Exhibit 10.1
RENEWAL, EXTENSION, MODIFICATION AND
AMENDMENT AGREEMENT
THIS RENEWAL, EXTENSION, MODIFICATION AND AMENDMENT
AGREEMENT (this "Agreement") is dated effective as of February
26, 1997. The parties hereto are AMERICAN INDUSTRIAL PROPERTIES
REIT (formerly known as ▇▇▇▇▇▇▇▇ ▇▇▇▇ Real Estate Investors)
("Borrower"), whose address is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and
USAA REAL ESTATE COMPANY ("Lender"), whose address is 8000 ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention: Mr. T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
RECITALS:
Borrower executed and delivered to The Manufacturers Life
Insurance Company (the "Original Note Holder"): (i) a promissory
note dated February 27, 1992 ("Note A"), in the original
principal sum of Twenty-Three Million Two Hundred Sixty-One
Thousand Three Hundred Seventeen and 66/100 Dollars
($23,261,317.66) bearing interest on the unpaid balance thereof
at the rate or rates therein stated, with a final stated maturity
of November 27, 1997, and (ii) a promissory note dated February
27, 1992 ("Note B"), in the original principal sum of Nineteen
Million One Hundred Forty-Three Thousand Six Hundred Forty-Six
and 92/100 Dollars ($19,143,646.92), bearing interest on the
unpaid balance thereof at the rate or rates therein stated, with
a final stated maturity of November 27, 1997.
Note A and Note B were issued pursuant to that certain Note
Purchase Agreement dated February 27, 1992 (the "Note Purchase
Agreement") between Borrower and the Original Note Holder. Note
A and Note B were subsequently assigned by the Original Note
Holder to The Manufacturers Life Insurance Company (U.S.A.) ("MLI
USA"). Note A, Note B and the Note Purchase Agreement were
amended in certain respects pursuant to: (i) that certain
Settlement Agreement (the "Settlement Agreement") dated May 22,
1996, executed by and between Borrower, Patapsco #1 Limited
Partnership, Patapsco #2 Limited Partnership, the Original Note
Holder and MLI USA, and (ii) that certain Option Agreement (the
"Option Agreement") dated May 22, 1996, executed by and between
Borrower, the Original Note Holder and MLI USA. The liens,
security interests and assignments created by all documents and
instruments now or hereafter governing, evidencing, or securing
or otherwise relating to payment of all or any part of the
indebtedness evidenced by Note A and Note B (collectively, the
"Credit Documents") are hereinafter collectively called the
"Liens".
Note A, Note B, the Liens and MLI USA's rights under the
Note Purchase Agreement, the Settlement Agreement and the Option
Agreement were acquired by Lender pursuant to separate Assignment
of Note and Transfer of Liens dated of even effective date
herewith from MLI USA in favor of Lender.
Borrower and Lender now agree to, among other matters
specified herein, renew, extend and rearrange Note A and Note B,
make certain other changes to Note A and Note B, to terminate the
Note Purchase Agreement, the Settlement Agreement and the Option
Agreement and to release the Liens and confirm that they no
longer secure Note A and Note B, as renewed, extended and
rearranged, all as set forth in the succeeding provisions of this
Agreement (which shall control over any conflicting or
inconsistent recitals above).
AGREEMENTS:
In consideration of the premises and the mutual agreements
herein set forth, Borrower and Lender hereby agree as follows:
1. Certain Definitions. The following words and terms
shall, unless the context otherwise requires, have the meanings
provided below:
(a) "Chapter One" means Chapter One of Title 79, Texas
Revised Civil Statutes, 1925, as amended.
(b) "Ceiling Rate" means, on any day, the maximum
nonusurious rate of interest permitted for that day by whichever
of applicable federal or Texas laws permits the higher interest
rate, stated as a rate per annum. On each day, if any, that
Chapter One establishes the Ceiling Rate, the Ceiling Rate shall
be the "indicated rate ceiling" (as defined in Chapter One) for
that day. Lender may from time to time, as to current and future
balances, implement any other ceiling permitted under Chapter One
by notice to Borrower, if and to the extent permitted by, Chapter
One. Without notice to Borrower or any other person or entity,
the Ceiling Rate shall automatically fluctuate upward and
downward as and in the amount by which such maximum nonusurious
rate of interest permitted by applicable law fluctuates.
(c) "Maturity Date" means the amended and extended
maturity date for the Renewal note (as hereinafter defined),
December 31, 2000, as the same may hereafter be accelerated
pursuant to the provisions of the Renewal Note, any of the other
Credit Documents or this Agreement.
(d) "Past Due Rate" means, on any day, a rate per annum
equal to the Ceiling Rate for that day, or only if applicable law
imposes no maximum nonusurious rate of interest for that day,
then the Past Due Rate for that day shall be a rate per annum
equal to eighteen percent (18%) per annum.
2. Note Purchase Agreement Terminated. Borrower and Lender
hereby agree that Note Purchase Agreement is hereby terminated
and of no continuing force and effect effective as of the
effective date of this agreement.
3. Settlement Agreement Terminated. Borrower and Lender
(Patapsco #1 Limited Partnership and Patapsco #2 Limited
Partnership currently in the process of being dissolved) hereby
agree that the Settlement Agreement is hereby terminated and of
no continuing force and effect effective as of the effective date
of this Agreement.
4. Option Agreement Terminated. Borrower and Lender hereby
agree that the Option Agreement is hereby terminated and of no
continuing force and effect effective as of the effective date of
this Agreement.
5. AIP Partnership Interest Pledge Terminated. Borrower
and Lender hereby agree that the AIP Partnership Interest Pledge
(as defined in the Settlement Agreement) is hereby terminated and
of no continuing force and effect effective as of the effective
date of this Agreement.
6. Stock Pledge Agreement Terminated. Borrower and Lender
hereby agree that the Stock Pledge Agreement (as defined in the
Settlement Agreement) is hereby terminated and of no continuing
force and effect effective as of the effective date.
7. Balance. Borrower and Lender hereby agree that
notwithstanding the unpaid principal balances of Note A and Note
B reflected in the books and records of MLI USA, the present
unpaid principal balance of Note A is Three Million One Hundred
Seventy-Eight Thousand Five Hundred Twenty-One and 66/100 Dollars
($3,178,521.66) and the present unpaid principal balance of Note
B is Three Million Eight Hundred Sixty-Two Thousand One Hundred
Ninety-Nine and 71/100 Dollars ($3,862,199.71). No amounts
remain unadvanced against Note A or Note B, and Lender shall have
no obligation to make any advances under Note A, Note B or any of
the other Credit Documents.
8. Renewal Note. To facilitate the administration of Note
A and Note B, Borrower has contemporaneously with the execution
of this Agreement executed a new promissory note (the "Renewal
Note") in favor of Lender in the original principal amount of
Seven Million Forty Thousand Seven Hundred Twenty-One and 37/100
Dollars ($7,040,721.37) in the form attached hereto as Exhibit A
which is given to the full extent thereof in renewal, extension
and rearrangement (but not extinguishment) of the remaining
principal balances Note A and Note B referenced in Paragraph 7
immediately above.
9. Loan Covenants.
(a) Borrower will deliver, or cause to be delivered, to
Lender:
(i) Borrower shall furnish or cause to be
furnished to Lender within five (5) business days after Borrower
is required to file the same with the Securities and Exchange
Commission ("Commission"), copies of the periodic information,
documents and other reports which Borrower is required to file
with the Commission pursuant to Section 13(a) of the Exchange
Act. If Borrower 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 Lender within five (5)
business days after Borrower would have been required to file the
same with the Commission; and
(ii) Borrower shall furnish or cause to be
furnished to Lender, within five (5) business days after the
effective date thereof, copies of any amendment or modification
to its By-Laws and Declaration of Trust.
(b) Borrower will at all times before the satisfaction
of the Renewal Note maintain and keep in force substantially
similar insurance coverages relating to its real property assets
as maintained by Borrower as of the date of this Agreement,
including but not limited to liability coverage of at least
$2,000,000.00.
(c) Borrower shall 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 Borrower or its assets; provided that items of the
foregoing description need not be paid while being contested in
good faith and by appropriate proceedings.
(d) Borrower shall not make distributions to
shareholders until such time as: (i) the Renewal Note is
satisfied in full; (ii) Borrower obtains the Shareholder Approval
described in Paragraph 10 immediately below; or (iii) Lender
otherwise grants its prior written approval thereto.
(e) Borrower shall promptly pay and discharge when due
all debts, claims, liabilities and obligations with respect to
any clean-up measures necessary for Borrower to comply with
Applicable Environmental Laws. Borrower hereby indemnifies and
agrees to defend and hold Lender and its successors and assigns
harmless from and against any and all third party claims,
demands, causes of action, loss, damage, liabilities, costs and
expenses (including reasonable attorneys' fees and court costs)
of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Lender at any time
and from time to time including, without limitation, those
asserted or arising subsequent to the payment or other
satisfaction of the Renewal Note, by reason of or arising out of
the ownership, construction, occupancy, operation, use and
maintenance of any of Borrower's real property assets, INCLUDING
MATTERS ARISING OUT OF THE NEGLIGENCE OF LENDER; provided,
however this indemnity shall not apply with respect to matters
caused by or arising out of (i) the gross negligence or willful
misconduct of Lender (it being the express intention of the
parties hereto that Lender shall be indemnified from the
consequences of their negligence; and (ii) the construction,
occupancy, operation, use and maintenance of Borrower's real
property assets by any lessee or party in possession of any such
asset subsequent to the ownership of such asset by Borrower. The
foregoing indemnity and agreement applies to the violation of any
Applicable Environmental Law prior to the payment or other
satisfaction of the Renewal Note and any act, omission, event of
circumstance existing or occurring on or about Borrower's real
property assets (including without limitation the presence on
such assets or release from such assets of asbestos or other
hazardous substances or solid waste disposed of or otherwise
presenting or released prior to the payment or other satisfaction
of the Renewal Note. It shall not be a defense to the covenant
of Borrower to indemnify that the act, omission, event or
circumstance did not constitute a violation of any Applicable
Environmental Law at the time of its existence or occurrence.
The terms "hazardous substance" and "release" shall have the
meanings specified in the Superfund Amendments and
Reauthorization Act of 1986 ("▇▇▇▇"), and the terms "solid waste"
and "disposed" shall have the meanings specified in the Resource
Conservation and Recovery Act of 1976 ("RCRA"); provided, to the
extent that any other applicable laws of the United States of
America or political subdivision thereof establish a meaning for
"hazardous substance", "release", "solid waste", or "disposed"
which is broader than that specified in either ▇▇▇▇ or RCRA, such
broader meaning shall apply. As used in this Agreement,
"Applicable Environmental Law" shall mean and include the
singular, and "Applicable Environmental Laws" shall mean and
include the collective aggregate of the following: Any law,
statute, ordinance, rule, regulation, order or determination of
any governmental authority or any board of fire underwriters (or
other body exercising similar functions), or any restrictive
covenant or deed restriction (recorded or otherwise) affecting
any of Borrower's real property assets pertaining to health,
safety or the environment, including, without limitation, all
applicable zoning ordinances and building codes, flood disaster
laws and health, safety or the environment, including without
limitation, the comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Superfund Amendments
and Reauthorization Act of 1986, the Occupational Safety and
Health Act and any federal, state or municipal laws, ordinances,
regulations or law which may now or hereafter require removal of
asbestos or other hazardous wastes from any of Borrower's real
property assets or impose any liability on Lender related to
asbestos or other hazardous wastes in any such assets. The
provisions of this Paragraph 9(e) shall survive the repayment or
conversion of the Renewal Note, and shall continue thereafter in
full force and effect. In the event of the transfer of the
Renewal Note or any portion thereof, in accordance with this
Agreement, Lender or any prior holder of the Renewal Note and any
participants permitted under this Agreement shall continue to be
benefitted by this indemnity and agreement with respect to the
period of such holding of the Renewal Note.
(f) Borrower shall execute and deliver or cause to be
executed and delivered to Lender upon Lender's reasonable request
such other and further instruments or documents as in the
reasonable judgment of Lender to conform, create, evidence,
preserve or maintain Lender's rights hereunder or under the
Renewal Note, and Borrower shall do all such additional acts,
give such assurances and execute such instruments as Lender may
reasonably require to vest more completely in and assure to
Lender its rights under this Agreement and the Renewal Note.
10. Recapitalization Plan; Shareholder Approval. Borrower
covenants and agrees to promptly commence and thereafter use
Borrower's best efforts to secure appropriate and required
approval of Borrower's shareholders ("Shareholder Approval") of
the following:
(a) Subject to Shareholder Approval, Borrower hereby
grants Lender the option and right at any time prior to the
Maturity Date upon written notice to Borrower to convert all or
any part of the principal balance of the Renewal Note into a
number of common shares of beneficial interest, $.10 par value
per share, of Borrower (the "Shares") determined as follows:
P / C = S
where: (i) "P" equals the aggregate principal balance of the
Renewal Note subject to the conversion by Lender; (ii) "C" equals
the applicable conversion price, being either (x) $2.00 if the
conversion occurs on or before December 31, 1997, or (y) $2.25 if
the conversion occurs on or after January 1, 1998 but before the
Maturity Date; and (iii) "S" equals the applicable number of
Shares.
(b) In the event Borrower fails to obtain Shareholder
Approval of the conversion option specified in subparagraph (a)
immediately above on or before June 30, 1997, the following shall
be applicable to the Renewal Note notwithstanding any contrary
provisions contained in this Agreement:
(i) Commencing July 1, 1997 the unpaid principal
balance of the Renewal Note from time to time outstanding shall
bear interest at the Past Due Rate; and
(ii) The Maturity Date shall automatically be
amended and accelerated to be October 31, 1997.
(c) Lender and Borrower acknowledge and agree that upon
Lender's conversion of all or a portion of the principal balance
of the Renewal Note into Shares after Shareholder Approval,
Borrower and Lender shall execute a Registration Rights Agreement
relating to the resale of the applicable Shares. Such
Registration Rights Agreement shall be in substantially the same
form as the Registration Rights Agreement executed by and between
Borrower and Lender dated December 13, 1996, to which reference
is hereby made for all purposes.
11. Lien Release; Miscellaneous. The Liens are hereby
terminated and released, and no longer continue to secure the
payment of the Renewal Note, and Lender shall execute such other
documents as Borrower shall reasonably request to further
evidence the termination and release of the Liens. To the extent
of any conflict between the Renewal Note or any of the other
Credit Documents (or any earlier modification of any of them) and
this Agreement, this Agreement shall control. This Agreement (a)
shall bind and benefit Borrower, and, except as herein expressly
limited, Lender and their respective heirs, beneficiaries,
administrators, executors, receivers, trustees, successors and
assigns (provided, that Borrower shall not assign its rights
hereunder without the prior written consent of Lender); (b) may
be modified or amended only by a writing signed by each party;
(c) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
APPLICABLE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF
AMERICA FROM TIME TO TIME IN EFFECT; (d) may be executed in
several counterparts, and by the parties hereto in separate
counterparts, and each counterpart, when executed and delivered,
shall constitute an original agreement enforceable against all
who signed it without production of or accounting for any other
counterpart, and all separate counterparts shall constitute the
same agreement and (e) embodies the entire agreement and
understanding between the parties with respect to modifications
of instruments provided for herein and supersedes all prior
conflicting or inconsistent agreements, consents and
understandings relating to such subject matter. Borrower
acknowledges and agrees that there are no oral agreements between
Borrower and Lender which have not been incorporated in this
Agreement. If any provision of this Agreement should be
determined by any court of competent jurisdiction to be illegal,
invalid or unenforceable under present or future laws, the
legality, validity and enforceability of the remaining provisions
of this Agreement shall not be affected thereby. Each waiver in
this Agreement is subject to the overriding and controlling rule
that it shall be effective only if and to the extent that (a) it
is not prohibited by applicable law and (b) applicable law
neither provides for nor allows any material sanctions to be
imposed against Lender for having bargained for and obtained it.
Wherever the term "including" or a similar term is used in this
Agreement, it shall be read as if it were "including by way of
example only and without in any way limiting the generality of
the clause or concept referred to." Any exhibits, appendices and
annexes described in this Agreement as being attached to it are
hereby incorporated into it. The headings in this Agreement
shall be accorded no significance in interpreting it.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE 26.02
THIS AGREEMENT, THE RENEWAL NOTE AND ALL OTHER CREDIT
DOCUMENTS EXECUTED BY ANY OF THE PARTIES BEFORE OR SUBSTANTIALLY
CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF, TOGETHER CONSTITUTE
A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
EXECUTED effective as of the date first set forth above.
BORROWER:
AMERICAN INDUSTRIAL PROPERTIES REIT
By: /s/
LENDER:
USAA REAL ESTATE COMPANY
By: /s/