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EXHIBIT 10.8
COMMON SHARE PURCHASE AGREEMENT
dated as of July 3, 1997
Between
AMERICAN INDUSTRIAL PROPERTIES REIT
and
ABKB/LASALLE SECURITIES LIMITED PARTNERSHIP
as Agent for and for the benefit of a
particular client
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.2 RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 2. PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
2.1 PURCHASE AND SALE OF THE COMMON SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
2.2 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
2.3 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
3.1 ORGANIZATION AND RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
3.2 CAPITAL STOCK; TITLE TO SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
3.3 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
3.4 SEC REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
3.5 AUTHORIZATION; NO CONFLICTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
3.6 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
3.7 COMPLIANCE WITH LAW AND PERMITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.8 DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.9 CERTAIN INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.10 NO BROKERS OR FINDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
3.11 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
3.12 LABOR MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
3.13 PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
3.14 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
3.15 MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
3.22 SHAREHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
SECTION 4. REPRESENTATIONS AND WARRANTIES OF INVESTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.1 ORGANIZATION AND RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.2 AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.3 NO CONFLICTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.4 NO BROKERS OR FINDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.5 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
4.6 INVESTMENT REPRESENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
4.7 LEGENDS; STOP-TRANSFER ORDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
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4.8 STATUS FOR REIT OWNERSHIP AND INCOME TESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
4.9 AUTHORITY OF THE INVESTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 5. COVENANTS WITH RESPECT TO CONDUCT OF SELLER PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . -26-
5.1 ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
5.2 MATERIAL ADVERSE CHANGES; SEC FILINGS; REPORTS; FINANCIAL STATEMENTS . . . . . . . . . . . . . . . -27-
5.3 CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
5.4 NOTIFICATION OF CERTAIN MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
5.5 ADJUSTMENT OF SHARE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
SECTION 6. ADDITIONAL CONTINUING COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
6.1 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
6.2 APPOINTMENT OF TRUST MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
6.3 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.4 STATUS FOR REIT OWNERSHIP AND INCOME TESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.5 PROHIBITED TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.6 SELLER/BUYER REGISTRATION RIGHTS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.7 REIT QUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.8 PREEMPTIVE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.9 DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
6.10 FURNISH DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
6.11 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
6.12 ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
6.13 MSRE AND MSAM CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
SECTION 7. GENERAL CONDITIONS OF PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
7.1 NO ORDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
7.2 APPROVALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
7.3 ABSENCE OF LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
7.4 NEW YORK STOCK EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
7.5 SHAREHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
SECTION 8. CONDITIONS TO OBLIGATIONS OF THE INVESTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
8.1 ACCURACY OF SELLER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . -35-
8.2 PERFORMANCE BY SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
8.3 NO MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
8.4 CERTIFICATION BY SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
8.5 OPINION OF SELLER'S COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
8.6 SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
8.7 REALCO, MSRE AND MSAM CONSENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
8.8 ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
8.9 CLOSING OF MSRE AND MSAM PURCHASE TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
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SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
9.1 ACCURACY OF THE INVESTOR'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . -36-
9.2 BUYERS' PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
9.3 CERTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
9.4 OPINION OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
9.5 REIT STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
SECTION 10. TERMINATION OF OBLIGATIONS; SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
10.1 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
10.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
10.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . . . . . . . . . . . -37-
SECTION 11. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
11.1 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
11.2 OBLIGATIONS OF THE INVESTOR AND THE PECUNIARY OWNER. . . . . . . . . . . . . . . . . . . . . . . -39-
11.3 PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
11.4 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
11.5 NOTICE BY SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
SECTION 12. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
12.1 AMENDMENTS; WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
12.2 SCHEDULES; EXHIBITS; INTEGRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.3 BEST EFFORTS; FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.4 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.5 NO ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.6 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.7 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.8 PUBLICITY AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
12.9 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
12.10 PARTIES IN INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
12.11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
12.12 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
12.13 REMEDIES; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
12.14 REPRESENTATION BY COUNSEL; INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
12.15 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-
12.16 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-
12.17 AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-
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EXHIBITS
EXHIBIT A Registration Rights Agreement
SCHEDULES
SCHEDULE 3.1 Jurisdictions; Officers and Trust Managers
SCHEDULE 3.2 Capital Stock; Title to Shares
SCHEDULE 3.3 Additional Liabilities or Contingencies
SCHEDULE 3.5 Permits and Approvals
SCHEDULE 3.6 Litigation
SCHEDULE 3.7 Compliance with Law and Permits
SCHEDULE 3.8 Dividends and Other Distributions
SCHEDULE 3.9 Certain Interests
SCHEDULE 3.11 Seller Benefit Plans
SCHEDULE 3.13 Properties and Encumbrances
SCHEDULE 3.14 Taxes
SCHEDULE 3.15 Material Contracts
SCHEDULE 3.16 Insurance
SCHEDULE 3.17 Environmental Compliance
SCHEDULE 3.18 Trust Records
SCHEDULE 5.3 Conduct of Business
SCHEDULE 8.5 List of Opinions of Seller's Counsel
SCHEDULE 9.4 List of Opinions of Investor's Counsel
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COMMON SHARE PURCHASE AGREEMENT
THIS COMMON SHARE PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of July 3, 1997, by and among AMERICAN INDUSTRIAL PROPERTIES
REIT, a Texas real estate investment trust ("SELLER"), and ABKB/LASALLE
SECURITIES LIMITED PARTNERSHIP, a registered investment advisor (the
"Investor"), as agent for and for the benefit of a particular client.
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, the number of Common Shares having an aggregate purchase
price as specified herein (the "Shares") upon the terms and subject to the
conditions set forth in this Agreement.
C. The proceeds from the sale of the Shares are to be used for
the purposes set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION
a. DEFINITIONS. The capitalized terms used in
this Agreement, the Exhibits and the Schedules
attached hereto shall have the meanings set forth
below:
"ACTION" means any action, complaint, investigation, suit or
other proceeding, whether civil or criminal, in law or in equity, or before any
mediator, arbitrator or Governmental Entity.
"AFFILIATE" means a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, a specified Person.
"AGREEMENT" means this Common Share Purchase Agreement, by and
between Seller and the Investor, as agent for and for the benefit of a
particular client, as amended from time to time pursuant to the terms of this
Agreement, together with all Exhibits and all Schedules attached hereto.
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"ANNUAL MEETING" shall mean the Seller's annual meeting that
was held on June 30, 1997.
"APPROVAL" means any approval, authorization, consent,
qualification or registration, or any waiver of the foregoing, or any notice,
statement or other communication required to be filed with or delivered to any
Governmental Entity or any other Person.
"ASSOCIATE" of a Person means
(i) a corporation or organization (other than Seller or a
party to this Agreement) of which such Person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities;
(ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar capacity; and
(iii) any relative or spouse of such Person who has the same
residence as such Person.
"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.3(a) of this Agreement.
"AUDITORS" means Ernst & Young, LLP, independent public
accountants to Seller.
"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.
"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
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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 each 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 $.10 per share, of Seller.
"CONTRACT" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
whether or not in writing.
"CURRENTLY OUTSTANDING SHARES" has the meaning set forth in
Section 2.4 of this Agreement.
"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 approved at the Annual Meeting, and (ii) a
$25 million line of credit from Prudential Securities Incorporated or its
Affiliates (the "Prudential Line of Credit").
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"ENCUMBRANCE" means any claim, charge, easement, encumbrance,
lease, covenant, security interest, lien, option, pledge, rights of others,
preferential right, right of first refusal or restriction (whether on voting,
sale, transfer, disposition or otherwise), whether imposed by agreement,
understanding, law, equity or otherwise, except that "Encumbrance" does not
include any such item that (i) is reflected in the Audited Financial Statements
or (ii) constitutes a statutory lien arising in the ordinary course of
business.
"ENVIRONMENTAL CLAIMS" means any of the following to the
extent they relate to, or arise out of, directly or indirectly, Environmental
Noncompliance with respect to the Properties or actual or alleged Environmental
Conditions or any Notification which may lead to: (i) claims, demands, suits,
causes of action for personal injury, death or property damage; (ii) claims for
actual or threatened damages to natural resources; (iii) claims for the
recovery of response costs, or administrative or judicial orders directing the
performance of investigations, response or remedial actions under any
Environmental Law; (iv) a requirement to implement "corrective action" pursuant
to any restitution, contribution or equitable indemnity to third parties or any
Governmental Entity; (v) fines, penalties, liens against the Properties; (vi)
claims for injunctive relief or other orders or notices of violation from any
Governmental Entity; or (vii) with regard to any present or former employees,
tenants or guests, exposure to or injury from Environmental Conditions.
"ENVIRONMENTAL CONDITIONS" means conditions of the
environment, including the ocean, natural resources (including flora and
fauna), soil, surface water, ground water, any actual or potential drinking or
water supply, subsurface strata, or air, including ambient air, relating to or
arising out of the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal, dumping or threatened
release of Hazardous Materials from, in, on, or onto the Properties.
"ENVIRONMENTAL NONCOMPLIANCE" means any of the following to
the extent they are applicable to the Properties or alleged to be applicable to
the Properties or to Seller, Subsidiaries or a Seller Partnership: (i) the
Release of any Hazardous Material into the environment, any storm drain, sewer,
septic system or publicly-owned treatment works, in violation of any effluent
or emission limitations, standards or other criteria or guidelines established
by any Environmental Law; (ii) any noncompliance of physical structure,
equipment, process or premises with the requirements of building or fire codes,
zoning or land use regulations or ordinances or conditional use permits; (iii)
any noncompliance with federal, state or local requirements governing
occupational safety and health; (iv) any operations, procedures and designs at
or on the Properties which do not conform to the statutory or regulatory
requirements of any Law (including land use regulations and ordinances)
intended to protect public health, welfare and the environment; (v) the failure
to have obtained permits, licenses, variances or other governmental
authorizations necessary for the legal use and/or operation of any equipment,
process or any activity at the Properties; or (vi) the operation and/or use of
any process or equipment in violation of any permit condition, schedule of
compliance, administrative or court order.
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"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.
"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
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amended ("CWA") (33 U.S.C. Sections 1251 et seq.); (iv) the Toxic Substances
Control Act, as now or hereafter amended ("TSCA") (15 U.S.C. Sections 2601 et
seq.); (v) the Clean Air Act, as now or hereafter amended ("CAA") (42 U.S.C.
Sections 7401 et seq.) (RCRA, CERCLA, CWA, TSCA and CAA are collectively
referred to herein as the "FEDERAL ENVIRONMENTAL LAWS"); (vi) any local, state
or foreign law, statute, regulation, or ordinance analogous to any of the
Federal Environmental Laws; or (vii) any other federal, state, local, or
foreign law (including any common law), statute, regulation, or ordinance
regulating, prohibiting, or otherwise restricting the placement, Release,
threatened Release, generation, treatment, or disposal upon or into any
environmental media of any substance, pollutant, or waste which is now or
hereafter classified or considered to be hazardous or toxic to human health or
the environment. All of the laws, statutes, regulations and ordinances referred
to in subsections (vi) and (vii) above, together with the Federal Environmental
Laws, are collectively referred to herein as "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
11.3(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 which after the Annual Meeting shall consist
of one Trust Manager designee of Investor, one Trust Manager designee of
Realco, one Trust Manager designee of MSAM and one independent Trust Manager.
"INVESTOR" means ABKB/LaSalle Securities Limited Partnership
Advisors Limited Partnership, a registered investment advisor.
"INVESTOR INDEMNIFIED PERSON" has the meaning set forth in
Section 11.1 of this Agreement.
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"LAW" means any constitutional provision, statute or other
law, rule, regulation or interpretation of any thereof and any Order of any
Governmental Entity (including Environmental Laws, including, without
limitation, the Americans with Disabilities Act).
"LOSS" means any claim, amount paid in settlement, cost,
damage (including, without limitation, consequential damage), disbursement,
expense (including legal fees and expenses), liability, loss, deficiency,
diminution in value or obligation.
"MATERIAL CONTRACT" means any Contract to which Seller, any
Subsidiary or any Seller Partnership is a party or by which any such Person or
any of their respective Properties are bound that currently is in effect and
(a) after December 31, 1996 obligates Seller, any Subsidiary or any Seller
Partnership to pay an amount equal to $100,000 or more, (b) is one of the group
of Tenant Leases that is anticipated by Seller to produce 66 2/3% of Seller's
gross income during the fiscal year ending December 31, 1997, such group of
Tenant Leases calculated beginning with the Tenant Lease that is anticipated to
produce the most gross income during such period and thereafter in descending
order of magnitude of gross income anticipated to be earned during such period
under each other Tenant Lease until such percentage of gross income is reached,
(c) is a Tenant Lease involving the lease of space in excess of 10,000 square
feet for any Property, (d) other than any Tenant Lease, has an unexpired term
as of December 31, 1996 in excess of five (5) years, (e) other than any Tenant
Lease, contains a covenant not to compete or otherwise significantly restricts
business activities of Seller, any Subsidiary or any Seller Partnership, (f)
provides for the extension of credit by Seller, any Subsidiary or any Seller
Partnership or a line of credit to Seller, any Subsidiary or any Seller
Partnership in excess of $50,000, (g) provides for a guaranty or indemnity by
Seller, any Subsidiary or any Seller Partnership, (h) grants a power of
attorney, agency or similar authority to another Person, (i) contains an option
to purchase or a right of first refusal relating to any of the Properties, (j)
relates to the sale or issuance of any equity securities of Seller or
securities exercisable for or convertible into any equity securities of Seller,
or (k) any other Contract that is not within the general descriptions of
clauses (a) through (j) (i.e., is not a Tenant Lease or within any of the other
general categories listed above) but is material to the business, financial
condition, assets, results of operations or prospects of Seller, Subsidiaries
or Seller Partnerships.
"MINIMUM EQUITY CAPITALIZATION" means $150 million as
calculated using the average closing price of the Common Shares on the New York
Stock Exchange for the 10 trading days immediately preceding the applicable
date of determination multiplied by the current number of issued and
outstanding Common Shares and Common Share equivalents; provided, however, it
shall not in any event include operating partnership units in excess of $50
million.
"MSAM" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Asset Management, Inc., a Delaware
corporation.
"MSAM PURCHASE AGREEMENT" means that certain Common Share
Purchase Agreement dated as of June 20, 1997, by and among Seller, MSRE and
MSAM pursuant to which MSRE and MSAM, as agent and attorney-in-fact on behalf
of certain clients, have agreed to
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purchase up to $20 million of Common Shares of Seller on terms and conditions
substantially similar to the terms and conditions contained herein.
"MSAM PURCHASERS" means the clients of MSAM listed on Exhibit
A to the MSAM Purchase Agreement.
"MSRE" means MS Real Estate Special Situations Inc., a
Delaware corporation.
"NOTIFICATION" means any summons, citation, directive, order,
claim, litigation, pleading, investigation, proceeding, judgment, letter or any
other written or oral communication from any Governmental Entity, any entity or
any individual, concerning any intentional or unintentional act or omission
which has resulted in or which may result in any Environmental Noncompliance or
Environmental Claim.
"ORDER" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"OTHER PECUNIARY OWNERS" means the other pecuniary owners for
whom the Investor is acting as agent for and on behalf of in connection with
the purchase of Common Shares of the Seller pursuant to Common Share Purchase
Agreements dated the date hereof similar to this Agreement and who, along with
the Pecuniary Owner, are purchasing Common Shares having an aggregate purchase
price of up to $15 million.
"PECUNIARY OWNER" means the client of Investor for whom
Investor is acting as Agent for and for the benefit of, in connection with the
purchase of the Common Shares pursuant to the Agreement.
"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.
"PREEMPTIVE RIGHTS" has the meaning set forth in Section 6.8
of this Agreement.
"PREFERRED SHARES" 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.
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"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.
"REALCO DEBT" has the meaning set forth in Section 3.2 of this
Agreement.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement among Seller, and Investor, as agent for and on behalf of the
Pecuniary Owner and certain Other Pecuniary Owners, 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 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 11.2 of this Agreement.
"SELLER PARTNERSHIPS" has the meaning set forth in Section 3.1
of this Agreement.
"SELLER PERMITS" has the meaning set forth in Section 3.7(b)
of this Agreement.
"SHARE PRICE" has the meaning set forth in Section 2.1 of this
Agreement.
"SHAREHOLDER APPROVAL" means the approval by Seller's
shareholders at the Annual Meeting of the proposal to approve the sale to
Investor of Common Shares having an aggregate
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purchase price of up to $15 million, and the authorization of the issuance of a
sufficient number of Common Shares to allow such sale to occur.
"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.
"THRESHOLD EQUITY CAPITALIZATION" means equity capitalization
of $250 million, calculated in the same manner as Minimum Equity
Capitalization.
"UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.3(b) of this Agreement.
b. RULES OF CONSTRUCTION. This Agreement shall be
construed in accordance with the following rules of
construction:
(a) the terms defined in this Agreement include the plural as well
as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings given such terms under GAAP;
(c) all references in the Agreement to designated "Sections" and
other subdivisions are to the designated Sections and other subdivisions of the
body of this Agreement;
(d) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms;
(e) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision;
(f) the words "includes" and "including" are not limiting; and
(g) knowledge of any Subsidiary or any Seller Partnership shall be
deemed to be knowledge of Seller.
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SECTION 2. PURCHASE AND SALE
a. PURCHASE AND SALE OF THE COMMON SHARES. Subject to
the terms and conditions set forth herein, Seller
shall sell and issue to Investor, and Investor shall
purchase from Seller, up to an aggregate of 1,956,123
Common Shares (the "Shares") at a price of $2.45 per
Common Share, subject to adjustment as set forth in
Section 5.5 (the "Share Price").
b. USE OF PROCEEDS. The proceeds of the purchase of
Shares hereunder shall be used by the Seller to
purchase real property as approved by the Investment
Committee.
c. CLOSING.
i. The Closing shall occur on or before July 11, 1997,
(the "CLOSING DATE"), and the Investor shall purchase
the number of Shares specified in Section 2.1.
ii. At the Closing, Seller shall deliver to the Investor
the certificates evidencing the Shares purchased by
the Investor on the applicable Closing Date,
registered in the name of the Investor or its
nominee. In addition, all other actions shall be
taken and all other documents shall be delivered
which are necessary to consummate the purchase and
sale of the Shares purchased by the Investor on the
applicable Closing Date.
iii. At the Closing, the Investor shall pay and deliver to
Seller the Purchase Price for the Shares being
purchased by the Investor at the Closing.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to, and agrees with, the Investor and
the Pecuniary Owner as follows:
a. ORGANIZATION AND RELATED MATTERS. Seller is duly
organized, validly existing and in good standing
under the laws of the State of Texas. Seller has all
necessary power and authority to execute, deliver and
perform this Agreement. Schedule 3.1 lists all
Subsidiaries (the "SUBSIDIARIES") and all
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, with
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respect to each Subsidiary, in good standing under
the laws of the jurisdiction of its incorporation or
organization. Seller, Subsidiaries and Seller
Partnerships have all necessary power (whether
corporate, partnership or other power, as applicable)
and authority to own their respective properties and
assets and to carry on their respective businesses as
now conducted. Seller, Subsidiaries and Seller
Partnerships are duly qualified or licensed to do
business as foreign Persons in good standing in all
jurisdictions in which the character or the location
of the assets owned or leased by any of them or the
nature of the business conducted by any of them
requires licensing or qualification, except where the
failure to be so qualified or licensed is not and
will not be material to their respective businesses,
financial condition, assets, results of operations or
prospects. Schedule 3.1 correctly lists the current
Trust Managers, directors, general partners and
executive officers of Seller, Subsidiaries and Seller
Partnerships. True, correct and complete copies of
the Charter Documents and the charter or
organizational documents of Subsidiaries and Seller
Partnerships (including the declaration of trust,
articles or certificate of incorporation, bylaws and
partnership agreements, as applicable) as in effect
on the date hereof have been delivered to the
Investor. Seller is registered and is a reporting
company under the Exchange Act. Neither any
Subsidiary nor any Seller Partnership is registered
or is a reporting company under the Exchange Act.
Except as listed on Schedule 3.1, Seller does not
directly or indirectly own or control any equity
interest in any Person.
b. CAPITAL STOCK; TITLE TO SHARES. The authorized
Capital Stock of Seller consists of 500,000,000
Common Shares, 10,000,000 of which are issued and
outstanding and 10,000,000 Preferred Shares, none of
which are issued and outstanding. Seller owns all of
the outstanding Capital Stock of Subsidiaries free
and clear of any Encumbrances, equities and claims
except as specified in Schedule 3.2. Seller owns the
equity interest in each Seller Partnership free and
clear of any Encumbrances, equities and claims except
as specified in Schedule 3.2. No Common Shares or
Capital Stock of any Subsidiary are held in treasury.
Except as set forth in Schedule 3.2 or as
contemplated in this Agreement, there are no
outstanding Contracts or other rights to subscribe
for or purchase, or Contracts or other obligations to
issue or grant any rights to acquire, any Common
Shares, any Capital Stock of any Subsidiary or any
Seller Partnership or to restructure or recapitalize
Seller, any Subsidiary or any Seller Partnership.
Except as set forth in Schedule 3.2, there are no
outstanding Contracts of Seller, any Subsidiary or
any Seller Partnership to repurchase, redeem or
otherwise acquire any of their respective Common
Shares or Capital Stock, as applicable. No bonds,
debentures, notes or other indebtedness having
general voting rights (or convertible into securities
having general voting rights) of Seller, any
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Subsidiary or any Seller Partnership are issued or
outstanding other than the Seller's note in the
aggregate principal amount of $5,449,618 (the "REALCO
DEBT") held by Realco. 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 contemplated by this Agreement, there are
no preemptive rights in respect of any Common Shares
or Capital Stock of any Subsidiary or any Seller
Partnership. Upon any issuance of Shares to the
Investor, such Shares will have been duly authorized,
validly issued and be validly outstanding, fully paid
and nonassessable, and the issuance of such Shares
will not be subject to preemptive rights of any other
shareholder of Seller and such Shares will be issued
in compliance with all applicable federal and state
laws and stock trading requirements. Each Buyer shall
receive good and marketable title to all Shares
acquired by such Buyer pursuant to this Agreement,
free and clear of 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. Such Shares will rank equally
with all other Common Shares of Seller with respect
to priority in payment of dividends and the
distribution of assets upon any liquidation of
Seller, and except for a class of preferred shares of
beneficial interest which the shareholders approved
at the Annual Meeting, none of which shall be issued
and outstanding as of the First Closing Date, there
are no shares of any class of Capital Stock of Seller
having any priority in respect thereof. All of the
outstanding securities of Seller were issued in
compliance with all applicable federal and state
securities laws.
c. FINANCIAL STATEMENTS.
i. AUDITED FINANCIAL STATEMENTS. Seller has delivered to
the Investor the consolidated balance sheets of
Seller (which reflect the financial position of all
Subsidiaries and Seller Partnerships), as of 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
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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.
ii. UNAUDITED FINANCIAL STATEMENTS. Seller has delivered
to the Investor the consolidated balance sheets of
Seller (which reflect the financial position of all
Subsidiaries and Seller Partnerships), as of March
31, 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 applied on a
consistent basis (except for changes, if any,
disclosed therein). The Unaudited Financial
Statements present fairly, in all material respects,
the consolidated financial condition and results of
operations of Seller, Subsidiaries and Seller
Partnerships as of March 31, 1997.
iii. NO MATERIAL ADVERSE CHANGES. Since March 31, 1997,
except as set forth in Schedule 3.3, or specifically
disclosed in any SEC Filings filed since March 31,
1997 and prior to the date of this Agreement (copies
of which have been provided to the 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:
(1) any change in or event affecting the business
of Seller, Subsidiaries and Seller Partnerships that
has had a material adverse effect on such business or
any materially adverse change or trend in the
business, financial condition, assets, results of
operations or prospects of Seller, Subsidiaries or
Seller Partnerships, or
(2) any condition or action which would be
proscribed by (or require consent under) Section 5.3
had it existed, occurred or arisen after the date of
this Agreement, or
(3) any casualty, loss, damage or destruction of
any real property of Seller, any Subsidiary or any
Seller Partnership that has involved or may involve a
Loss (whether or not covered by insurance) to Seller,
any Subsidiary or any Seller Partnership of more than
$100,000 individually, or $300,000 in the aggregate.
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iv. NO OTHER LIABILITIES OR CONTINGENCIES. Neither Seller
nor any Subsidiary nor any Seller Partnership has any
material liability of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or
to become due, probable of assertion or not, except
liabilities that (i) were incurred after March 31,
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.
d. 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 the 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.
e. AUTHORIZATION; NO CONFLICTS. Seller has the requisite
power and authority to enter into this Agreement and
the Registration Rights Agreement and to carry out
its obligations hereunder and thereunder. Except for
the share ownership limitation contained therein, the
Charter Documents do not in any way prevent or
restrict the transactions contemplated hereby or
preclude the Investor acting as agent on behalf of
the Pecuniary Owner, or the Pecuniary Owner from
owning or holding the amount, value or class of
Common Shares to be purchased hereby. The execution,
delivery and performance of this Agreement by Seller
has been duly and validly authorized by the Trust
Managers and by all other necessary action on the
part of Seller, and no other proceedings on the part
of Seller (including Trust Manager and shareholder
approval) are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby
except the shareholder consent needed to increase the
number of authorized Common Shares to allow the
issuance and sale of Shares on any Closing Date to
occur. This Agreement has been duly
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executed and delivered by Seller and constitutes the
legally valid and binding obligation of Seller,
enforceable against Seller in accordance with its
terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium
and other similar laws and equitable principles
relating to or limiting creditors' rights generally
(collectively, "EQUITABLE REMEDIES"). Except as set
forth in Schedule 3.5, the execution, delivery and
performance of this Agreement by Seller and the
consummation by Seller of the transactions
contemplated hereby will not (i) conflict with or
result in the breach or violation of any provisions
of, or trigger any preferential rights under, the
Charter Documents or the charter or organizational
documents of Subsidiaries or Seller Partnerships,
(ii) result in a breach or violation of, a default
under, or the triggering of any payment or other
material obligations pursuant to, or accelerate
vesting under, any Seller Benefit Plans or any grant
or award thereunder or any employment or consulting
agreement or arrangement of Seller, any Subsidiary or
any Seller Partnership, (iii) violate, conflict with,
result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of
time or both, would constitute a default) under,
result in the termination or in a right of
termination or cancellation of, accelerate the
performance required by, result in the creation of
any Encumbrance upon any Properties under, result in
the triggering of any rights under, or result in
being declared void, voidable or without further
binding effect, any of the terms or provisions of any
Material Contract of Seller, any Subsidiary or any
Seller Partnership or (iv) violate any Law. Schedule
3.5 lists all Permits and Approvals required to be
obtained by Seller, Subsidiaries and Seller
Partnerships to consummate the transactions
contemplated hereby. Except for matters identified in
Schedule 3.5 as requiring that certain actions be
taken by or with respect to a third party or
Governmental Entity, the execution and delivery of
this Agreement by Seller and the consummation of the
transactions contemplated hereby will not require the
consent, authorization or approval 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.
f. 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 or affecting
Seller, any Subsidiary, any Seller Partnership, any
Trust Manager in his capacity as a Trust Manager of
Seller or any of the Properties which (i) questions
the validity of this Agreement, the Registration
Rights Agreement or any action taken or to be taken
pursuant hereto or thereto, (ii) may adversely affect
the right, title or interest of the Investor to the
Shares or (iii) individually or when aggregated with
one or
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more other Orders or Actions has, or if determined
adversely will have, a material adverse effect on the
business, financial condition, assets, results of
operations or prospects of Seller, any Subsidiary or
any Seller Partnership or on Seller's ability to
perform this Agreement. To Seller's knowledge,
Schedule 3.6 lists each Order and each Action that
(i) involves a claim or potential claim of aggregate
liability in excess of $50,000 against Seller, any
Subsidiary or any Seller Partnership that is not
covered by insurance, (ii) involves a claim or
potential claim of aggregate liability brought by
Seller, any Subsidiary or any Seller Partnership
against a tenant under any Tenant Lease which Tenant
Lease obligates such tenant to pay rent to Seller,
any Subsidiary or any Seller Partnership during the
year ending December 31, 1997 in an amount equal to
or in excess of $150,000, or (iii) that enjoins or
seeks to enjoin any activity by Seller, any
Subsidiary or any Seller Partnership. There is no
matter as to which Seller, any Subsidiary or any
Seller Partnership has received any notice, claim or
assertion in connection with which any such Person
has or may reasonably be expected to have any right
to be indemnified by Seller, any Subsidiary or any
Seller Partnership.
g. COMPLIANCE WITH LAW AND PERMITS.
i. Seller, Subsidiaries and Seller Partnerships are
organized and have conducted their respective
businesses in accordance with applicable Laws,
neither Seller nor any Subsidiaries or Seller
Partnerships has received any notice of violation of
any Laws which remains uncorrected, and the
respective forms, procedures and practices of Seller,
Subsidiaries and Seller Partnerships are in
compliance with all such Laws, to the extent
applicable, the violation of which would have a
material adverse effect on the respective businesses,
financial condition, assets, results of operations or
prospects of Seller, Subsidiaries and Seller
Partnerships.
ii. Except as set forth in Schedule 3.7, Seller,
Subsidiaries and Seller Partnerships hold all
permits, licenses, variances, exemptions,
authorizations, orders and approvals of all
Governmental Entities necessary for the lawful
conduct of their respective businesses (the "SELLER
PERMITS") and Seller, Subsidiaries and Seller
Partnerships are in compliance with the terms of the
Seller Permits relating to each such Person, except
where the failure to hold such Seller Permits or be
in compliance therewith would not, individually or in
the aggregate, have a material adverse effect on the
business, financial condition, assets, results of
operations or prospects of Seller, Subsidiaries or
Seller Partnerships. Seller has made available to the
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
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review by any Governmental Entity with respect to
the Seller Permits is pending or threatened.
h. 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.
i. CERTAIN INTERESTS. Except as set forth in Schedule
3.1 and Schedule 3.9, no Affiliate of Seller, any
Subsidiary or any Seller Partnership, nor any of
their respective officers, Trust Managers, directors
or partners, nor any Associate of any such
individual, has any material interest in any property
used in or pertaining to the respective businesses of
Seller, any Subsidiary or any Seller Partnership.
Except as set forth in Schedule 3.1 and Schedule 3.9,
no such Person is indebted or otherwise obligated to
Seller, any Subsidiary or any Seller Partnership.
Except as set forth in Schedule 3.9, Seller,
Subsidiaries and Seller Partnerships are not indebted
or otherwise obligated to any such Person, except for
amounts due under normal arrangements applicable to
all employees generally as to salary or reimbursement
of ordinary business expenses not unusual in amount
or significance. Except as set forth in Schedule 3.1
and Schedule 3.9, there are no material transactions
between Seller, any Subsidiary or any Seller
Partnership and any Affiliate of Seller, any
Subsidiary or any Seller Partnership or any Associate
of any such Affiliate that have continuing
obligations of any party thereunder. Except as set
forth in Schedule 3.9, the consummation of the
transactions contemplated by this Agreement will not
(either alone, or upon the occurrence of any act or
event, or with the lapse of time, or both) result in
any compensation or severance or other payment or
benefit arising or becoming due from Seller, any
Subsidiary or any Seller Partnership or any of its
assigns to any Person.
j. NO BROKERS OR FINDERS. No agent, broker, finder, or
investment or commercial banker, or other Person or
firm engaged by or acting on behalf of Seller or any
of its Affiliates in connection with the negotiation,
execution or performance of this Agreement or the
transactions contemplated by this Agreement, is or
will be entitled to any brokerage or finder's or
similar fee or other commission as a result of this
Agreement or such transactions except for a fee
payable to Prudential Securities Incorporated.
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k. EMPLOYEE BENEFIT PLANS. Schedule 3.11 lists all
employee benefit plans and collective bargaining,
labor and employment agreements or other similar
benefit arrangements to which either Seller, any
Subsidiary, or any Seller Partnership is a party or
by which either Seller, any Subsidiary, or any Seller
Partnership is bound (collectively, the "SELLER
BENEFIT PLANS"), including (i) any profit-sharing,
deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement,
severance, welfare or incentive plan, agreement or
arrangement, (ii) any plan, agreement or arrangement
providing for "fringe benefits" or perquisites to
employees, officers, directors, trust managers or
agents, including benefits relating to automobiles,
clubs, vacation, child care, parenting, sabbatical,
sick leave, medical, dental, hospitalization, life
insurance and other types of insurance, (iii) any
employment agreement not terminable on 30 days (or
less) written notice or (iv) any other "employee
benefit plan" within the meaning of Section 3(3) of
ERISA. True and complete copies of the Seller Benefit
Plans, current descriptive booklets and summary plan
descriptions of the Seller Benefit Plans, any
relevant trust agreements or insurance policies or
contracts and, if applicable, the most recent annual
return on Form 5500 (or equivalent form) have been
made available to the Investor. To the extent
applicable, the Seller Benefit Plans comply, in all
material respects, with the requirements of ERISA and
the Code. Except as set forth in Schedule 3.11, no
Seller Benefit Plan is or is intended to be a stock
bonus, pension or profit-sharing plan within the
meaning of Section 401(a) of the Code. Neither any
Seller Benefit Plan nor Seller, any Subsidiary, or
any Seller Partnership has incurred any liability or
penalty under Section 4975 of the Code or Section
502(i) of ERISA. Each Seller Benefit Plan has been
maintained and administered in all material respects
in compliance with its terms and with ERISA and the
Code to the extent applicable thereto. Except as set
forth in Schedule 3.11, there are no pending, or to
the knowledge of Seller threatened, claims (other
than pursuant to the terms of any such plan) against
or otherwise involving any of the Seller Benefit
Plans and no Action has been brought against or with
respect to any Seller Benefit Plan, and neither
Seller nor any Subsidiary nor any Seller Partnership
has incurred any liability to any party with respect
to any Seller Benefit Plan. All contributions
required to be made to the Seller Benefit Plans have
been made or provided for. Except as set forth in
Schedule 3.11, neither Seller nor any Subsidiary nor
any Seller Partnership maintains or contributes to
any plan or arrangement which provides or has any
liability to provide life insurance or medical or
other employee welfare benefits to any employee or
former employee upon his retirement or termination of
employment and neither Seller nor any Subsidiary nor
any Seller Partnership has represented, promised or
contracted (whether in oral or written form) to any
employee or former
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employee that such benefits would be provided. Except
as set forth in Schedule 3.11, the execution of, and
performance of the transactions contemplated by, this
Agreement will not (either alone or upon the
occurrence of any additional or subsequent event)
constitute an event under any Seller Benefit Plan or
other policy, arrangement or any trust or loan that
will or may result in any payment (whether of
severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits
with respect to any employee. No Seller Benefit Plan
is subject to Title IV of ERISA and neither Seller
nor any Subsidiary nor any Seller Partnership has,
within six years prior to the date of this Agreement,
contributed to or had any obligation to contribute to
any employee benefit plan subject to Title IV of
ERISA. For purposes of this Section 3.11, (i) the
term "Seller" includes any entity required to be
aggregated with the Seller pursuant to Code Section
414(b), (c), (m) or (o) and (ii) provisions of ERISA
or the Code include regulations prescribed under such
provisions.
l. 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.
m. PROPERTIES.
i. 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,
marketable 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
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payable, (ii) easements for utilities servicing the
Properties and (iii) such Encumbrances as do not
materially detract from or interfere with the present
use of the Properties subject thereto or affected
thereby, or otherwise materially impair the use or
value of such Properties.
ii. Seller has delivered to the 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 April 30, 1997 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
condemnation or similar proceeding affecting the land, the improvements or the
personalty situated at the Properties or any portion thereof, and neither
Seller nor any Subsidiary nor any Seller Partnership has received any written
notice and has no knowledge that any such proceeding is contemplated.
(d) The continued ownership, operation, use and occupancy of the
land or the improvements thereon do not violate any zoning, building,
administrative or other law, ordinance, order or regulation or any restrictive
covenant applicable to the Properties, the violation of which would have a
material adverse effect on the business, financial condition, assets, results
of operations or prospects of Seller, Subsidiaries or Seller Partnerships, as
applicable, and no written notice of any
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such violation has been received by Seller, any Subsidiary or any Seller
Partnership from any Governmental Entity.
(e) Seller, Subsidiaries or Seller Partnerships, as applicable,
currently has in place title, liability, casualty and other insurance coverage
with respect to the Properties in such amounts as are reasonable and customary
for properties similar to the Properties. Each of such policies is in full
force and effect, and all premiums due and payable thereunder have been, and on
any Closing Date will be, fully paid when due. No notice of cancellation has
been received, or to the knowledge of Seller threatened, with respect thereto.
(f) Except as set forth in Schedule 3.13, there is no Action
pending, or to the knowledge of Seller contemplated, by any Governmental Entity
or third party to levy any special assessments against the Properties that, if
successful, would have a material adverse effect on the business, financial
condition, assets, results of operations or prospects of Seller, any Subsidiary
or any Seller Partnership.
(g) To Seller's knowledge, each unsatisfied brokerage obligation
that is in excess of $25,000 with respect to the Properties is set forth on
Schedule 3.13.
(h) To Seller's knowledge and except as set forth on Schedule
3.13, no capital expenditures are contemplated by Seller to be incurred by
Seller, any Subsidiary or any Seller Partnership within twelve months after the
date of this Agreement in excess of $50,000 per Property with respect to any
Property.
(i) Except as set forth in Schedule 3.13, all management contracts
with respect to the Properties are terminable by Seller on 30 days notice.
(j) To Seller's knowledge, except for customary easements for
access to building systems or utilities and except as set forth in Schedule
3.13, each Property is an independent unit which does not now rely on any
facilities (other than facilities of municipalities or public utilities)
located on any property that is not part of the Property for the furnishing to
the Property of any essential building systems or utilities (including drainage
facilities, catch basins and retention ponds) that if the owner of the Property
could not avail the use of which, would materially detract from the value of
the Property or materially interfere with the use of the Property.
3.14 TAX MATTERS.
(a) For purposes of this Agreement, "TAXES" means any federal
(including, without limitation, tax on its undistributed taxable income,
alternative minimum tax, tax on certain sale proceeds or other nonqualifying
income from foreclosure property or on income from prohibited transactions, and
any taxes imposed upon Seller, Subsidiaries or Seller Partnerships under
Section 857 or Section 4981 of the Code), state, county, local or foreign
taxes, charges, fees, levies, or other assessments, including, without
limitation, all net income, gross income, sales and use, ad valorem,
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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.
(c) Seller elected to be taxed as a REIT under Sections 856
through 860 of the Code effective for its taxable year ended December 31, 1985
(the "INITIAL REIT YEAR"). Seller, since the Initial REIT Year through the end
of the immediately preceding taxable year, has always qualified as a REIT under
the Code. At all times from and after the Initial REIT Year to the date hereof,
Seller has complied with, and through the Closing Date will comply with, all
applicable Code and regulatory requirements necessary to maintain its
qualification as a REIT under the Code and has otherwise operated, and through
the Closing Date will have otherwise operated, in the manner necessary to
maintain its qualification as a REIT under the Code. No dividend will be
required to be distributed before December 31, 1997 in order for Seller to
maintain its qualification as a REIT under the Code.
(d) Except as disclosed in Schedule 3.14, Seller, Subsidiaries and
Seller Partnerships have (i) filed all Tax Returns required to be filed by
applicable Law since December 31, 1990, and all such Tax Returns were in all
material respects (and, as to Tax Returns not filed as of the date hereof but
filed on or before the Closing Date, will be in all material respects) true,
complete and correct and filed on a timely basis and (ii) within the time and
in the manner prescribed by law, paid (and until the Closing Date will pay
within the time and in the manner prescribed by law) all material Taxes that
were or are due and payable.
(e) Except as set forth in Schedule 3.14, Seller, Subsidiaries and
Seller Partnerships have established (and until the Closing Date will maintain)
on their respective books and records reserves adequate to pay all Taxes of
Seller, Subsidiaries and Seller Partnerships not yet due and payable in
accordance with GAAP which are reflected in the Audited Financial Statements
and Unaudited Financial Statements to the extent required by GAAP.
(f) Except as disclosed in Schedule 3.14, as of the date hereof,
there are no, and, as of any 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
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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, 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 First Closing Date.
(k) Seller has made available (or, with respect to all Tax Returns
filed after the date hereof, will make available) to the 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 First 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 the 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 First 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).
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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 the 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.
3.16 INSURANCE. Schedule 3.16 sets forth a complete and correct
list of all insurance policies, except for title insurance policies, currently
in force insuring against risks of Seller, Subsidiaries and Seller
Partnerships. Seller, Subsidiaries and Seller Partnerships are in compliance
with the terms of such policies applicable to them and there are no claims by
Seller, any Subsidiary or any Seller Partnership under any such policy as to
which any insurance company is denying liability or defending under a
reservation of rights clause.
3.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth in the documentation provided to Seller
pursuant to Section 3.17(b) and in Schedule 3.17, there is no material
Environmental Noncompliance with respect to any Property and there are no
material Environmental Claims with respect to any Property or the Seller, any
Subsidiary or any Seller Partnership or, to the knowledge of Seller, any
tenants under any of the Tenant Leases. All material permits, consents,
licenses, certificates, approvals, registrations, and authorizations in
connection with environmental matters (collectively, "ENVIRONMENTAL PERMITS")
which are required by any Law have been obtained and are valid. The Properties
(and all uses thereof and operations conducted thereon) comply in all material
respects with all Environmental Permits. All operations on or at the Properties
conducted by Seller are and have been conducted in all material respects in
compliance with applicable Environmental Laws. Except as set forth in the
documentation provided to Seller pursuant to Section 3.17(b) and in Schedule
3.17, Seller has not received any Notification from any Governmental Entity
seeking any information or alleging any violation of any Law regarding
Environmental Conditions. Except as set forth in the documentation provided to
Seller pursuant to Section 3.17(b) and in Schedule 3.17, Seller has not caused
or given its verbal or written authorization to cause, and has no knowledge of,
any Release of any Hazardous Materials on-site or off-site of the Properties in
violation of any Environmental Law.
(b) Seller has made available to Investor true, correct, and
complete copies of all written reports of any environmental assessment,
compliance or regulatory audit, inspection, or investigation
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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.
3.18 TRUST RECORDS; ACCOUNTING RECORDS. The minute books of Seller
accurately reflect in all material respects all actions taken to the date of
this Agreement by the holders of Common Shares, the Trust Managers and
committees of the Trust Managers, except for those matters set forth in
Schedule 3.18 for which minutes of such actions have not yet been prepared or
approved. The share certificate books and records of Seller accurately reflect
the ownership of the Common Shares. Seller maintains accounting records which
fairly reflect, in all material respects, Seller's transactions.
3.19 NEW YORK STOCK EXCHANGE LISTING. The outstanding Common Shares
are listed on the New York Stock Exchange. The issuance or sale and delivery of
any Shares to the Investor pursuant to this Agreement will not violate any
listing requirements of the New York Stock Exchange for the listing of Common
Shares, including the Shares.
3.20 DISCLOSURE OF FACTS. There are no facts peculiar to Seller,
Subsidiaries or the Seller Partnerships that Seller has not disclosed to the
Investor that materially adversely affect, or insofar as Seller can reasonably
foresee, will materially adversely affect, the business, financial condition,
assets, results of operations or prospects of Seller, Subsidiaries or Seller
Partnerships.
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 First 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% of the
interests in Seller.
3.22 SHAREHOLDER APPROVAL. The Seller's shareholders approved at
the Annual Meeting all of the proposals set forth in the Notice of Annual
Meeting of Shareholders and accompanying proxy statement dated May 12, 1997.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants with respect to itself (except as
indicated) to, and agrees with, Seller as follows:
a. ORGANIZATION AND RELATED MATTERS. It is a limited
partnership duly organized and validly existing under
the laws of the state of its organization. It has all
necessary partnership power and partnership authority
to carry on its business as now being conducted. It
has all necessary partnership power and partnership
authority to execute, deliver and perform this
Agreement and the transactions contemplated hereby.
b. AUTHORIZATION. This Agreement has been duly executed
and delivered by it and constitutes the legally valid
and binding obligation of the Investor and the
Pecuniary Owner, enforceable in accordance with its
terms, except as such enforceability may be limited
by Equitable Remedies. The execution and delivery of
this Agreement by it and the consummation of the
transactions contemplated hereby will not require
filing or registration with, or the issuance of any
Permit by, any other third party or Governmental
Entity under the terms of any applicable Law or its
material Contracts, other than any filing required
under the Exchange Act.
c. NO CONFLICTS. The execution, delivery and performance
of this Agreement 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.
d. 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 or the transactions contemplated by this
Agreement, is or will be entitled to any broker's or
finder's or similar fees or other commissions as a
result of this Agreement or such transactions.
e. 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 its business,
properties, or financial condition or on its ability
to perform this Agreement.
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f. INVESTMENT REPRESENTATION. This Agreement is made
with the Investor in reliance upon such Investor's
representation to Seller, which by such Investor's
execution of this Agreement such Investor hereby
confirms that the Shares will be acquired by the
Investor as agent for and on behalf of the Pecuniary
Owner, for the Pecuniary Owner's own account, not as
nominee or agent for any other party, 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.
g. LEGENDS; STOP-TRANSFER ORDERS.
i. The certificates for Shares will bear legends
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 SUCH LAWS OR IS EXEMPTED FROM SUCH REGISTRATION
REQUIREMENTS.
The foregoing legend shall be removed from any such certificate at the request
of the holder thereof at such time as the shares represented thereby are
registered under the Securities Act or become eligible for resale under Rule
144 promulgated under the Securities Act.
ii. The certificates for Shares may also bear any
legend required by any applicable state blue sky law.
iii. 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.
iv. Seller may impose appropriate stop-transfer
instructions relating to the restrictions set forth
herein.
h. STATUS FOR REIT OWNERSHIP AND INCOME TESTS.
At the Closing, to the best of Investor's knowledge,
the purchase of the Common
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Shares by the Pecuniary Owner will not result in a
"qualified trust" as defined in Code Section
856(h)(3) holding more than 25% in value of the
Seller's outstanding Capital Stock. The Pecuniary
Owner is not purchasing the Common Shares, and will
not hold any or all of the Common Shares so
purchased, through any arrangement or entity that
would be deemed, for federal income tax purposes, to
be a partnership between the Pecuniary Owner and any
or all of the Other Pecuniary Owners (other than
ABKB/LaSalle Securities Private Placement Limited
Partnership I, L.P.). The Common Shares that each
Pecuniary Owner owns will not be considered to be
owned by any individual (or entity treated as an
individual under Section 856(h) of the Code), 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.
i. AUTHORITY OF THE INVESTOR. The Investor is duly
authorized to enter into this Agreement and to
consummate the transactions contemplated hereby as
agent for and on behalf of the Pecuniary Owner.
SECTION 5. COVENANTS WITH RESPECT TO CONDUCT OF SELLER PRIOR TO
CLOSING
From the date of this Agreement up to and including the Closing Date,
Seller covenants and agrees to take such actions, or refrain from taking such
actions, as are set forth in this Section 5.
a. ACCESS. Seller shall, and shall cause the
Subsidiaries and Seller Partnerships to, authorize
and permit the Investor and its representatives
(which term shall be deemed to include its
independent accountants and counsel) to have
reasonable access during normal business hours, upon
reasonable notice and in such manner as will not
unreasonably interfere with the conduct of business,
to all of the Properties, books, records, operating
instructions and procedures, Tax Returns and all
other information with respect to the businesses of
Seller, Subsidiaries and Seller Partnerships as the
Investor may from time to time reasonably request,
and to make copies of such books, records and other
documents and to discuss the business of Seller,
Subsidiaries and Seller Partnerships with the
Investor and its partners and their respective
officers, employees, accountants and counsel, as the
Investor considers necessary or appropriate for the
purposes of familiarizing itself with the business of
Seller, obtaining any necessary Approvals of, or
Permits for, the transactions contemplated by this
Agreement and conducting an evaluation of the
organization and business of Seller. From the date of
this Agreement up to and including the Closing Date,
Seller will permit, and cause Subsidiaries and Seller
Partnerships to
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permit, the Investor and its officers, directors,
agents, attorneys, accountants, and representatives,
to audit such books and records, to meet with tenants
of the Properties, and to conduct such
investigations, tests, or inspections of the
Properties as Seller shall approve in Seller's sole
discretion, including intrusive sampling studies to
ascertain whether or not there are any Hazardous
Materials on, in, or under the Properties.
b. MATERIAL ADVERSE CHANGES; SEC FILINGS; REPORTS;
FINANCIAL STATEMENTS.
i. Seller shall promptly notify the Investor of
any event of which Seller obtains knowledge which has
had or might reasonably be expected to have a
material adverse effect on Seller's business or which
if known as of the date hereof would have been
required to be disclosed to the Investor.
ii. Seller will, and will cause the Subsidiaries
and Seller Partnerships to, furnish to the Investor
as soon as available copies of all SEC Filings, and
all material reports, renewals, filings,
certificates, statements and other documents filed
with any Governmental Entity.
c. CONDUCT OF BUSINESS. Except as set forth in Schedule
5.3 and as provided in Section 5.4, from the date of
this Agreement until the Closing Date, Seller agrees
with and for the benefit of Buyer that Seller shall
not, and Seller shall cause Subsidiaries and Seller
Partnerships not to, without the prior written
consent of the Investor, which consent may not
unreasonably be withheld:
i. conduct the business of Seller, Subsidiaries
and Seller Partnerships in any manner except in the
ordinary course consistent with past practices; or
ii. purchase any real property without the
consent of the Investment Committee; or
iii. declare, issue, make or pay any dividend or
other distribution of assets, whether consisting of
money, other tangible or intangible personal
property, real property or other thing of value, to
its shareholders, or split, combine, dividend,
distribute or reclassify any Common Shares or any
shares of its Capital Stock, as applicable, except
for dividends the record date of which is after the
First Closing Date; or
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iv. issue, sell, redeem or acquire for value, or
agree to do so, any debt obligations (other than the
Prudential Line of Credit), Common Shares or Capital
Stock; or
v. incur or agree to incur any obligation or
liability (absolute or contingent) that individually
calls for payment by Seller, any Subsidiary or any
Seller Partnership of more than $50,000 individually
or in the aggregate except for (i) liabilities (other
than indebtedness for borrowed money) incurred in the
ordinary course of business consistent with past
practices (including, but not limited to, tenant
improvements and capital improvements to Properties),
(ii) liabilities arising out of, incurred in
connection with, or related to the consummation of
the transactions contemplated by this Agreement,
(iii) payments to Realco under the Realco Debt and
(iv) purchases of real property in accordance with
Section 5.3(b); or
vi. merge (if Seller is not the surviving
entity), sell substantially all of its assets or
enter into any other contract involving any other
form of business combination or liquidate, wind-up or
dissolve (or suffer any liquidation or dissolution)
or adopt any plan of liquidation or dissolution; or
vii. change the number of Trust Managers or the
Board of Directors of any of the Subsidiaries, or
admit any additional partners to the Seller
Partnerships; or
viii. amend the Charter Documents or the charter or
organizational documents of the Subsidiaries or
Seller Partnerships; or
ix. sell, lease, transfer or otherwise dispose
of, or mortgage, pledge or otherwise encumber, other
than the lease of any Property or space therein in
the ordinary course of business consistent with past
practices, any of the Properties; or
x. cancel, satisfy or prepay any debt,
obligation, liability or encumbrance, or waive any
claim or right of value of Seller, Subsidiaries or
Seller Partnerships except the extinguishment of debt
under the Realco Debt through the conversion of the
Realco Debt to Common Shares; or
xi. (i) increase in any manner the compensation
or fringe benefits (including, but not limited to,
severance benefits) payable or to become payable by
Seller, Subsidiaries, or Seller Partnerships to any
officer, Trust Manager, director, partner, consultant
or independent contractor as salary
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or wages or under any bonus, insurance, welfare,
severance, deferred compensation, pension,
retirement, profit sharing, share option (including,
without limitation, the granting of any share option
or share appreciation right or performance or
restricted share award), share purchase or other
employee benefit plan, (ii) except as approved by the
Compensation Committee prior to the date of this
Agreement or except as approved by the Compensation
Committee and approved by a unanimous vote of the
Seller's Board of Trust Managers, increase in any
manner the compensation or fringe benefits
(including, but not limited to, severance benefits)
payable or to become payable by Seller, Subsidiaries
or Seller Partnerships to any employee who is not an
officer, Trust Manager, director or partner of
Seller, Subsidiaries or Seller Partnerships as salary
or wages or under any bonus, insurance, welfare,
severance, deferred compensation, pension,
retirement, profit sharing, share option (including,
without limitation, the granting of any share option
or share appreciation right or performance or
restricted share award), share purchase or other
employee benefit plan, except for such increase in
salary, bonuses or severance benefits to such
employees in the ordinary course of business
consistent with past practices and provided that all
such increases in salary, bonuses or severance
benefits do not have a material adverse effect on the
business, assets, financial condition or prospects of
Seller, Subsidiaries or Seller Partnerships, or (iii)
enter into, adopt, amend in any material respect
(except as required by law) or terminate any Seller
Benefit Plan or any agreement, arrangement, plan or
policy between Seller, Subsidiaries or Seller
Partnerships, as applicable, and one or more of its
Trust Managers, directors, partners, officers,
employees or independent contractors; or
xii. make any tax election other than in
connection with maintaining Seller's qualification as
a REIT or take any action that would cause Seller not
to qualify as a REIT, or fail to take any reasonable
action to preserve Seller's qualification as a REIT;
or
xiii. make any change in any significant accounting
principles or practices used by Seller, Subsidiaries
or Seller Partnerships, except as required by the
Commission; or
xiv. amend, modify or change the terms of any
Material Contract other than in the ordinary course
of business consistent with past practice and
provided that such amendment, modification or change
does not have a material adverse effect on the
business, assets, financial condition or prospects of
Seller, Subsidiaries or Seller Partnerships; or
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xv. except as provided in Section 5.3(b), acquire
any Person (or interest therein) or any material
amount of assets, or make any loans, advances or
capital contributions to, or investments in, any
Person; or
xvi. take any action that would, or fail to take
any action which failure would, result in any of
Seller's representations and warranties set forth in
this Agreement not being true; or
xvii. agree to or make any commitment to take any
action prohibited by this Section 5.3.
d. NOTIFICATION OF CERTAIN MATTERS. Seller shall give
prompt notice to the Investor, and the Investor shall
give prompt notice to Seller, of (a) the occurrence,
or failure to occur, of any event that causes any
representation or warranty contained in this
Agreement to be untrue or inaccurate at any time from
the date of this Agreement to the Closing Date and
(b) any failure of the Investor or Seller, as the
case may be, to comply with or satisfy, in any
material respect, any covenant, condition or
agreement to be complied with or satisfied by it
under this Agreement.
e. ADJUSTMENT OF SHARE PRICE. The Share Price will be
subject to adjustment from time to time prior to the
Closing Date as follows:
(a) If Seller shall at any time prior to the Closing Date
(i) pay a dividend or make any other distribution payable in Common Shares to
holders of any class of Capital Stock of Seller, (ii) subdivide or reclassify
the outstanding Common Shares into a greater number of shares or (iii) combine
or reclassify the outstanding Common Shares into a smaller number of shares,
the Share Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification will be proportionately adjusted so that the Investor will be
entitled to receive upon purchase after such time the number of Common Shares
that the Investor would have owned or been entitled to receive had such
purchase occurred immediately prior to such time. An adjustment made pursuant
to this subsection (a) will become effective immediately after the record date
in the case of a dividend or other distribution and will become effective
immediately after the effective date of any such subdivision, combination,
reclassification or change, provided that, if such dividend or distribution is
not ultimately paid or made, the Share Price shall be readjusted to be equal to
the Share Price in effect immediately prior to such record date. Such
adjustment will be made successively whenever any event listed above occurs.
(b) If Seller shall at any time prior to the Closing Date
issue rights or warrants to all holders of Common Share entitling them (for a
period commencing no earlier than the record date for the determination of
holders of Common Shares entitled to receive such rights or warrants and
expiring within 45 days after such record date) to subscribe for or purchase
Common Shares at
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a price per share less than the Current Market Price (as defined in subsection
(d) below) of Common Shares on such record date, the Share Price will be
adjusted effective as of immediately after such record date so that it shall
equal the price determined by multiplying the Share Price in effect immediately
prior thereto by a fraction, the numerator of which is the number of Common
Shares outstanding on such record date plus the number of Common Shares that
the aggregate offering price of the Common Shares so offered for subscription
or purchase or purchased would purchase at the Current Market Price per Common
Share, and the denominator of which is the number of Common Shares outstanding
on such record date plus the number of additional Common Shares which may be
purchased upon the exercise of the rights or warrants issued, provided that, if
such issuance is not ultimately made, the Share Price shall be readjusted to be
equal to the Share Price in effect immediately prior to such record date.
Common Shares owned by or held for the account of Seller shall not be deemed
outstanding for the purpose of any such computation. Such adjustment will be
made successively whenever such rights or warrants are issued.
(c) If Seller shall at any time prior to the Closing Date
distribute to all holders of Common Shares any shares of any class of Capital
Stock other than Common Shares, evidences of indebtedness or other assets
(other than cash dividends or distributions out of retained earnings), or shall
distribute to holders of Common Shares rights or warrants to subscribe to
securities (other than those referred to in subsection (b) above), then in each
such case the Share Price will be adjusted so that it equals the price
determined by multiplying the Share Price in effect immediately prior to the
date of such distribution by a fraction, the numerator of which is the Current
Market Price per Common Share on the record date mentioned below less the then
fair market value (as determined by the Board of Trust Managers, whose
determinations shall be conclusive evidences of such fair market value) of said
shares, evidences of indebtedness, assets, rights or warrants or distributions
applicable to one Common Share, and the denominator of which is such Current
Market Price. Such adjustment will become effective immediately after the
record date for the determination of the holders of Common Shares entitled to
receive such distribution, provided that, if such issuance is not ultimately
made, the Share Price shall be readjusted to be equal to the Share Price in
effect immediately prior to such record date. Such adjustment will be made
successively whenever such a distribution is made.
(d) For the purpose of computation under subsections (b)
and (c) above, the "Current Market Price" per Common Share at any date will be
deemed to be the average of the daily closing price for the Common Shares on
the New York Stock Exchange for 20 consecutive trading days commencing 30
trading days before such date.
SECTION 6. ADDITIONAL CONTINUING COVENANTS AND AGREEMENTS
a. USE OF PROCEEDS. The proceeds from the sale of the
Shares to the 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 in accordance with
Section 2.2.
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b. APPOINTMENT OF TRUST MANAGER.
i. GENERAL. Effective immediately following the Closing,
Seller shall increase the number of its Trust
Managers from seven to eight, and Seller shall
appoint one individual designated by the Investor as
Agent for and on behalf of the Pecuniary Owner and
the Other Pecuniary Owners collectively to fill the
vacancy caused by the increase in the number of Trust
Managers under this Section 6.2(a). Simultaneously
with the designee of the Investor becoming a Trust
Manager of Seller, Seller and such designee shall
enter into an indemnification agreement providing for
indemnification of such designee identical in form to
the indemnification agreements entered into between
Seller and other Trust Managers. In addition, at the
first annual meeting and all subsequent annual
meetings of shareholders after the number of Trust
Managers has been increased to eight under this
Section 6.2(a), until Seller achieves the Threshold
Equity Capitalization, Seller shall nominate, and use
its best efforts to have such person elected (which
efforts shall include, without limitation, including
the Investor's nominee in management's slate for
nomination and election and solicitation of proxies
on their behalf), one designee of the Investor (which
may be a different person than the person initially
appointed as Trust Manager pursuant to the first
sentence of this Section 6.2(a) if such initial
designee shall have died, resigned, been removed or
declined to be nominated) as Trust Manager. During
such time as Seller shall have an individual
designated by the Investor serving as Trust Manager
pursuant to this Section 6.2(a), and except as
otherwise provided in Section 6.2(b) hereof, the
number of Trust Managers shall consist of not more
than eight persons, including the designee of the
Investor. Such designee of the Investor shall hold
office until resignation, removal, death or
expiration of the term for which he or she was
appointed and any successive term for which such
representative is duly elected as a Trust Manager by
the shareholders of Seller. In the event of the
death, resignation or removal from office of the
designee of the Investor serving as a Trust Manager
pursuant to the first sentence of this Section
6.2(a), Seller agrees to promptly appoint a
replacement designee selected by the Investor as
Trust Manager prior to the date Trust Managers are to
be elected at the first annual meeting after the
number of Trust Managers has been increased to eight
pursuant to this Section 6.2(a).
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ii. OBSERVATION RIGHTS. In the event that the designee
selected by the Investor to serve as Trust Manager is
not, for any reason, elected by Seller's
shareholders, the Investor shall have full
observation rights with respect to Seller's Trust
Managers, including the right to obtain full and
timely notice of all meetings of the Trust Managers
and of each of its committees, to obtain copies of
all written and other materials disseminated to Trust
Managers and to designate a person to attend in
person or by telephone all meetings of the Trust
Managers or their committees. If the Investor
receives observation rights pursuant to the
provisions of this paragraph, the Investor and its
designees in respect of such rights shall each
execute a confidentiality agreement in form and
substance reasonably satisfactory to Seller.
iii. RESIGNATIONS. At such time as Seller achieves
Threshold Equity Capitalization, the Investor shall
cause its designee to not seek re-election at the
next annual meeting, or at Seller's option, to
immediately resign.
iv. QUALIFICATIONS. Each of the representatives
designated by the Investor in accordance with this
Section 6.2 shall be a Person selected by the
Investor in its sole discretion; provided, however,
that any such person may not have been involved in
any of the events described in Item 401(f)(1)-(4) of
Regulation S-K promulgated under the Exchange Act.
v. COMMITTEES. At any time that the Investor shall have
exercised its rights under this Section 6.2 to
appoint a designee as Trust Manager, Seller shall
appoint the Investor's designee on each committee of
the Trust Managers, and each such committee shall
contain no more than four members until expiration of
the latest term of office of any designee of the
Investor pursuant to Section 6.2(a) or 6.2(b).
c. ENVIRONMENTAL MATTERS. Seller will advise the
Investor promptly (a) upon obtaining knowledge that a
Release has occurred at or upon the Properties and/or
(b) upon receipt of a Notification pertaining to the
Properties.
d. STATUS FOR REIT OWNERSHIP AND INCOME TESTS. Following
the Closing Date, and at all subsequent times during
which the Investor or the Pecuniary Owner owns any of
the Shares, applying the stock ownership rules of
Section 856(h) of the Code, the representation set
forth in Section 4.8 will remain true and correct.
e. 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.
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f. SELLER/BUYER REGISTRATION RIGHTS AGREEMENT. On the
Closing Date, the Investor, as agent for and on
behalf of the Pecuniary Owner and certain Other
Pecuniary Owners, and Seller shall enter into a
Registration Rights Agreement substantially in the
form of Exhibit A.
g. REIT QUALIFICATION. Seller shall take all actions
necessary to maintain Seller's qualification as a
REIT and, without the written consent of the 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 the 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 the
Investor such information and/or verification as the
Investor shall reasonably request in order to verify
whether Seller constitutes a "pension-held REIT" as
defined under Section 856(h)(3)(C) of the Code.
h. PREEMPTIVE RIGHTS. In the event that Seller shall at
any time subsequent to the date of this Agreement
issue any Common Shares to any Person or Persons
(other than (i) Common Shares issued to Realco in
connection with the conversion of the Realco Debt to
Common Shares, (ii) Common Shares issued pursuant to
an employee share option, share purchase, share
incentive or compensation plan or (iii) Common Shares
issued to any partners in Affiliates of Realco in
connection with the merger of such Affiliates with
and into Seller) (each such issuance, a "Subsequent
Offering")), the Investor shall have the right to
purchase, on the same terms and conditions as the
other purchasers in the Subsequent Offering, Common
Shares in an amount not to exceed, in the aggregate,
such number of Common Shares as is equal to the total
number of Common Shares offered in the Subsequent
Offering times a fraction, the numerator of which is
the number of Common Shares then owned by the
Investor in the aggregate and the denominator of
which is the total number of Common Shares
outstanding immediately prior to such Subsequent
Offering. Notwithstanding the foregoing, with respect
to each Subsequent Offering by Seller in the amount
of $10 million or more, the amount of shares the
Investor may purchase in the aggregate pursuant to
such Preemptive Rights shall be reduced by 5% of the
total Common Shares outstanding (on a fully-diluted
basis) after each such Subsequent Offering. The
Investor's Preemptive Rights will immediately
terminate once Seller achieves a Minimum Equity
Capitalization. The Investor or the Pecuniary Owner,
as
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applicable, shall have the right to assign the
preemptive right to buy additional Common Shares
pursuant to this Section 6.8 to any of the Other
Pecuniary Owners or to any other client of the
Investor who can make the representation to Seller
set forth in Section 4.8.
i. DEBT. Neither Seller, any Subsidiary or any Seller
Partnership shall, without the prior written consent
of the Investor (i) incur, create, assume, guarantee
or in any way become liable for, or permit to exist,
any Debt prior to such time as the Seller achieves a
Minimum Equity Capitalization, except to the extent
the proceeds of such Debt is to be used to acquire
real property, and such acquisition occurs within 90
days of the date such Debt is incurred; or (ii) issue
or have outstanding any Preferred Shares, or any
warrants, options, conversion rights or other rights
to subscribe for, purchase or acquire any Preferred
Shares, prior to such time as the Seller achieves
Minimum Equity Capitalization.
j. FURNISH DOCUMENTS. Seller shall furnish or cause to
be furnished to the 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 the Investor
within five Business Days after Seller would have
been required to file the same with the Commission;
and
i. Seller shall furnish or cause to be furnished
to the Investor, within five Business Days
after the effective date thereof, copies of
any amendment or modification to its Charter
Documents.
k. 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.
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l. ADDITIONAL INFORMATION Seller shall execute and
deliver or cause to be executed and delivered to the
Investor upon the Investor's reasonable request such
other and further instruments or documents as in the
reasonable judgment of the Investor and Seller are
necessary to conform, create, evidence, preserve or
maintain the Pecuniary Owner's rights in the Shares,
and Seller shall do all such additional acts, give
such assurances and execute such instruments as the
Investor may reasonably require to vest more
completely in and assure to the Pecuniary Owner its
rights in the Shares.
m. MSRE AND MSAM CLOSING. If MSRE and MSAM, as agent and
attorney-in-fact on behalf of certain clients, do not
purchase additional Common Shares of Seller for an
aggregate purchase price of at least $4,500,000
within seven days of the Closing Date, Seller shall
rescind the sale of Shares hereunder and promptly
repay to the Investor the full purchase price for the
Shares purchased hereby.
SECTION 7. GENERAL CONDITIONS OF PURCHASE
The obligations of the parties to effect each Closing shall be subject
to the following conditions unless waived in writing by all parties:
a. NO ORDERS. No Law or Order shall have been enacted,
entered, issued, promulgated or enforced by any
Governmental Entity which prohibits or restricts the
transactions contemplated by this Agreement. No
Governmental Entity shall have notified any party to
this Agreement that consummation of the transactions
contemplated by this Agreement would constitute a
violation of any Law of any jurisdiction or that it
intends to commence proceedings to restrain or
prohibit such transactions or force divestiture or
rescission, unless such Governmental Entity shall
have withdrawn such notice and abandoned any such
proceedings prior to the time which otherwise would
have been the applicable Closing Date.
b. APPROVALS. To the extent required by applicable Law,
all Permits and Approvals required to be obtained in
connection with each Closing from any Governmental
Entity or any consent from a third party material to
Seller or its business shall have been received or
obtained on or prior to the applicable Closing Date.
c. ABSENCE OF LITIGATION. No Action before any
Governmental Entity pertaining to the transactions
contemplated by this Agreement shall
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have been instituted on or before the applicable
Closing Date whether or not any of the parties hereto
or its Affiliates is a party.
d. NEW YORK STOCK EXCHANGE. The Shares shall have been
approved for listing, upon official notice of
issuance, on the New York Stock Exchange. Seller will
use its best efforts to maintain the listing of its
Common Shares on the New York Stock Exchange.
e. SHAREHOLDER APPROVAL. Seller shall have received
Shareholder Approval.
SECTION 8. CONDITIONS TO OBLIGATIONS OF THE INVESTOR
The obligations of the Investor, as agent for and on behalf of the
Pecuniary Owner, to effect the Closing shall be subject to the following
conditions except to the extent waived in writing by the Investor:
a. ACCURACY OF SELLER'S REPRESENTATIONS AND WARRANTIES.
All representations and warranties of Seller set
forth in this Agreement shall be true and correct in
all material respects on the applicable Closing Date
as if made on and as of such Closing Date.
b. PERFORMANCE BY SELLER. Seller shall have in all
material respects performed, satisfied and complied
with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied
or complied with by Seller on or before the
applicable Closing Date, including the covenants set
forth in Section 5.
c. NO MATERIAL ADVERSE CHANGE. During the period from
December 31, 1996 to the applicable Closing Date, (i)
there shall not have been any material adverse change
or any development involving a material adverse
change in the condition (financial or otherwise) of
Seller, any Subsidiary or any Seller Partnership,
taken as a whole, or in the earnings, business,
prospects or operations of Seller, any Subsidiary or
any Seller Partnership, taken as a whole, and (ii)
there shall not have occurred any material adverse
change in the financial markets in the United States,
any outbreak of hostilities or escalation thereof or
other calamity or crisis or any change or development
involving a prospective change in national or
international political, financial or economic
conditions, in each case the effect of which is such
as to, in the judgment of the Investor, significantly
impair the marketability or value of the Shares,
(iii) the trading in any securities of Seller shall
not have been suspended or limited by the
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Commission or the New York Stock Exchange, trading
generally on the American Stock Exchange or the New
York Stock Exchange or in the Nasdaq National Market
shall not have been suspended or limited, minimum or
maximum prices for trading shall not have been fixed,
and maximum ranges for prices shall not have been
required, by any of said exchanges or by such system
or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other
Governmental Entity, and (iv) a banking moratorium
shall not have been declared by Federal, Texas or New
York authorities.
d. CERTIFICATION BY SELLER. The Investor shall have
received a certificate, addressed to the Investor and
dated as of the applicable Closing Date, signed by
the President of Seller, certifying, in such detail
as the Investor and its counsel reasonably may
request, that all of the conditions specified in
Section 8 have been fulfilled.
e. OPINION OF SELLER'S COUNSEL. The Investor shall have
received from counsel for Seller an opinion,
addressed to the Investor and dated as of the
applicable Closing Date, in form and substance
reasonably satisfactory to the Investor as to the
matters set forth in Schedule 8.5.
f. SCHEDULES. Seller shall have delivered to the
Investor updated Schedules, if any, to this
Agreement.
g. REALCO, MSRE AND MSAM CONSENT. Seller shall have
received all necessary consents or waivers from
Realco, MSRE and MSAM in connection with the matters
contemplated by this Agreement.
h. ADDITIONAL INFORMATION. Seller's Fourth Amended and
Restated Bylaws shall have been amended to provide
for a maximum of eight (8) Trust Managers.
i. CLOSING OF MSRE AND MSAM PURCHASE TRANSACTIONS.
Seller shall have closed on the sale of the Common
Shares to MSRE and MSAM, as agent and
attorney-in-fact on behalf of the MSAM Purchasers,
pursuant o the MSAM Purchase Agreement whereby Seller
shall have received an aggregate purchase price of at
least $12,500,00 from such purchasers from the
issuance and sale of its Common Shares.
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SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to effect each Closing shall be subject to
the following conditions, except to the extent waived in writing by Seller:
a. ACCURACY OF THE INVESTOR'S REPRESENTATIONS AND
WARRANTIES. All representations and warranties of the
Investor set forth in this Agreement shall be true
and correct in all material respects on the
applicable Closing Date as if made on and as of such
Closing Date.
b. BUYERS' PERFORMANCE. The Investor shall have in all
material respects performed, satisfied and complied
with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied
or complied with by the Investor on or before the
applicable Closing Date.
c. CERTIFICATION. Seller shall have received a
certificate, dated as of the applicable Closing Date,
signed by a Managing Director of the Investor,
certifying, in such detail as Seller and its counsel
reasonably may request, that the conditions specified
in Section 9 have been fulfilled.
d. OPINION OF COUNSEL. Seller shall have received from
counsel to the Investors an opinion, dated as of the
applicable Closing Date, in form and substance
reasonably satisfactory to Seller as to the matters
set forth in Schedule 9.4.
e. REIT STATUS. The purchase of Shares by the Investor,
as agent for and on behalf of the Pecuniary Owner,
will not cause Seller to lose its status as a REIT
under the Code.
SECTION 10. TERMINATION OF OBLIGATIONS; SURVIVAL
a. TERMINATION OF AGREEMENT. This Agreement and the
transactions contemplated by this Agreement may be
terminated at any time before the Closing Date, as
follows and in no other manner:
i. MUTUAL CONSENT. By mutual consent in writing of the
Investor and Seller.
ii. MISREPRESENTATION OR MATERIAL BREACH. By the Investor
or Seller with written notice to the other parties if
there has been a misrepresentation or material breach
on the part of Seller or the Investor, in their
respective representations, warranties and covenants
set forth herein, which, with respect to a breach of
a covenant, if curable, has not been cured within 10
business days after receipt of notice from the
Investor or Seller of the terminating party's
intention to terminate.
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iii. ENVIRONMENTAL NONCOMPLIANCE. By the Investor in the
event of the discovery of any Release or other matter
prior to any Closing Date which, if known to Seller
as of the date of this Agreement, would have
constituted a breach of the representations and
warranties contained in Section 3.17.
iv. CLOSING. This Agreement shall terminate if the
Closing does not occur on or before July 11, 1997.
b. EFFECT OF TERMINATION. In the event that this
Agreement shall be terminated pursuant to Section
10.1all further obligations of the parties under this
Agreement shall terminate; provided that the
obligations of the parties contained in this Section
10.2, Section 11, and Section 12 (other than Sections
12.3 and 12.8) shall survive any such termination. A
termination under Section 10.1shall not relieve any
party of any liability for a breach of, or for any
misrepresentation under, this Agreement, or be deemed
to constitute a waiver of any available remedy
(including specific performance if available) for any
such breach or misrepresentation.
c. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. (a) The representations and warranties
contained in or made pursuant to this Agreement shall
expire on the third anniversary of the Closing Date
except that (a) the representations and warranties
contained in Section 3.2 shall continue forever
(subject to all defenses of Seller available under
applicable Law, including the expiration of the
applicable statute of limitations period), (b) the
representations and warranties contained in Section
3.14 shall continue through the applicable statute of
limitations, (c) representations and warranties which
are intentionally misrepresented shall continue
through the later of the first anniversary of the
Closing Date and one year following the date of
actual discovery of such intentional
misrepresentation, and (d) if a claim or notice is
given under Section 12 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 each Closing Date pursuant to the terms thereof.
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(c) The provisions of Section 11.1 through Section 11.5 and
Section 12.12 shall survive and remain in full force and effect with respect to
the Investor notwithstanding any termination of the Investor's appointment as
agent on behalf of the Pecuniary Owner.
SECTION 11. INDEMNIFICATION
a. INDEMNIFICATION. In partial consideration of
the commitment of the Investors as agent for and on
behalf of the Pecuniary Owner hereunder, Seller
agrees to indemnify and hold harmless the Investor
and the Pecuniary Owner and any of their respective
affiliates, directors, officers, agents and employees
and each other person, if any, controlling the
Investor or the Pecuniary Owner or any of their
respective affiliates (each an "Investor Indemnified
Person") from and against any Losses (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 of the Common Shares)
including without limitation any and all Losses of
the Investor Indemnified Person as a result of, or
based upon or arising out of, directly or indirectly
any inaccuracy in, breach or nonperformance of, any
of the representations, warranties, covenants or
agreements made by Seller in, or pursuant to this
Agreement, 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 Persons's gross negligence or willful
misconduct. In the event that the foregoing indemnity
is unavailable or insufficient to hold 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 and the Pecuniary Owner 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.
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b. OBLIGATIONS OF THE INVESTOR AND THE PECUNIARY OWNER.
The Investor and the Pecuniary Owner, severally and
not jointly, agree 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 the Investor as agent for and on behalf of
the Pecuniary Owner in, or pursuant to, this
Agreement, or (b) any pending or threatened Action
brought by the Investor's or the Pecuniary Owner's
shareholders or creditors relating to, or arising out
of or in connection with, directly or indirectly, the
transactions contemplated under this Agreement;
provided, however, that the Investor or the Pecuniary
Owner, as applicable, 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 the Investor or
the Pecuniary Owner, as applicable. As a condition to
the rights of any of the Seller Indemnified Parties
under this Section 11, the Investor may require that
any such Person provide a written undertaking that
such Person will repay to the Investor or the
Pecuniary Owner, as applicable, any amount expended
by the Investor or the Pecuniary Owner, as
applicable, to indemnify, defend or hold harmless
such Person in the event and to the extent a court
determines that such Investor's or Pecuniary Owner's
indemnification or defense of such Person is
prohibited by applicable Law. The agreement of the
Investor and the Pecuniary Owner in this paragraph
shall be in addition to any other liability that the
Investor and the Pecuniary Owner may otherwise have.
c. PROCEDURE.
i. NOTICE. Any party seeking indemnification with
respect to any Loss shall give notice to the party
required to provide indemnity hereunder (the
"INDEMNIFYING PARTY") on or before the date specified
in Section 11.4.
ii. 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
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conduct and control the defense, compromise or
settlement of any Action or threatened Action brought
against the Indemnified Party in respect of matters
embraced by the indemnity set forth in this Section
11. The Indemnified Party shall have the right to
employ counsel separate from counsel employed by the
Indemnifying Party in connection with any such Action
or threatened Action and to participate in the
defense thereof, but the fees and expenses of such
counsel employed by the Indemnified Party shall be at
the sole expense of the Indemnified Party unless (i)
the Indemnifying Party shall have elected not, or,
after reasonable written notice of any such Action or
threatened Action, shall have failed, to assume or
participate in the defense thereof, (ii) the
employment thereof has been specifically authorized
by the Indemnifying Party in writing, or (iii) the
parties to any such Action or threatened Action
(including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and the
Indemnified Party shall have been advised in writing
by counsel for the Indemnified Party that there may
be one or more defenses available to the Indemnified
Party that are not available to the Indemnifying
Party or legal conflicts of interest pursuant to
applicable rules of professional conduct between the
Indemnifying Party and the Indemnified Party (in any
which case, the Indemnifying Party shall not have the
right to assume the defense of such Action on behalf
of the Indemnified Party), in either of which events
referred to in clauses (i), (ii) and (iii) the fees
and expenses of such counsel employed by the
Indemnified Party shall be at the expense of the
Indemnifying Party. The Indemnifying Party shall not,
without the written consent of the Indemnified Party,
settle or compromise any such Action or threatened
Action or consent to the entry of any judgment which
does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the
Indemnified Party a release from all liability in
respect of such Action or threatened Action. Unless
the Indemnifying Party shall have elected not, or
shall have after reasonable written notice of any
such Action or threatened Action failed, to assume or
participate in the defense thereof, the Indemnified
Party may not settle or compromise any Action or
threatened Action without the written consent of the
Indemnifying Party. If, after reasonable written
notice of any such Action or threatened Action, the
Indemnifying Party neglects to defend the Indemnified
Party, a recovery against the latter suffered by it
in good faith, is conclusive in its favor against the
Indemnifying Party; provided, however, that no such
conclusive presumption shall be made if the
Indemnifying Party has not received reasonable
written notice of the Action against the Indemnified
Party.
d. SURVIVAL. The indemnity set forth in this Section 11
shall survive each Closing or any termination of this
Agreement and shall remain in effect for a period of
(a) with respect to a breach of a representation or
warranty, for the period through which such
representation or warranty shall continue pursuant to
Section 10.3 (including such period of time through
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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 11.1 or 11.2(b), forever.
e. NOTICE BY SELLER. Seller and the Investor agree to
notify in writing the other parties of any
liabilities, claims or misrepresentations, breaches
or other matters covered by this Section 11 upon
discovery or receipt of notice thereof (other than
from such other parties), whether before or after any
Closing Date.
SECTION 12. GENERAL
a. AMENDMENTS; WAIVERS. This Agreement and any Schedule
or Exhibit attached hereto or referenced herein may
be amended only by agreement in writing of all
parties. No waiver of any provision nor consent to
any exception to the terms of this Agreement shall be
effective unless in writing and signed by the party
to be bound and then only to the specific purpose,
extent and instance so provided.
b. SCHEDULES; EXHIBITS; INTEGRATION. Each Exhibit and
Schedule delivered pursuant to the terms of this
Agreement shall be in writing and shall constitute a
part of the Agreement. This Agreement, together with
such Exhibits and Schedules, constitutes the entire
agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements and
understandings of the parties in connection
therewith.
c. 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.
d. 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
MARYLAND, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW
OR CONFLICT OF LAW PROVISION (WHETHER OF THE STATE OF
MARYLAND OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
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e. NO ASSIGNMENT. Except as otherwise specifically
provided herein, neither this Agreement nor any
rights or obligations under it are assignable by any
party, except that the Investor may assign the
commitment of any Pecuniary Owner to purchase Shares
hereunder, and the related rights and remedies of
such Pecuniary Owner, to any other client on behalf
of whom it or any of its Affiliates acts as
investment advisor, whether or not such client is
initially the Pecuniary Owner hereunder and (ii) the
Pecuniary Owner may at any time subsequent to the
date hereof appoint a successor agent to act on its
behalf in connection with the matters contemplated
herein.
f. 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.
g. COUNTERPARTS. This Agreement and any other agreement
or document delivered pursuant hereto may be executed
in one or more counterparts and by different parties
in separate counterparts. All of such counterparts
shall constitute one and the same agreement or other
document and shall become effective when one or more
counterparts of this Agreement have been signed by
each party and delivered to the other parties.
h. PUBLICITY AND REPORTS. Seller and the 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 parties,
except to the extent that independent legal counsel
to Seller or the Investor, as the case may be, shall
advise the other parties 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).
i. CONFIDENTIALITY. All information disclosed by any
party (or its representatives) to the other party
whether before or after the date hereof, in
connection with the transactions contemplated by, or
the discussions and negotiations preceding, this
Agreement to any other party (or its representatives)
shall be kept confidential by such other party and
its representatives and shall not be used by any such
Persons other than as contemplated by this Agreement,
except (a) to the extent that such information (i)
was known by the recipient when received, (ii) is or
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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 parties. Notwithstanding the
foregoing, the Investor shall be entitled to disclose
information relating to this Agreement and the
transactions contemplated hereby to any client on
behalf of whom it or any of its Affiliates acts as
investment advisor, in connection with a contemplated
investment by such client in Seller as described
herein. If this Agreement is terminated in accordance
with its terms, each party shall use all reasonable
efforts to return upon written request from the other
parties all documents (and reproductions thereof)
received by it or its representatives from such other
parties (and, in the case of reproductions, all such
reproductions made by the receiving party) that
include information not within the exceptions
contained in the first sentence of this Section 12.9,
unless the recipients provide assurances reasonably
satisfactory to the requesting party that such
documents have been destroyed.
j. 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.
k. 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 the Investor, addressed to:
ABKB/LaSalle Securities Limited Partnership
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esquire
Piper & Marbury L.L.P.
▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Seller, addressed to:
American Industrial Properties REIT
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or to such other person as any party shall have last
designated by such notice to the other parties. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in this Section 12.11 and an
appropriate answer back is received, (ii) if given by mail, three days after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when actually
delivered at such address.
l. EXPENSES. Except as set forth in the next sentence,
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. Seller shall reimburse the Investors for
all legal fees incurred by the Investor relating to
the transactions contemplated by this Agreement and
the Registration Rights Agreement up to a maximum of
$25,000.
m. 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.
n. 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 Agreement shall be interpreted in a
reasonable manner to effect the intent of the parties
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hereto, and no rule of strict construction shall be
applied against any party to this Agreement.
o. 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 12.15.
p. 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 12.16 shall
be held in Baltimore, Maryland in the first instance,
in Dallas, Texas in the second instance, and
continuing in that order with respect to each dispute
occurring hereunder.
q. AGENTS. (a) Seller acknowledges and agrees that the
Investor is acting as agent for and on behalf of the
Pecuniary Owner and that the Investor shall not have
any liability to Seller, and shall not be obligated
to purchase securities hereunder with respect to
which the Pecuniary Owner was obligated to but did
not purchase.
(b) In the event that the Investor shall no longer act as agent
for and on behalf of the Pecuniary Owner in connection with the matters
contemplated by this Agreement, then (i) any agent(s) appointed by the
Pecuniary Owner as successor agent(s) to the Investor shall be entitled to, and
to exercise on behalf of the Pecuniary Owner, all of the rights and remedies
provided for herein with respect to the Investor and (ii) at any such time as
no successor agent(s) shall have been appointed by the Pecuniary Owner, the
Pecuniary Owner shall be entitled to exercise all of the rights and remedies
provided for herein in its individual capacity, including the right to obtain,
upon request, copies of all documents and notices as specified herein. In the
event that the Investor shall no longer act as agent on behalf of the Pecuniary
Owner hereunder, all consents or waivers of the
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Investor necessary to effect any action hereunder shall be required to be given
by any successor agent(s) appointed by the Pecuniary Owner or, if no
successor(s) has been appointed, by the Pecuniary Owner, prior to the
consummation of such action.
(c) Until such time as Seller shall have received a written notice
from the Pecuniary Owner that the Investor is no longer acting as the Pecuniary
Owner's agent hereunder, Seller shall be entitled to rely on any instructions
and any notices received from the Investor on behalf of the Pecuniary Owner as
if received from the Pecuniary Owner directly.
"INVESTOR"
ABKB/LASALLE SECURITIES LIMITED
PARTNERSHIP, as Agent and for and
on behalf of the Pecuniary Owner
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
"SELLER"
AMERICAN INDUSTRIAL PROPERTIES REIT
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
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