an Underwritten Registration, (1) make
such representations and warranties to the Investor and the underwriters, if
any, in form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings; (2) obtain opinions of counsel
to the Company and updates thereof (which counsel and opinions (in
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<PAGE> 9
form, scope and substance) shall be reasonably satisfactory to the Investor and
the managing underwriters, if any, covering the matters customarily covered in
opinions requested in Underwritten Offerings and such other matters as may be
reasonably requested by the Investor and the underwriters, if any; (3) obtain
"cold comfort" letters and updates thereof from the Company's independent
certified public accountants addressed to the Investor and the underwriters, if
any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters by underwriters in connection
with primary Underwritten Offerings; (4) if an underwriting agreement is
entered into, the same shall set forth in full the indemnification provisions
and procedures of Section 6 hereof with respect to all parties to be
indemnified pursuant to said Section; and (5) deliver such documents and
certificates as may be reasonably requested by the Investor and the managing
underwriters, if any, to evidence compliance with clause (1) above and with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Company. The above shall be done at each closing under
such underwriting or similar agreement or as and to the extent required
thereunder;
(n) make available for inspection by a representative of
the Investor, any underwriter participating in any disposition pursuant to such
registration, and any attorney or accountant retained by the Investor or any
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company and cause the Company's officers, trust managers and
employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with such
registration; provided that any records, information or documents that the
Company designates in writing as confidential shall be kept confidential by
such Persons unless disclosure of such records, information or documents is
required by court or administrative order;
(o) otherwise use its commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, beginning within three months after
the effective date of the registration statement, which earnings statement
shall satisfy the provisions of section 11(a) of the Securities Act; and
(p) cooperate with the Investor and each underwriter
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD").
The Company may require the Investor to furnish to the Company such
information regarding the distribution of Registrable Securities as the Company
may from time to time reasonably request in writing.
The Investor agrees by acquisition of the Registrable Securities that,
upon receipt of any notice from the Company of the happening of any event of
the kind described in Section 4(k) hereof, the Investor will forthwith
discontinue disposition of Registrable Securities until the Investor's receipt
of the copies of the supplemented or amended Prospectus contemplated by Section
4(k)
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<PAGE> 10
hereof, or until it is advised in writing (the "ADVICE") by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and, if so directed by the Company, the Investor will deliver to
the Company (at the Company's expense), all copies, other than permanent file
copies then in the Investor's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time periods regarding the
effectiveness of Registration Statements set forth in Section 2 hereof and
Section 4(b) hereof shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to Section
4(c)(6) hereof to the date when the Investor shall receive copies of the
supplemented or amended prospectus contemplated by Section 4(k) hereof or the
Advice.
5. Registration Expenses. All expenses incident to the
Company's performance of or compliance with this Agreement, including without
limitation: all registration and filing fees; fees with respect to filings
required to be made with the NASD; fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel for the underwriters or the Investor in connection with blue sky
qualifications of the Registrable Securities and determination of their
eligibility for investment under the laws of such jurisdictions as the managing
underwriters and the Investor may designate); printing expenses, messenger,
telephone and delivery expenses; fees and disbursements of counsel for the
Company and fees and expenses for independent certified public accountants
retained by the Company (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section 4(m) hereof);
securities acts liability insurance, if the Company so desires; all internal
expenses of the Company (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties);
the expense of any annual audit; the fees and expenses incurred in connection
with the listing of the securities to be registered on each securities exchange
on which similar securities issued by the Company are then listed; and the fees
and expenses of any Person, including special experts, retained by the Company
(all such expenses being herein called "REGISTRATION EXPENSES") will be borne
by the Company regardless of whether the Registration Statement becomes
effective. The Company shall not have any obligation to pay any underwriting
fees, discounts or commissions attributable to the sale of Registrable
Securities, or any legal fees and expenses of counsel to the Investor, except
as expressly provided herein.
6. Indemnification: Contribution.
(a) Indemnification by Company. The Company agrees to
indemnify and hold harmless the Investor and its partners, officers, directors,
employees and agents, and each Person who controls any such Persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
against all losses claims, damages, liabilities and reasonable expenses arising
out of or based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or preliminary prospectus
or any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the
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<PAGE> 11
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the Company by the
Investor expressly for use therein. The Company will also indemnify
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, their officers and trust
managers and each Person who controls such Persons (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of the Investor,
if requested.
(b) Indemnification By Holder of Registrable Securities.
The Investor agrees to indemnify and hold harmless the Company and its trust
managers, officers, employees and agents, and each Person who controls the
Company (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) against any losses, claims, damages, liabilities and
reasonable expenses resulting from any untrue statement of a material fact or
any omission of a material fact required to be stated in the Registration
Statement or Prospectus or preliminary prospectus or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue statement or omission is contained in any information or affidavit
so furnished in writing by the Investor to the Company specifically for
inclusion in such Registration Statement or Prospectus. In no event shall the
liability of the Investor hereunder be greater in amount than the dollar amount
of the proceeds received by such Person upon the sale of the Registrable
Securities giving rise to such indemnification obligation. The Company shall
be entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above with respect to information
so furnished in writing by such Persons specifically for inclusion in any
Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder will (i) give prompt notice (and in any
event within 10 days) to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, however that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel and
to participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such Person unless (a) the indemnifying
party has agreed to pay such fees or expenses, (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such Person or (c) based upon written advice of counsel to such
Person, there shall be one or more defenses available to such Person that are
not available to the indemnifying party or there shall exist conflicts of
interest pursuant to applicable rules of professional conduct between such
Person and the indemnifying party (in which case, if the Person notifies the
indemnifying party in writing that such Person elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such claim on behalf of such
Person), in each of which events the fees and expenses of such counsel shall be
at the expense of the indemnifying party. The indemnifying party will not be
subject to any liability for any settlement made without its consent (but such
consent will not be unreasonably withheld), but if settled with its written
consent, or if
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<PAGE> 12
there be a final judgment for the plaintiff in any such action or proceeding,
the indemnifying party shall indemnify and hold harmless the indemnified
parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. No indemnified party will be required
to consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(d) Contribution. If for any reason the indemnification
provided for in the preceding clauses (a) and (b) is unavailable to an
indemnified party or insufficient to hold it harmless as contemplated by the
preceding clauses (a) and (b), then the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and
the indemnifying party, as well as any other relevant equitable considerations,
provided, that in no event shall the Investor be required to contribute an
amount greater than the dollar amount of the proceeds received by Investor with
respect to the sale of the Registrable Securities giving rise to such
indemnification obligation. The relative fault of the Company on the one hand
and of the Investor on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 10(f) of the Securities Act) shall be entitled
to contribution from any Person who was not guilty of such fraudulent
misrepresentations.
7. Rule 144. The Company hereby agrees that it will file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder (or, if the
Company is not required to file such reports, it will, upon the request of the
Investor, make publicly available other information so long as necessary to
permit sales pursuant to Rule 144 under the Securities Act), and it will take
such further action as the Investor may reasonably request, all to the extent
required from time to time to enable the Investor to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of the Investor, the Company
will deliver to the Investor a written statement as to whether it has complied
with such information and requirements.
8. Participation in Underwritten Registrations.
(a) If any of the Registrable Securities covered by the
Shelf Registration are to be sold in an Underwritten Offering (excluding under
Section 2(c)), the investment banker or investment bankers and manager or
managers that will administer the offering will be selected by the Investor;
provided that such investment bankers and managers must be reasonably
satisfactory to the Company.
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<PAGE> 13
(b) No Person may participate in any Underwritten
Registration hereunder unless such Person (i) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements. Nothing in this Section 8 shall be construed to create any
additional rights regarding the registration of Registrable Securities in any
Person otherwise than as set forth herein.
9. Miscellaneous.
(a) Remedies. Each party hereto, in addition to being
entitled to exercise all rights provided herein or granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement to the extent available under applicable law. Each party
hereto agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(b) Third Party Registration Rights. The Company will
not on or after the date of this Agreement, enter into any agreement granting
registration rights to any other Person with respect to the securities of the
Company that are not junior or subordinate to the rights granted to the
Investor hereunder without the written consent of the Investor. The Company
hereby represents and warrants to the Investor that it has obtained all
necessary consents or waivers of Realco, the Morgan Entities and the LaSalle
Entities in connection with the execution of this Agreement and the
consummation of the transactions contemplated hereby.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the written consent of the Company
and Investor.
(d) Notices. The notice provisions contained in Section
9.11 of the Purchase Agreements shall be incorporated herein and shall be
governing under this Agreement.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities, provided further,
that the Company cannot assign its rights hereunder except pursuant to a
merger.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
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<PAGE> 14
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. THIS AGREEMENT, AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO, SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
(i) Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any current or future law,
and if the rights or obligations of the parties under this Agreement would not
be materially and adversely affected thereby, such provision shall be fully
separable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
and the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance therefrom. In lieu of such illegal, invalid or
unenforceable provision, there shall be added simultaneously as a part of this
Agreement, a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible, and the parties
hereto request the court or any arbitrator to whom disputes relating to this
Agreement are submitted to reform the otherwise illegal, invalid or
unenforceable provision in accordance with this Section 9(i).
(j) Arbitration. In the event of a dispute hereunder
which cannot be resolved by the parties, such dispute shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and judgment on the award rendered by the arbitration
panel may be entered in any court or tribunal of competent jurisdiction. Any
arbitration occurring under this Section 9(j) shall be held in Dallas, Texas.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(l) Attorneys' Fees. In any proceeding brought to
enforce any provision of this Agreement the successful party shall be entitled
to recover reasonable attorneys' and accountants' fees in addition to its costs
and expenses and any other available remedy.
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.
"COMPANY"
AMERICAN INDUSTRIAL PROPERTIES REIT
/s/ Charles W. Wolcott
----------------------------------------
Charles W. Wolcott
President and Chief Executive Officer
"INVESTOR"
By: PRAEDIUM II INDUSTRIAL ASSOCIATES
LLC,
a Delaware limited liability company
By: THE PRAEDIUM OPPORTUNITY
FUND II, L.P.,
its member
By: PRAEDIUM ADVISORS, INC., its
managing general partner
By: /s/ Christopher Hughes
-----------------------------
Name: Christopher Hughes
---------------------------
Title: Vice President
--------------------------
By: PRAEDIUM PARTNERS, LLC, its
investment general partner
By: /s/ Christopher Hughes
-----------------------------
Name: Christopher Hughes
---------------------------
Title: Vice President
--------------------------
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<PAGE> 1
EXHIBIT 10.3
AGREEMENT
The undersigned hereby agree that notwithstanding anything in any
prior agreement to the contrary, American Industrial Properties REIT (the
"Trust") shall nominate for election or re-election as Trust Manager at each
annual meeting of shareholders one nominee of Morgan Stanley Asset Management
Inc. and one nominee of ABKB/LaSalle Securities Limited Partnership, as agent
for and for the benefit of particular clients ("ABKB"). The Trust shall have
no further obligation to nominate MSAM's and ABKB's nominee, as applicable, at
the time MSAM's or ABKB's holdings, as applicable, of the Trust's common shares
of beneficial interest ("Shares") fall below 5% of the Trust's issued and
outstanding Shares. Upon determining that a party has fallen below the
threshold, the Trust may require such party's nominee to immediately resign or
the Trust may require that the nominee not seek election at the next annual
meeting of shareholders.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas.
This Agreement may be executed in counterparts.
Dated: January 29, 1998
AMERICAN INDUSTRIAL PROPERTIES REIT LASALLE ADVISORS LIMITED
PARTNERSHIP,
as Agent for and for the benefit
of a particular client
/s/ Charles W. Wolcott /s/ Stanley J. Kraska, Jr.
- -------------------------------------- -----------------------------------
Charles W. Wolcott Stanley J. Kraska, Jr.,
President and Chief Executive Officer Managing Director
USAA REAL ESTATE COMPANY MS REAL ESTATE SPECIAL
SITUATIONS, INC.
/s/ T. Patrick Duncan By: /s/ T. R. Bigman
- -------------------------------------- --------------------------------
T. Patrick Duncan, Senior Vice President - Title: Vice President
Real Estate Operations -----------------------------
ABKB/LASALLE SECURITIES LIMITED MORGAN STANLEY ASSET MANAGEMENT
PARTNERSHIP, as Agent for and for the INC., as Agent and Attorney-in-fact
benefit of particular clients for certain designated clients
/s/ Stanley J. Kraska, Jr. By: /s/ T. R. Bigman
- -------------------------------------- --------------------------------
Stanley J. Kraska, Jr., Managing Director Title: Principal
-----------------------------
