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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 2)
American Industrial Properties REIT
-----------------------------------
(Name of Issuer)
Common Shares of Beneficial Interest, $.01 par value per share
--------------------------------------------------------------
(Title of Class of Securities)
026791 20 2
-----------
(CUSIP Number)
Scott A. Wolstein, President and Chief Executive Officer
Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
(440) 247-4700
--------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 20, 1998
-----------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
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CUSIP NO. 026791 20 2 13D
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Developers Diversified Realty Corporation
2 CHECK APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /x/
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(a) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
7 SOLE VOTING POWER
5,122,810
NUMBER OF 8 SHARED VOTING POWER
SHARES -0-
BENEFICIALLY 9 SOLE DISPOSITIVE POWER
OWNED BY 5,122,810
EACH 10 SHARED DISPOSITIVE POWER
REPORTING -0-
PERSON WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,122,810
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
-0-
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
31.7%
14 TYPE OF REPORTING PERSON
CO
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This Amendment No. 1 to Schedule 13D is filed to reflect the
Second Closing (as defined herein).
ITEM 1. SECURITY AND ISSUER
This Amendment No. 1 to Schedule 13D relates to the common
shares of beneficial interest, $.01 par value per share ("Common Shares"),
issued by AIP to DDRC and Scott A. Wolstein, the Chairman of the Board,
President and Chief Executive Officer of DDRC, pursuant to the Agreements (as
defined herein).
The principal executive offices of AIP are located at 6210
North Beltline Road, Suite 170, Irving, Texas 75063-2656.
ITEM 2. IDENTITY AND BACKGROUND
This schedule is filed jointly by: (i) DDRC by virtue of its
direct ownership of 5,022,810 Common Shares and options to purchase 100,000
Common Shares, and (ii) Scott A. Wolstein by virtue of his direct ownership of 6
Common Shares and his status as the Chairman of the Board, President and Chief
Executive Officer of DDRC (DDRC and Mr. Wolstein collectively, the "Reporting
Parties").
The business address of each of the Reporting Persons is 34555
Chagrin Boulevard, Moreland Hills, Ohio 44022.
Mr. Wolstein's principal occupation is serving as the Chairman
of the Board, President and Chief Executive Officer of DDRC. Under the Purchase
Agreement, Mr. Wolstein has been appointed Chairman of the Board of AIP. Mr.
Wolstein is a citizen of the United States.
Set forth in Appendix A hereto are the name, business address,
present principal occupation or employment, and the name, principal business and
address of any corporation or other organization in which such employment is
conducted, of each director and executive officer of DDRC. Each such person is a
citizen of the United States.
During the last five years, none of DDRC, Mr. Wolstein or any
of the persons named in Appendix A: (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), or (ii) was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws, or finding
any violations with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Under the Share Purchase Agreement dated as of July 30, 1998,
between AIP and DDRC, as amended by Amendment No. 1 dated as of September 14,
1998 (as amended, the "Purchase Agreement"), DDRC received 949,147 Common Shares
in exchange for $14,711,778.50. DDRC borrowed this amount under its existing
credit facility with The First Chicago National Bank, as administrative agent,
and certain other banks (the "Credit Facility").
Under the Merger Agreement (the "Merger Agreement" and,
together with the Purchase Agreement, the "Agreements") dated as of July 30,
1998 among AIP, DDRC and DDR Office Flex Corporation, a Delaware corporation
("Merger Sub"), DDRC received 1,258,471 Common Shares and Mr. Wolstein received
6 Common Shares in exchange for their respective interests in Merger Sub.
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Merger Sub owned five light industrial or office properties and was merged into
AIP, with AIP as the survivor of the merger. The closing of the purchase of
949,147 Common Shares and 1,258,477 Common Shares under the Purchase Agreement
and the Merger Agreement, respectively, are collectively referred to herein as
the "Initial Closing," and the date of the Initial Closing is referred to as the
"Initial Closing Date."
On November 20, 1998, at the second closing (the "Second
Closing" ) under the Purchase Agreement, DDRC received 2,815,192 Common Shares
in exchange for the cancellation of $43,635,476 in aggregate principal amount of
outstanding debt owed to DDRC by AIP.
DDRC anticipates funding the additional purchases of Common
Shares and Preferred Shares (as defined herein) described in Item 4(a) through a
combination of all or some of the following: working capital, borrowings under
the Credit Facility, and the issuance of medium-term notes or equity securities
under its shelf registration statement.
ITEM 4. PURPOSE OF TRANSACTION
Except as described below, neither of the Reporting Persons
has any current plans or proposals which relate to or would result in any of the
events described in Items (a) through (j) of Item 4 of Schedule 13D:
(a) From time to time beginning on the Second Closing Date and
ending on the date 180 days after the Second Closing Date (the "180 Day
Period"), DDRC is obligated to purchase, at a price of $15.50 per Common Share,
2,411,391 Common Shares (the "Remaining Shares"), solely for the purpose of
funding property acquisitions approved by a majority of the members of the
executive committee (the "Executive Committee") of the Board of Trust Managers
of AIP (the "Board") that are not affiliates of the seller of the property or of
the assignor that assigned its right to acquire such property to AIP. It is a
condition precedent to DDRC's obligation to purchase the Remaining Shares that
AIP has borrowed at least 35% of the aggregate purchase price of each such
acquisition approved by the Executive Committee from one or more third-party
lenders.
If, as of the Business Day following the expiration of the 180
Day Period, DDRC has not purchased all of the Remaining Shares at a price of
$15.50 per Common Share, then DDRC has the option to purchase a number of Common
Shares that when added to the Common Shares purchased during the 180 Day Period,
equals the total number of the Remaining Shares.
From time to time during the period commencing on the Second
Closing Date and ending on the second anniversary of that date, AIP has the
option to sell to DDRC the additional shares described in the first sentence of
the following paragraph (the "Additional Purchased Shares") for an aggregate
purchase price that may not exceed $200,000,000 (the "Additional Purchase
Option") solely for the purpose of funding property acquisitions approved by a
majority of the Managers (the "Managers") that are not affiliates of the seller
of the property or of the assignor that assigned its right to acquire such
property to AIP. The Additional Purchase Option may only be exercised by action
of a majority of the Managers, excluding the Managers appointed by DDRC.
The Additional Purchased Shares may consist of any combination
of the following, as AIP elects: (i) Common Shares, at a price of $15.50 per
share, or (ii) Series A Convertible Preferred Shares, $.01 par value per share
(the "Preferred Shares"), that are convertible into Common Shares after the
expiration of the Standstill Period (as defined herein), at a price of $14.00
per share, but if DDRC would own, as a result of any such sale and purchase, in
excess of 49.9% of the outstanding Common Shares (the "Forty-Nine Percent
Threshold"), then AIP may sell only Preferred Shares to DDRC. The
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price per share of the Additional Purchased Shares is subject to adjustment if
the ten trading day average price per Common Share on the NYSE falls below
$12.12 per share and in the event of any share split, subdivision, combination,
merger, reclassification or share dividend.
After the aggregate purchase price for the Additional
Purchased Shares reaches $100,000,000, the Additional Purchase Option is not
exercisable on any date on which: (i) the closing price per common share,
without par value, of DDRC (each, a "DDRC Common Share"), was equal to or less
than $18.00, or (ii) the aggregate value of all Common Shares and Preferred
Shares purchased by DDRC in accordance with the Purchase Agreement, determined
based upon the amount paid by DDRC for such shares, exceeds ten percent (10%) of
DDRC's Market Capitalization as of the last trading day prior to such date.
"DDRC's Market Capitalization" means for any date (with the value of DDRC's
publicly-traded securities determined by reference to the reported trading
prices for the last trading day prior to such date when available and, when not
available, based upon a certificate of the chief financial officer of DDRC who
will, in good faith, value such securities): (i) the aggregate value of all of
DDRC's equity securities then issued and outstanding, including DDRC Common
Shares, and DDRC's preferred and convertible securities, determined on a
fully-diluted basis, plus (ii) the then outstanding aggregate principal amount
of the indebtedness of DDRC and any subsidiary of DDRC. The term of the
Additional Purchase Option is extended by one day for each day that the
Additional Purchase Option cannot be exercised because of this limitation. In
addition, the purchase price of all Common Shares and Preferred Shares issued to
DDRC under that certain unit repurchase agreement to be entered into among DDRC,
AIP and the investors named therein, related to the properties known as Tech 29,
reduces the amount of the Additional Purchase Option on a dollar for dollar
basis.
At the Initial Closing, Mr. Wolstein was awarded options to
purchase 100,000 Common Shares at a purchase price of $12.875 per Common Share
(the closing price on the NYSE of one Common Share on the day prior to the
Initial Closing Date). Mr. Wolstein assigned his options to DDRC as of the
Initial Closing Date. All of those options vested on the Second Closing Date.
(b) Under the Merger Agreement, Merger Sub was merged with and
into AIP, with AIP as the survivor of such merger.
(c) To the best of the Reporting Persons' knowledge, no such
transaction is contemplated.
(d) Under the Purchase Agreement, the Board was expanded to 11
members. DDRC has the right to nominate four Managers, including the Chairman of
the Board. At the Initial Closing, DDRC nominated Mr. Wolstein, James A. Schoff,
Albert T. Adams and Robert H. Gidel for election as Managers. The Board elected
each of Messrs. Wolstein, Schoff, Adams and Gidel to the Board, with Mr.
Wolstein serving as its Chairman. If DDRC has purchased all of the Remaining
Shares prior to the expiration of the 180 Day Period, DDRC may continue to
nominate three Managers (of a Board that will comprise 10 Managers commencing in
May 1999) for so long as it retains its Common Share holdings, with reductions
in the number of nominees on a graded scale to zero when it holds less than 25%
of the shares acquired under the Agreements. If DDRC has not purchased all of
the Remaining Shares following the expiration of the 180 Day Period, DDRC has a
right to nominate a number of Managers equal to the percentage of AIP's issued
and outstanding Common Shares on a fully diluted basis held by DDRC (with all
Preferred Shares treated as issued and outstanding Common Shares) times the
authorized number of Managers, with any resulting fraction rounded down. If the
number of Managers DDRC is entitled to nominate under the right described in the
preceding sentence is less that three, then DDRC's right to nominate the
Chairman of the Board of AIP terminates.
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One Manager (not nominated by DDRC) has indicated that he will
retire at AIP's next annual meeting of shareholders.
(e) Except as described herein, the Reporting Persons are not
aware of any changes to AIP's present capitalization or dividend policy.
(f) Except as described herein, the Reporting Persons are not
aware of any material changes in AIP's business or corporate structure resulting
from this transaction.
(g) DDRC and the Significant Shareholders (as defined herein)
are parties to voting agreements described in Item 6(b). Under those voting
agreements, AIP and the Significant Shareholders may not seek transactions that
compete with the Transactions, subject to certain exceptions. These agreements
may impede a change of control of AIP.
(h) The Reporting Persons are not aware of any such plan or
proposal.
(i) The Reporting Persons are not aware of any such plan or
proposal.
(j) The Reporting Persons are not aware of any such actions
other than those described herein.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) DDRC beneficially owns 5,022,810 Common Shares and options
to purchase 100,000 Common Shares that vested on the Second Closing,
representing approximately 31.7% of the outstanding Common Shares. Mr. Wolstein,
as an individual, beneficially owns six Common Shares, representing less than 1%
of the outstanding Common Shares. As the Chairman of the Board, President and
Chief Executive Officer of DDRC, Mr. Wolstein may be deemed to beneficially own
5,022,816 Common Shares, consisting of all of the Common Shares owned by DDRC
and Mr. Wolstein, collectively, representing approximately 31.7% of the
outstanding Common Shares.
The Remaining Shares and the Common Shares and Preferred
Shares, as applicable, to be acquired by DDRC under the Additional Purchase
Option have not been included in determining the beneficial ownership of DDRC or
Mr. Wolstein, because the acquisition of these shares remains subject to a
number of contingencies, as described herein.
(b) DDRC has the sole power to vote and dispose of the
5,022,810 Common Shares listed as owned by it in Item 5(a) and has the sole
power to exercise the options to purchase the 100,000 Common Shares described in
Item 5(a) and to vote and dispose of those Common Shares. Mr. Wolstein has the
sole power to vote and dispose of the six Common Shares listed as owned by him
in Item 5(a). As the Chairman of the Board, President and Chief Executive
Officer of DDRC, Mr. Wolstein may be deemed to have the power to vote and
dispose of the Common Shares owned by DDRC.
(c) Except as described herein, none of the Reporting Persons
or any of the persons identified in Appendix A has effected any transaction in
the Common Shares in the past 60 days.
(d) No other person is known to have the right to receive, or
the power to direct the receipt of dividends from, or the proceeds from the sale
of, the Common Shares described in Item 5(a).
(e) Not applicable.
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ITEM 6. CONTRACTS, ARRANGEMENT, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
(a) PURCHASE AGREEMENT.
(i) Standstill Provisions. From the Initial Closing
Date until the third anniversary of the Second Closing Date (the "Standstill
Period"), DDRC is subject to a standstill provision that limits DDRC's ability
to: acquire Common Shares, other than under the Purchase Agreement; act with
others as a "group," as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended; solicit proxies or submit shareholder proposals in
opposition to a majority of the Board; assist or encourage others in purchasing
in excess of five percent of the Common Shares; and seek to control the
management or policies of AIP.
(ii) Remaining Shares. DDRC's obligation or option,
as applicable, to acquire the Remaining Shares is described in Item 4(a).
(iii) Anti-Dilution. If DDRC's beneficial ownership
of Common Shares falls below forty percent (40%) of the outstanding Common
Shares on a fully diluted basis (the "Forty Percent Threshold"), DDRC has the
right to purchase, at a price of $15.50 per Common Share, a number of Common
Shares such that, immediately after such purchase and giving effect thereto,
DDRC's beneficial ownership of Common Shares will be less than or equal to the
Forty Percent Threshold. The purchase price of all Common Shares issued pursuant
to this option will reduce the Additional Purchase Option on a dollar for dollar
basis.
If DDRC's beneficial ownership of Common Shares falls below
the Forty Percent Threshold after the Additional Purchase Option has been
exhausted or otherwise terminated, then, notwithstanding the standstill
provisions described in Item 6(a)(i), DDRC has the right (to the extent
permitted by law) to purchase, in the open market or in one or more privately
negotiated transactions, a number of Common Shares such that, immediately after
such purchase and giving effect thereto, DDRC's beneficial ownership of Common
Shares will be less than or equal to the Forty Percent Threshold.
(iv) Additional Purchase Option. The Additional
Purchase Option is described in Item 4(a).
(v) Right to Nominate Managers. DDRC's right to
nominate Managers is described in Item 4(d).
(vi) Open Market Purchases. Notwithstanding any other
provision of the Purchase Agreement, DDRC may, from time to time, purchase
Common Shares with an aggregate value (determined based on the price paid by
DDRC in each such transaction) that does not exceed $10,000,000 in one or more
open market transactions, which purchases will reduce the aggregate amount of
the Additional Purchase Option on a dollar for dollar basis after the aggregate
purchase price for the Additional Purchased Shares reaches $100,000,000, but
DDRC may not make any such purchase if, as a result of such purchase, DDRC would
own in excess of the Forty-Nine Percent Threshold.
(b) VOTING AGREEMENTS. DDRC is a party to separate voting
agreements with each of the following shareholders of AIP (the "Significant
Shareholders"): (i) LaSalle Advisors Capital Management, Inc. and ABKB/LaSalle
Securities Limited Partnership (the "LaSalle Entities"); (ii) Morgan Stanley
Asset Management Inc., on behalf of certain of its clients with respect to
shares of AIP over which it exercises investment discretion, and MS Real Estate
Special Situations, Inc. (the "Morgan Entities"); and (iii) USAA Real Estate
Company ("USAA"). The voting agreements provide that each
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Significant Shareholder will (i) either vote the Common Shares that it
beneficially owns, or recommend that such shares, vote, as applicable, in favor
of the transactions contemplated by the Purchase Agreement and the Merger
Agreement, and (ii) not solicit competing transactions involving AIP. The voting
agreement with the LaSalle Entities is subject to the LaSalle Entities' ability
to vote or recommend otherwise for fiduciary duty reasons. The voting agreements
provide that each Significant Shareholder agrees to either vote the Common
Shares that it beneficially owns or recommend that such shares vote, as
applicable, in favor of the Managers nominated by DDRC for so long as DDRC's
rights to nominate Managers continues under the Purchase Agreement. In the
Purchase Agreement, DDRC has agreed to vote its Common Shares in favor of the
nominees of each Significant Shareholder for so long such Significant
Shareholder has a right to nominate a Manager. The previously disclosed voting
agreement with Praedium II Industrial Associates LLC terminated at the Second
Closing.
(c) REGISTRATION RIGHTS AGREEMENT. AIP and DDRC are parties to
a registration rights agreement (the "Registration Rights Agreement") relating
to the Common Shares. The Registration Rights Agreement provides that DDRC may
make up to three demands to have Common Shares registered pursuant to the
Securities Act of 1933, as amended (the "Securities Act"). These demand
registration rights are subject to certain limitations on other stockholders
exercising their demand rights.
DDRC has the right to require that AIP file and have declared
effective a shelf registration statement to remain effective for three years
from the date such registration statement is declared effective. DDRC also has
certain "piggy-back" registration rights. DDRC must be notified prior to the
filing of any registration statement under the Securities Act by AIP. DDRC may
include Common Shares in any such registration statement. AIP must use its best
efforts to include any such Common Shares in that registration statement.
DDRC's rights under the Registration Rights Agreement rank
pari passu with those of the Significant Shareholders under similar agreements
with AIP.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
A. Agreement among the Reporting Persons to file a joint
statement on Schedule 13D*
B. Share Purchase Agreement(1)
C. Amendment No. 1 to the Share Purchase Agreement**
D. Merger Agreement(1)
E. Voting Agreement between DDRC and the LaSalle
Entities***
F. Voting Agreement between DDRC and Praedium(1)
G. Voting Agreement between DDRC and the Morgan
Entities(1)
H. Voting Agreement between DDRC and USAA(1)
I. Registration Rights Agreement(1)
J. Credit Facility(2)
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* Filed herewith.
** Previously filed.
*** Filed herewith. This voting agreement is filed because LaSalle Advisors
Capital Management, Inc., as successor to LaSalle Advisors Limited
Partnership, executed a new voting agreement.
(1) Incorporated by reference herein from AIP's Current Report on Form 8-K
filed with the Commission on August 5, 1998, Commission file number
1-9016.
(2) Incorporated by reference herein from DDRC's Annual Report on Form 10-K
filed with the Commission on March 31, 1998, Commission file number
1-11690.
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and
belief, each of the undersigned hereby certifies that the information set forth
in this statement is true, complete and correct.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION, an Ohio corporation
By: /s/ Scott A. Wolstein
Name: Scott A. Wolstein
Title: President and Chief Executive Officer
/s/ Scott A. Wolstein
-------------------------------------
Scott A. Wolstein
Dated as of November 23, 1998
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APPENDIX A
DIRECTORS AND EXECUTIVE OFFICERS
OF DEVELOPERS DIVERSIFIED REALTY CORPORATION
The following table sets forth the name, business address,
present principal occupation or employment, the name, principal business and
address of the principal office of any corporation or other organization in
which such employment is conducted of each director and executive officer of
Developers Diversified Realty Corporation, an Ohio corporation ("DDRC").
<TABLE>
<CAPTION>
Principal Occupation or Employment and Name,
Principal Business and Address of Organization
Name and Business Address in which Employment Conducted(1)
- ------------------------- ------------------------------
<S> <C>
A. Directors of DDRC
Scott A. Wolstein(2) Chairman of the Board, President and
Chief Executive Officer of DDRC (real estate
investment trust); Chairman of the Board of
American Industrial Properties REIT (real estate
investment trust)
James A. Schoff(2) Vice Chairman of the Board and Chief Investment
Officer of DDRC (real estate investment trust)
William N. Hulett III Director of DDRC (real estate investment trust)
6127 Chagrin River Road
Bentleyville, OH 44022
Ethan Penner President of Nomura Asset Capital Corporation (real
101 California Street estate financing)
Suite 4225
San Francisco, CA 94111
Albert T. Adams Partner, Baker & Hostetler LLP (law firm)
3200 National City Center
1900 East 9th Street
Cleveland, OH 44114-3485
Dean S. Adler Principal, Lubert-Adler Partners, L.P. (real estate
Belgravia, 8th Floor investments)
1811 Chesnut Street
Philadelphia, PA 19103
Barry A. Sholem Co-Chairman, Donaldson, Lufkin & Jenrett, Inc. Real
2121 Avenue of the Stars Estate Capital Partners (real estate investments) Los
Angeles, CA 90667
</TABLE>
- --------------------------
1 The business address of the organization in which each person's
employment is conducted is the same as such person's business address.
2 The business address of each such person is 34555 Chagrin Boulevard,
Moreland Hills, Ohio 44022.
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<TABLE>
<CAPTION>
B. Executive Officers of DDRC
<S> <C>
Scott A. Wolstein(2) See A. above
James A. Schoff(2) See A. above
Vice President and Director of Development
John R. McGill(2)
Joan U. Allgood(2) Vice President and General Counsel
Loren F. Henry(2) Vice President and Director of Management
William H. Schafer(2) Vice President and Chief Financial Officer
Alan Bobman(2) Regional Vice President of Leasing
Steven M. Dorsky(2) Regional Vice President of Leasing
Robin R. Walker(2) Regional Vice President of Leasing
</TABLE>
- ---------------------------
1 The business address of the organization in which each person's
employment is conducted is the same as such person's business address.
2 The business address of each such person is 34555 Chagrin Boulevard,
Moreland Hills, Ohio 44022.
<PAGE> 13
EXHIBIT A
This Exhibit A to Amendment No. 2 to Schedule 13D is filed
pursuant to the requirements of Rule 13d(1)(f)(1)(iii). The undersigned,
Developers Diversified Realty Corporation and Scott A. Wolstein, hereby agree
that the Amendment No. 2 to Schedule 13D to which this Exhibit A is attached is
filed on behalf of each of the undersigned.
DEVELOPERS DIVERSIFIED REALTY CORPORATION,
an Ohio corporation
By: /s/ Scott A. Wolstein
Name: Scott A. Wolstein
Title: President and Chief Executive Officer
/s/ Scott A. Wolstein
-----------------------------------
Scott A. Wolstein
Dated as of November 23, 1998
<PAGE> 14
EXHIBIT E
July 30, 1998
Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio
Re: Voting Agreement
Ladies and Gentlemen:
The undersigned understands that Developers Diversified Realty
Corporation, an Ohio corporation ("DDRC"), and American Industrial Properties
REIT, a Texas real estate investment trust ("AIP"), are entering into a Share
Purchase Agreement to be dated on or about the date hereof (the "Purchase
Agreement"), and, together with DDR Office Flex Corporation, a Delaware
corporation, a Merger Agreement to be dated on or about the date hereof (the
"Merger Agreement" and, together with the Purchase Agreement, the "Agreements"),
providing for, among other things, the purchase of common shares, $.10 par value
per share, of AIP by DDRC (the "Share Purchase"). Under the rules of the New
York Stock Exchange, consummation of the Share Purchase will require the
approval of the shareholders of AIP.
The undersigned is a shareholder of AIP (the "Shareholder")
and is entering into this letter agreement at your request, in exchange for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, to induce you to enter into the Agreements and to consummate the
transactions contemplated thereby.
The Shareholder confirms its agreement with you as follows:
1. The Shareholder represents and warrants that it is the
beneficial owner of the shares of beneficial interest AIP listed on Schedule I
annexed hereto (the "Shares") of which the Shareholder or any affiliate (as
defined under the Securities Exchange Act of 1934, as amended) of the
Shareholder controlled by the Shareholder (a "Controlled Affiliate") that has
the power to vote or to make recommendations regarding voting, and that the
Shareholder and the Controlled Affiliates, or the clients on whose behalf the
Shareholder or any Controlled Person acts as a fiduciary, are, to the best of
the Shareholder's knowledge, on the date hereof the lawful owners of the number
of Shares set forth in Schedule I, free and clear of all liens, charges,
encumbrances, voting agreements and commitments of any kind, except as disclosed
in Schedule I. Except for the Shares set forth in Schedule I, neither the
Shareholder nor any Controlled Affiliate owns or holds any rights to acquire any
additional shares of beneficial interest of AIP (other than pursuant to options
or conversion rights with regard to any of the Shares, in each case as disclosed
in Schedule I) or any interest therein or any voting rights with respect to any
such additional shares.
2. Until the earliest date referred to in Section 12, the
Shareholder agrees that it will not, and will not permit any Controlled
Affiliate to, contract to sell, sell or otherwise transfer or dispose of any of
the Shares or any interest therein or securities convertible into shares of
beneficial interest of AIP, or any voting rights with respect thereto, without
your prior written consent.
<PAGE> 15
3. The Shareholder agrees that, during the term of this letter
agreement, neither it nor any Controlled Affiliate will take any action that AIP
would be prohibited from taking under Section 5.4 of the Purchase Agreement.
4. The Shareholder agrees that during the term of this letter
agreement (a) all of the shares of beneficial interest of AIP beneficially owned
by the Shareholder or any Controlled Affiliate, or over which the Shareholder or
any Controlled Affiliate has voting power or control, directly or indirectly,
including any such shares acquired after the date hereof at the record date for
any meeting of shareholders of AIP called to consider and vote on the Share
Purchase and the Agreements and the transactions contemplated thereby or any
Competing Transaction (as such term is defined in the Purchase Agreement) will
be voted by the Shareholder or such Controlled Affiliates, or any representative
or proxy thereof, or that the Shareholders will recommend that such Shares be
voted, as applicable, in favor of the approval of the Share Purchase and the
Agreements and the transactions contemplated thereby and (b) neither the
Shareholder nor any Controlled Affiliate, nor any such representative or proxy
will vote any such Shares or recommend that such Shares be voted, in favor of
any Competing Transaction, in each case except to the extent that the
Shareholder determines in its good faith judgment, after consultation with its
legal counsel, that it is prudent to vote or recommend otherwise in the exercise
of its fiduciary obligations.
5. The Shareholder agrees that the shares referred to in
Section 4 above, owned at the record date for any meeting of shareholders of AIP
called to consider and vote on the election of members of the Board of Trust
Managers of the Trust (the "Board"), will be voted by the Shareholder or any
Controlled Affiliate, or any representative or proxy thereof, or that the
Shareholder will recommend that such Shares be voted, as applicable, in favor of
the approval of the election of the representatives of DDRC to the Board for so
long as DDRC has the right to nominate members of the Board under the Purchase
Agreement, in each case except to the extent that the Shareholder determines in
its good faith judgment, after consultation with its legal counsel, that it is
prudent to vote or recommend otherwise in the exercise of its fiduciary
obligations.
6. The Shareholder hereby appoints Marc A. Simpson to attend
the special meeting of the shareholders of AIP held to consider and vote on the
Share Purchase and to vote the shares referred to in Section 4 above, with all
the power the Shareholder would possess if personally present, in favor of the
approval of the Share Purchase, the Agreements and the transactions contemplated
thereby. The Shareholder agrees to execute, and to cause each Controlled
Affiliate to execute, such proxies and other instruments, and to take and to
cause each Controlled Affiliate to take such actions, as may be necessary to
cause all of those shares to be so voted.
7. The Shareholder has all necessary power and authority to
enter into this letter agreement. This letter agreement is the legal, valid and
binding agreement of the Shareholder, and is enforceable against the Shareholder
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity.
This letter agreement shall inure to the benefit of the parties hereto and the
successors and assigns of DDRC.
8. The Shareholder agrees that damages are an inadequate
remedy for the breach by Shareholder of any term or condition of this letter
agreement and that you shall be entitled to a temporary restraining order and
preliminary and permanent injunctive relief in order to enforce our agreements
herein.
9. Except to the extent that the laws of the jurisdiction of
organization of any party hereto, or any other jurisdiction, are mandatorily
applicable to matters arising under or in connection with this letter agreement,
this letter agreement shall be governed by the laws of the State of Ohio. All
actions
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<PAGE> 16
and proceedings arising out of or relating to this letter agreement shall be
heard and determined in any United States District Court sitting in the Northern
District of Ohio.
10. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of any United States District Court located in the
Northern District of Ohio, for the purpose of any action or proceeding arising
out of or relating to this letter agreement and each of the parties hereto
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined exclusively in any federal court sitting in the Northern
District of Ohio. Each of the parties hereto agrees that a final judgment in any
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Shareholder hereby irrevocably appoints A.G.C. Co., 1900 East
9th Street, Suite 3200, Cleveland, Ohio, as its lawful agent in and for the
State of Ohio, for and in its behalf, to accept and acknowledge service of, and
upon whom may be served, all necessary processes in any action, suit, or
proceeding arising under this Agreement that may be had or brought against it in
any federal court in the Northern District of Ohio, such service of process or
notice, or the acceptance thereof by said agent endorsed thereon, to have the
same force and effect as if served upon such corporation or individual. Nothing
in this Section 10 shall affect the right of any party hereto to serve legal
process in any other manner permitted by law. Shareholder hereby waives all
defenses of improper venue and forum non conveniens with respect to any action,
suit, or proceeding brought in the any United States District Court located in
the Northern District of Ohio and arising under this letter agreement.
11. This letter agreement constitutes the entire agreement
between the parties hereto with respect to the matters covered hereby and
supersedes all prior agreements, understandings or representations between the
parties, written or oral, with respect to the subject matter hereof.
12. This letter agreement and the proxy granted pursuant to
Section 6 hereof shall become effective upon the execution and delivery of the
Agreements by the respective parties thereto. Except as otherwise provided
herein, this letter agreement and the proxy granted pursuant to Section 6 hereof
shall terminate automatically, without the need for any notice or other action
by either party upon the earliest of (i) the date on which the Purchase
Agreement and the Merger Agreement are terminated, (ii) the Second Closing Date,
as defined in the Purchase Agreement, and (iii) the date that is 240 days after
the date hereof.
13. Each of the parties hereto intends that AIP shall be a
third party beneficiary of this letter agreement, and shall be entitled to the
benefits hereof and shall have the ability to exercise the rights granted to
DDRC herein as fully as if it were a signatory of this letter agreement.
14. Notwithstanding anything to the contrary contained herein,
neither AIP nor any representative of the Shareholder serving on the Board of
Trust Managers of AIP shall be deemed to be a Controlled Affiliate.
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<PAGE> 17
Please confirm that the foregoing correctly states the
understanding between us by signing and returning to me a counterpart hereof.
LaSalle Advisors Capital Management, Inc.
By:/s/ Stanley J. Kraska, Jr.
Name: Stanley J. Kraska, Jr.
Title: Managing Director
ABKB/LaSalle Securities Limited Partnership
By:/s/ Stanley J. Kraska, Jr.
Name: Stanley J. Kraska, Jr.
Title: Managing Director
Confirmed on the date
first above written
Developers Diversified Realty Corporation
By: /s/ Scott A. Wolstein
Name: Scott A. Wolstein
Title: President
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<PAGE> 18
Schedule I
Ownership of Shares of Beneficial Interest
<TABLE>
<CAPTION>
Owned Beneficially Total Number of Shares
(including Options to Purchase Shares) Beneficially Owned
-------------------------------------- -------------------
<S> <C>
LaSalle Securities 960,425
LaSalle Advisors 542,153
</TABLE>
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