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EXHIBIT 10.4
SHARE PURCHASE AGREEMENT
dated as of December 20, 1996
Among
AMERICAN INDUSTRIAL PROPERTIES REIT, INC.,
AMERICAN INDUSTRIAL PROPERTIES REIT
and
USAA REAL ESTATE COMPANY
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION.............................-1-
1.1 Definitions......................................................-1-
1.2 Rules of Construction............................................-8-
SECTION 2. PURCHASE AND SALE...............................................-8-
2.1 Purchase and Sale of the Shares..................................-8-
2.2 Purchase Price; Payment.........................................-9-
2.3 The Closing......................................................-9-
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND TRUST...............-9-
3.1 Organization and Related Matters.................................-9-
3.2 Capital Stock; Title to Shares..................................-10-
3.3 Financial Statements............................................-11-
3.4 SEC Reports.....................................................-12-
3.5 Authorization; No Conflicts.....................................-12-
3.6 Legal Proceedings...............................................-13-
3.7 Compliance with Law and Permits.................................-14-
3.8 Dividends and Other Distributions...............................-14-
3.9 Certain Interests...............................................-14-
3.10 No Brokers or Finders...........................................-15-
3.11 Employee Benefit Plans..........................................-15-
3.12 Labor Matters...................................................-16-
3.13 Properties......................................................-16-
3.14 Tax Matters.....................................................-18-
3.15 Material Contracts..............................................-20-
3.16 Insurance.......................................................-20-
3.17 Environmental Matters...........................................-21-
3.18 Trust Records; Accounting Records...............................-21-
3.19 New York Stock Exchange Listing.................................-22-
3.20 Disclosure of Facts.............................................-22-
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.........................-22-
4.1 Organization and Related Matters................................-22-
4.2 Authorization...................................................-22-
4.3 No Conflicts....................................................-22-
4.4 No Brokers or Finders...........................................-23-
4.5 Legal Proceedings...............................................-23-
4.6 Investment Representation.......................................-23-
4.7 Legends; Stop-Transfer Orders...................................-23-
4.8 Status for REIT Ownership and Income Tests......................-23-
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SECTION 5. COVENANTS WITH RESPECT TO CONDUCT OF SELLER PRIOR TO
CLOSING.........................................................-23-
5.1 Access..........................................................-23-
5.2 Material Adverse Changes; SEC Filings; Reports; Financial
Statements......................................................-24-
5.3 Conduct of Business.............................................-24-
5.4 Prohibition of Solicitation.....................................-26-
5.5 Notification of Certain Matters.................................-28-
5.6 Permits and Approvals...........................................-28-
SECTION 6. ADDITIONAL CONTINUING COVENANTS AND AGREEMENTS..................-28-
6.1 Use of Proceeds.................................................-28-
6.2 Environmental Matters...........................................-28-
6.3 Status for REIT Ownership and Income Tests......................-28-
6.4 Prohibited Transactions.........................................-28-
6.5 Registration Rights Agreement...................................-29-
6.6 REIT Qualification..............................................-29-
6.7 Services by Buyer...............................................-29-
SECTION 7. GENERAL CONDITIONS OF PURCHASE..................................-29-
7.1 No Orders.......................................................-29-
7.2 Approvals.......................................................-29-
7.3 Absence of Litigation...........................................-29-
7.4 New York Stock Exchange.........................................-29-
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER..............................-30-
8.1 Settlement Agreement............................................-30-
8.2 Accuracy of Representations and Warranties......................-30-
8.3 Performance by Seller and the Trust.............................-30-
8.4 No Material Adverse Change......................................-30-
8.5 Certification by Seller and the Trust...........................-30-
8.6 Opinion of Seller and the Trust's Counsel.......................-31-
8.7 No Other Business Combination Transaction.......................-31-
SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER AND THE TRUST...............-31-
9.1 Settlement Agreement............................................-31-
9.2 Accuracy of Buyer's Representations and Warranties..............-31-
9.3 Buyer's Performance.............................................-31-
9.4 Certification by Buyer..........................................-31-
9.5 Opinion of Buyer's Counsel......................................-31-
SECTION 10. TERMINATION OF OBLIGATIONS; SURVIVAL...........................-31-
10.1 Termination of Agreement........................................-31-
10.2 Effect of Termination...........................................-32-
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10.3 Survival of Representations and Warranties......................-32-
SECTION 11. INDEMNIFICATION...............................................-33-
11.1 Obligations of Seller and the Trust.............................-33-
11.2 Obligations of Buyer............................................-33-
11.3 Procedure.......................................................-34-
11.4 Survival........................................................-34-
11.5 Notice by Seller and the Trust..................................-35-
SECTION 12. GENERAL.......................................................-35-
12.1 Amendments; Waivers.............................................-35-
12.2 Schedules; Exhibits; Integration................................-35-
12.3 Best Efforts; Further Assurances................................-35-
12.4 Governing Law...................................................-35-
12.5 No Assignment...................................................-35-
12.6 Headings........................................................-36-
12.7 Counterparts....................................................-36-
12.8 Publicity and Reports...........................................-36-
12.9 Confidentiality.................................................-36-
12.10 Parties in Interest.............................................-36-
12.11 Notices.........................................................-37-
12.12 Expenses........................................................-37-
12.13 Remedies; Waiver................................................-37-
12.14 Representation By Counsel; Interpretation.......................-38-
12.15 Severability....................................................-38-
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EXHIBITS
EXHIBIT A Settlement Agreement
EXHIBIT B 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 Trust 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 8.6 List of Opinions of Seller and the Trust's Counsel
SCHEDULE 9.5 List of Opinions of Buyer's Counsel
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of December 20, 1996, by and among AMERICAN INDUSTRIAL PROPERTIES REIT, INC.,
a Maryland corporation ("SELLER"), AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas
real estate investment trust ("TRUST"), and USAA REAL ESTATE COMPANY, a Delaware
corporation ("BUYER").
R E C I T A L S
A. Seller is a wholly-owned subsidiary of the Trust.
B. The Trust qualifies and operates as a real estate investment trust for
federal income tax purposes.
C. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, a certain number of Common Shares (as defined herein) owned by Seller
upon the terms and subject to the conditions set forth in this Agreement.
D. The proceeds from the sale of the Common Shares owned by Seller are to
be used for the purposes set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION
1.1 DEFINITIONS. The capitalized terms used in this Agreement, the
Exhibits and the Schedules attached hereto shall have the meanings set forth
below:
"ACTION" means any action, complaint, investigation, Suit or other
proceeding, whether civil or criminal, in law or in equity, or before any
mediator, arbitrator or Governmental Entity.
"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 Share Purchase Agreement, by and among
Seller, the Trust and Buyer, 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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"ALTERNATIVE PROPOSAL" has the meaning set forth in Section 5.4(a)
of this Agreement.
"APPROVAL" means any approval, authorization, consent, qualification
or registration, or any waiver of the foregoing, or any notice, statement or
other communication required to be filed with or delivered to any Governmental
Entity or any other Person.
"ASSOCIATE" of a Person means
(i) a corporation 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 the Trust.
"BUYER" means USAA Real Estate Company, a Delaware corporation, or
permitted assigns.
"BUYER INDEMNIFIED PARTIES" has the meaning set forth in Section
11.1 of this Agreement.
"CAPITAL STOCK" means any capital stock, beneficial interest or
other equity interest, or any securities convertible into or exchangeable or
exercisable for capital stock, beneficial interests or other equity interests,
or any other rights, warrants or options to acquire any of the foregoing
securities.
"CHARTER DOCUMENTS" means the Trust's Second Amended and Restated
Declaration of Trust and Fourth Amended and Restated Bylaws as in effect as of
the date of this Agreement.
"CLOSING" has the meaning set forth in Section 2.3(a) of this
Agreement.
"CLOSING AGREEMENT" shall mean a written and legally binding
agreement with a taxing authority relating to Taxes.
"CLOSING DATE" means the date specified in Section 2.3(a) of this
Agreement.
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"CODE" means the Internal Revenue Code of 1986, as amended, and, as
applicable, the regulations promulgated thereunder.
"COMMON SHARES" means common shares of beneficial interest, par
value $.10 per share, of the Trust.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section
5.4(b) of this Agreement.
"CONTRACT" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
whether or not in writing.
"DECEMBER 13 AGREEMENT" has the meaning set forth in Section 3.5 of
this Agreement.
"DEMAND NOTE" has the meaning set forth in Section 2.2 of this
Agreement.
"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.
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"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 the Trust, Subsidiaries or a Trust 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.
"ENVIRONMENTAL PERMITS" has the meaning set forth in Section 3.17(a)
of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EVEREN" means EVEREN Securities, Inc.
"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.
"HAZARDOUS MATERIALS" means any substance, matter, material, waste,
solid, liquid, gas, or pollutant, the generation, storage, disposal, handling,
recycling, Release (or threatened Release) or treatment of which is regulated,
prohibited, or limited under: (1) the Resource Conservation and Recovery Act, as
amended by the Hazardous and Solid Waste Amendments of 1984, as now or hereafter
amended ("RCRA") (42 U.S.C. Sections 6901 et seq.); (ii) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act of 1986, as now or hereafter
amended ("CERCLA") (42 U.S.C. Sections 9601 et seq.); (iii) the Clean Water Act,
as now or hereafter amended ("CWA") (33 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
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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 PARTY" means
the party entitled to indemnity hereunder and their successors, assigns, and
heirs; and "INDEMNIFYING PARTY" means the Person obligated to provide
indemnification hereunder and its successors and assigns.
"INITIAL REIT YEAR" has the meaning set forth in Section 3.14(c) of
this Agreement.
"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 the Trust, any
Subsidiary or any Trust 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, 1995 obligates the Trust, any Subsidiary or any Trust
Partnership to pay an amount equal to $100,000 or more, (b) is one of the group
of Tenant Leases that is anticipated by the Trust to produce 66 2/3% of the
Trust'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
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Lease, has an unexpired term as of December 31, 1995 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 the Trust, any
Subsidiary or any Trust Partnership, (f) provides for the extension of credit by
the Trust, any Subsidiary or any Trust Partnership or a line of credit to the
Trust, any Subsidiary or any Trust Partnership in excess of $50,000, (g)
provides for a guaranty or indemnity by the Trust, any Subsidiary or any Trust
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 the Trust or securities exercisable for or convertible into
any equity securities of the Trust, 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
the Trust, Subsidiaries or Trust Partnerships.
"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.
"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 association, a corporation, an individual, a
partnership, a joint venture, a limited liability company, a trust or any other
entity or organization, including a Governmental Entity.
"PROPERTIES" means the real property owned or leased the Trust,
Subsidiaries and Trust Partnerships listed on Schedule 3.13 hereto.
"PURCHASE PRICE" has the meaning set forth in Section 2.2 of this
Agreement.
"PURE WORLD LITIGATION" means that case pending in the United States
District Court for the Northern District of Texas Dallas Division, Civil No.
3:96-CV-0068-H, involving the Trust, Pure World, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, et. al.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement between Buyer and the Trust to be executed contemporaneously with the
Closing.
"REIT" has the meaning set forth in Section 3.14(b) of this
Agreement.
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"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" means the Securities and Exchange Commission or any successor
entity.
"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, Inc., a Maryland
corporation and a wholly-owned subsidiary of the Trust.
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section
11.2 of this Agreement.
"SELLING SHAREHOLDER AGREEMENTS" has the meaning set forth in
Section 3.5 of this Agreement.
"SETTLEMENT AGREEMENT" shall mean the settlement agreement by and
among the Trust, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ on the one hand and
Pure World, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on the other hand attached
hereto as Exhibit A.
"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. All references herein to Subsidiaries shall include Seller.
"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" means American Industrial Properties REIT, a Texas real
estate investment trust.
"TRUST BENEFIT PLANS" has the meaning set forth in Section 3.11 of
this Agreement.
"TRUST MANAGERS" means the Trust Managers of the Trust.
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"TRUST PARTNERSHIPS" has the meaning set forth in Section 3.1 of
this Agreement.
"TRUST PERMITS" has the meaning set forth in Section 3.7(b) of this
Agreement.
"UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.3(b) of this Agreement.
"USAA GROUP" means United Services Automobile Association, a
reciprocal interinsurance exchange under the Texas Insurance Code ("USAA"), and,
as designated by USAA from time to time, any entity in which USAA directly or
indirectly owns 100% of the issued and outstanding equity securities.
1.2 RULES OF CONSTRUCTION. This Agreement shall be construed in accordance
with the following rules of construction:
(a) the terms defined in this Agreement include the plural as well as the
singular;
(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 Trust Partnership shall be deemed
to be knowledge of Seller and the Trust.
SECTION 2. PURCHASE AND SALE
2.1 PURCHASE AND SALE OF THE SHARES. Subject to the terms and conditions
set forth herein, on the Closing Date, Seller shall sell to Buyer, and Buyer
shall purchase from Seller, an aggregate of 998,100 Common Shares (the
"SHARES").
2.2 PURCHASE PRICE; PAYMENT. The aggregate purchase price for the Shares
(the "PURCHASE PRICE") is payable on the Closing Date by the cancellation of all
principal and interest
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outstanding under the Promissory Note dated November 25, 1996 in the principal
amount of $2,769,775 between the Trust and Buyer (the "DEMAND NOTE").
2.3 THE CLOSING.
(a) The closing of the purchase and sale of the Shares (the "CLOSING")
will take place at 10:00 a.m. at the offices of Liddell, Sapp, Zivley, Hill &
▇▇▇▇▇▇, L.L.P., counsel to Seller and the Trust, within one (1) or two (2)
business days of final approval of the settlement of the Pure World Litigation
by the court overseeing such settlement (the "CLOSING DATE").
(b) At the Closing, Seller shall deliver to Buyer the certificate or
certificates evidencing the Shares. 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, other than such actions and
documents as are to be taken or delivered at another date, as specifically
provided in this Agreement.
(c) At the Closing, Buyer shall pay and deliver to Seller the Purchase
Price in the manner set forth in Section 2.2 above.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND TRUST
Seller and the Trust, jointly and severally, represent and warrant to, and
agree with, Buyer as follows:
3.1 ORGANIZATION AND RELATED MATTERS. Seller is duly organized, validly
existing and in good standing under the laws of the State of Maryland. Seller
has all necessary corporate power and corporate authority to execute, deliver
and perform this Agreement. The Trust is duly organized, validly existing and in
good standing under the laws of the State of Texas. The Trust has all necessary
power and authority to execute, deliver and perform this Agreement. Schedule 3.1
lists all Subsidiaries (the "SUBSIDIARIES," which term includes Seller) and all
Trust Partnerships (the "TRUST PARTNERSHIPS") of the Trust and correctly sets
forth the Trust's ownership interest therein, the jurisdiction in which each
Subsidiary and each Trust Partnership is organized and each jurisdiction in
which the Trust, each Subsidiary and each Trust Partnership is and is required
to be qualified or licensed to do business as a foreign Person. Each Subsidiary
and each Trust Partnership is duly organized, validly existing and, with respect
to each Subsidiary, in good standing under the laws of the jurisdiction of its
incorporation or organization. The Trust, Subsidiaries and Trust 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. The Trust, Subsidiaries
and Trust 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
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executive officers of the Trust, Subsidiaries and Trust Partnerships. True,
correct and complete copies of the Charter Documents and the charter or
organizational documents of Subsidiaries and Trust 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 Buyer. The Trust is registered and is a reporting company under the
Exchange Act. Neither any Subsidiary nor any Trust Partnership is registered or
is a reporting company under the Exchange Act. Except as listed on Schedule 3.1,
the Trust does not directly or indirectly own or control any equity interest in
any Person.
3.2 CAPITAL STOCK; TITLE TO SHARES. The authorized Capital Stock of the
Trust consists of 10,000,000 Common Shares of which 10,000,000 Common Shares are
issued and outstanding. The Trust 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. The Trust owns the equity interest in each Trust
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 Trust
Partnership or to restructure or recapitalize the Trust, any Subsidiary or any
Trust Partnership. Except as set forth in Schedule 3.2, there are no outstanding
Contracts of the Trust, any Subsidiary or any Trust 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 the Trust, any Subsidiary or any Trust Partnership are issued or
outstanding. There are no voting trusts or other agreements or understandings to
which the Trust, any Subsidiary or any Trust Partnership is a party or is bound,
or to the knowledge of the Trust and 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 Trust Partnership. All issued and
outstanding Common Shares and Capital Stock of all Subsidiaries and Trust
Partnerships were duly authorized and validly issued at the time of issuance and
are fully paid and nonassessable. There are no preemptive rights in respect of
any Common Shares or Capital Stock of any Subsidiary or any Trust Partnership.
Upon the sale of the Shares to Buyer at the Closing, the Shares will have been
validly issued and be validly outstanding, fully paid and nonassessable, and the
sale of such Shares is not and will not be subject to preemptive rights of any
other shareholder of the Trust. Buyer shall receive good and marketable title to
the Shares, free and clear of all Encumbrances, 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 the Trust with respect to priority
in payment of dividends and the distribution of assets upon any liquidation of
the Trust, and there are no shares of any class of Capital Stock of the Trust
having any priority in respect thereof.
3.3 FINANCIAL STATEMENTS.
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(a) AUDITED FINANCIAL STATEMENTS. The Trust has delivered to Buyer the
consolidated balance sheets of the Trust (which reflect the financial position
of all Subsidiaries and Trust Partnerships), as of December 31, 1993, 1994 and
1995, and the respective related consolidated statements of operations, cash
flows and stockholders' equity for the periods then ended (collectively, the
"AUDITED FINANCIAL STATEMENTS"). The Audited Financial Statements have been
examined by the Auditors whose report thereon is attached to such financial
statements. All Audited Financial Statements have been prepared in conformity
with GAAP applied on a consistent basis (except for changes, if any, disclosed
therein). The Audited Financial Statements present fairly, in all material
respects, the consolidated financial condition and results of operations of the
Trust, Subsidiaries and Trust Partnerships as of their respective dates and
periods. Since December 31, 1995, there has been no change in the significant
accounting policies or procedures of the Trust, any Subsidiary or any Trust
Partnership. The Trust has not received any annual management letters from the
Auditors since March 29, 1996.
(b) UNAUDITED FINANCIAL STATEMENTS. The Trust has delivered to Buyer the
consolidated balance sheets of the Trust (which reflect the financial position
of all Subsidiaries and Trust Partnerships), as of March 31, June 30 and
September 30, 1996, and the respective related consolidated statements of
operations, cash flows and stockholders' equity for the periods then ended
(collectively, the "UNAUDITED FINANCIAL STATEMENTS"). All 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 the Trust, Subsidiaries and Trust
Partnerships as of their respective dates and periods.
(c) NO MATERIAL ADVERSE CHANGES. Since September 30, 1996, except as set
forth in Schedule 3.3, specifically contemplated by this Agreement, specifically
disclosed in any SEC Filings filed since September 30, 1996 and prior to the
date of this Agreement (copies of which have been provided to Buyer), and except
the settlement of the Pure World Litigation, the Trust, Subsidiaries and Trust
Partnerships have conducted their respective businesses only in the ordinary
course and in a manner consistent with past practice and, whether or not in the
ordinary course of business, there has not been, occurred or arisen:
(i) any change in or event affecting the business of the Trust,
Subsidiaries and Trust 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 the Trust, Subsidiaries or Trust Partnerships, or
(ii) 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
(iii) any casualty, loss, damage or destruction of any real
property of the Trust, any Subsidiary or any Trust Partnership that has
involved or may involve a Loss (whether or not
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covered by insurance) to the Trust, any Subsidiary or any Trust
Partnership of more than $100,000 individually, or $300,000 in the
aggregate.
(d) NO OTHER LIABILITIES OR CONTINGENCIES. Neither the Trust nor any
Subsidiary nor any Trust 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 September 30, 1996 in the ordinary course of business in a manner
consistent with past practice and are not material in amount or which involve
the Pure World Litigation, or (ii) are set forth in Schedule 3.3 hereto.
3.4 SEC REPORTS. The Trust has filed with the SEC 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 SEC since December 31, 1993. Such forms, reports,
statements, including registration statements, and other material documents
required to be filed with the SEC by the Trust since December 31, 1993 are
collectively referred to in this Agreement as the "SEC FILINGS." The Trust has
made available to Buyer 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.
3.5 AUTHORIZATION; NO CONFLICTS. Seller has the requisite corporate power
and corporate authority to enter into this Agreement and to carry out its
obligations hereunder. The Trust 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. The execution, delivery and performance of
this Agreement by Seller has been duly and validly authorized by its Board of
Directors and by all other necessary action on the part of Seller, and no other
proceedings on the part of Seller (including shareholder approval) are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by the Trust
has been duly and validly authorized by the Trust Managers and by all other
necessary action on the part of the Trust, and no other proceedings on the part
of the Trust (including shareholder approval) are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly 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. This Agreement
has been duly executed and delivered by the Trust and constitutes the legally
valid and binding obligation of the Trust, enforceable against the Trust 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. Except
as set forth in Schedule
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3.5, the execution, delivery and performance of this Agreement by Seller and the
Trust and the consummation by Seller and the Trust of the transactions
contemplated hereby, by the Share Purchase Agreement between the Trust and
Buyer, dated as of December 13, 1996 (the "DECEMBER 13 AGREEMENT") and by the
share purchase agreements dated as of November 25, 1996 between Buyer and (i)
Pure World, Inc. and (ii) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
and ▇. ▇. ▇▇▇▇▇ (the "SELLING SHAREHOLDER AGREEMENTS") will not (i) conflict
with or result in the breach of any provisions of, or trigger any preferential
rights under, the Charter Documents or the charter or organizational documents
of Subsidiaries or Trust 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 Trust Benefit Plans or any grant
or award thereunder or any employment or consulting agreement or arrangement of
the Trust, any Subsidiary or any Trust 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 the Trust,
any Subsidiary or any Trust Partnership or (iv) violate any Law. Schedule 3.5
lists all Permits and Approvals required to be obtained by Seller, the Trust,
Subsidiaries and Trust Partnerships to consummate the transactions contemplated
hereby and by the December 13 Agreement. 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 Trust and the consummation of the transactions contemplated
hereby and by the December 13 Agreement will not require the consent,
authorization or approval of 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, the Trust, Subsidiaries or
Trust Partnerships.
3.6 LEGAL PROCEEDINGS. Except as set forth in Schedule 3.6 and except with
respect to the Pure World Litigation, there is no Order or Action pending, or to
the knowledge of Seller or the Trust threatened, against or affecting the Trust,
any Subsidiary, any Trust Partnership, any Trust Manager in his capacity as a
trust manager of the Trust or any of the Properties which (i) questions the
validity of this Agreement, the Registration Rights Agreement, the Settlement
Agreement or any action taken or to be taken pursuant hereto or thereto, or (ii)
individually or when aggregated with one or 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 the Trust,
any Subsidiary or any Trust Partnership or on the Trust's ability to perform
this Agreement. To Seller's and the Trust'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 the Trust, any Subsidiary or any Trust
Partnership that is not covered by insurance, (ii) involves a claim or potential
claim of aggregate liability brought by the Trust, any Subsidiary or any Trust
Partnership against a tenant under any Tenant Lease which Tenant Lease obligates
such tenant to pay rent to the Trust, any Subsidiary or any Trust Partnership
during the year ending December 31, 1996 in an amount equal to or in excess of
$150,000, or (iii) that enjoins or seeks to enjoin any activity by the Trust,
any Subsidiary or any Trust
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Partnership. There is no matter as to which the Trust, any Subsidiary or any
Trust 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 the Trust, any Subsidiary or any Trust Partnership.
3.7 COMPLIANCE WITH LAW AND PERMITS.
(a) The Trust, Subsidiaries and Trust Partnerships are organized and have
conducted their respective businesses in accordance with applicable Laws,
neither the Trust nor any Subsidiaries or Trust Partnerships has received any
notice of violation of any Laws which remains uncorrected, and the respective
forms, procedures and practices of the Trust, Subsidiaries and Trust
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
the Trust, Subsidiaries and Trust Partnerships.
(b) Except as set forth in Schedule 3.7, the Trust, Subsidiaries and Trust
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 "THE TRUST PERMITS") and the Trust,
Subsidiaries and Trust Partnerships are in compliance with the terms of the
Trust Permits relating to each such Person, except where the failure to hold
such Trust 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 the Trust, Subsidiaries
or Trust Partnerships. The Trust has made available to Buyer correct and
complete copies of all Trust Permits. Except as set forth in Schedule 3.7, to
the knowledge of the Seller and the Trust, no investigation or review by any
Governmental Entity with respect to the Trust Permits is pending or threatened.
3.8 DIVIDENDS AND OTHER DISTRIBUTIONS. Except as set forth in Schedule
3.8, there has been no dividend or other distribution of assets or securities by
the Trust or Trust Partnerships (other than Trust Partnerships in which the
Trust 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 the
Trust subsequent to the date of the Audited Financial Statements.
3.9 CERTAIN INTERESTS. Except as set forth in Schedule 3.1 and Schedule
3.9, no Affiliate of the Trust, any Subsidiary or any Trust 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 the Trust, any Subsidiary or
any Trust Partnership. Except as set forth in Schedule 3.1 and Schedule 3.9, no
such Person is indebted or otherwise obligated to the Trust, any Subsidiary or
any Trust Partnership. Except as set forth in Schedule 3.9, the Trust,
Subsidiaries and Trust 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
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between the Trust, any Subsidiary or any Trust Partnership and any Affiliate of
the Trust, any Subsidiary or any Trust 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 the Trust,
any Subsidiary or any Trust Partnership or any of its assigns to any Person.
3.10 NO BROKERS OR FINDERS. No agent, broker, finder, or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of
Seller, the Trust or any of their 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 EVEREN.
3.11 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 the Trust, any Subsidiary, or any
Trust Partnership is a party or by which either the Trust, any Subsidiary, or
any Trust Partnership is bound (collectively, the "THE TRUST 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 Trust Benefit Plans, current
descriptive booklets and summary plan descriptions of the Trust 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 Buyer. To the extent applicable, the Trust Benefit Plans
comply, in all material respects, with the requirements of ERISA and the Code.
Except as set forth in Schedule 3.11, no Trust 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 Trust Benefit Plan nor the Trust, any
Subsidiary, or any Trust Partnership has incurred any liability or penalty under
Section 4975 of the Code or Section 502(i) of ERISA. Each Trust 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
and the Trust threatened, claims (other than pursuant to the terms of any such
plan) against or otherwise involving any of the Trust Benefit Plans and no
Action has been brought against or with respect to any Trust Benefit Plan, and
neither the Trust nor any Subsidiary nor any Trust Partnership has incurred any
liability to any party with respect to any Trust Benefit Plan. All contributions
required to be made to the Trust Benefit Plans have been made or provided for.
Except as set forth in Schedule 3.11, neither the Trust nor any Subsidiary nor
any Trust Partnership maintains or contributes to any plan or
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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 the Trust nor any
Subsidiary nor any Trust Partnership has represented, promised or contracted
(whether in oral or written form) to any employee or former employee that such
benefits would be provided. Except as set forth in Schedule 3.11, the execution
of, and performance of the transactions contemplated by, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent event)
constitute an event under any Trust 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 Trust Benefit Plan is subject to Title IV of ERISA and
neither the Trust nor any Subsidiary nor any Trust 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 "Trust" includes any entity required
to be aggregated with the Trust pursuant to Code Section 414(b), (c), (m) or (o)
and (ii) provisions of ERISA or the Code include regulations prescribed under
such provisions.
3.12 LABOR MATTERS. Neither the Trust nor any Subsidiary nor any Trust
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 and the
Trust, threatened labor dispute, strike or work stoppage against the Trust, any
Subsidiary, or any Trust Partnership. Neither the Trust nor any Subsidiary nor
any Trust Partnership, nor their respective representatives or employees, has
committed any unfair labor practices in connection with the operation of the
respective businesses of the Trust, each Subsidiary, and each Trust Partnership,
and there is no pending or, to the knowledge of the Seller and the Trust,
threatened charge or complaint against the Trust, any Subsidiary, or any Trust
Partnership by the National Labor Relations Board or any comparable state
agency. The Trust, Subsidiaries, and Trust Partnerships are in compliance with
all applicable Laws respecting employment, consulting, employment practices,
wages, hours, and terms and conditions of employment.
3.13 PROPERTIES.
(a) Schedule 3.13 contains a complete and correct list of all real
property owned or leased by the Trust, each Subsidiary and each Trust
Partnership (collectively, the "PROPERTIES"). Except as set forth in Schedule
3.13, the Trust, Subsidiary or Trust Partnership, as applicable, owns good and
indefeasible title to each Property, including the land and all improvements,
all personalty and the Tenant Leases (as hereinafter defined). Except as set
forth in Schedule 3.13, the Properties are free and clear of all Encumbrances of
any nature, except for (i) liens for real property taxes or similar assessments
not yet due and payable, (ii) easements for utilities servicing the Properties
and (iii) such Encumbrances as do not materially detract from or interfere with
the present use of the Properties subject thereto or affected thereby, or
otherwise materially impair the use or value of such Properties.
(b) The Trust has delivered to Buyer a true, correct and complete copy of
a rent roll with respect to each Property setting forth, among other matters,
the term (commencement or renewal date
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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 the Trust,
Subsidiaries and Trust Partnerships and, to Seller's and the Trust'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 October 31, 1996 except as set forth
in Schedule 3.13. To Seller's and the Trust's knowledge, no tenant of the
Properties has initiated or threatened bankruptcy since January 1, 1996. No
tenant of the Properties is an Affiliate or Associate of the Trust, any
Subsidiary or any Trust 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, the Trust, Subsidiaries, Trust Partnerships or the Properties. Except
as set forth in Schedule 3.13, since January 1, 1996, no tenants have terminated
their leases prior to expiration and, to Seller's and the Trust'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 the Trust nor any
Subsidiary nor any Trust 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 the Trust, Subsidiaries or Trust Partnerships, as applicable, and no written
notice of any such violation has been received by the Trust, any Subsidiary or
any Trust Partnership from any Governmental Entity.
(e) The Trust, Subsidiaries or Trust Partnerships, as applicable,
currently has in place title, liability, casualty and other insurance coverage
with respect to the Properties in such amounts as are reasonable and customary
for properties similar to the Properties. Each of such policies is in full force
and effect, and all premiums due and payable thereunder have been, and on the
Closing Date will be, fully paid when due. No notice of cancellation has been
received, or to the knowledge of Seller and the Trust threatened, with respect
thereto.
(f) Except as set forth in Schedule 3.13, there is no Action pending, or
to the knowledge of Seller and the Trust 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 the Trust.
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(g) To the Seller's and the Trust'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 and the Trust's knowledge and except as set forth on
Schedule 3.13, no capital expenditures are contemplated by the Trust to be
incurred by the Trust, any Subsidiary or any Trust 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 the Trust on 30 days notice.
(j) To Seller's and the Trust'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
the Trust, Subsidiaries or Trust 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, 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 the Trust, Subsidiaries or Trust
Partnerships with respect to their respective operations, income, assets and
shareholders or partners in order to maintain the Trust's status as a real
estate investment trust ("REIT") under the Code.
(c) The Trust 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"). The Trust, 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, the
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Trust 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, 1996 in order for the Trust to
maintain its qualification as a REIT under the Code.
(d) Except as disclosed in Schedule 3.14, the Trust, Subsidiaries and
Trust 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, the Trust, Subsidiaries and
Trust Partnerships have established (and until the Closing Date will maintain)
on their respective books and records reserves adequate to pay all Taxes of the
Trust, Subsidiaries and Trust Partnerships not yet due and payable in accordance
with GAAP which are reflected in the Audited Financial Statements and Unaudited
Financial Statements to the extent required by GAAP.
(f) Except as disclosed in Schedule 3.14, as of the date hereof, there are
no, and, as of the Closing Date, there will be no, material Tax liens upon the
assets of the Trust, Subsidiaries and Trust Partnerships, except liens for Taxes
not yet due.
(g) Except as disclosed in Schedule 3.14, the Trust, Subsidiaries, and
Trust Partnerships have complied (and until the Closing Date will comply) in all
material respects with the provisions of the Code relating to the payment and
withholding of Taxes, including the withholding and reporting requirements under
Code Sections 1441 through 1464, 3401 through 3406, and 6041 through 6049, as
well as similar provisions under any other laws, and have, within the time and
in the manner prescribed by law, withheld from employee wages and paid over to
the proper governmental authorities all material amounts required by applicable
Law.
(h) Except as disclosed in Schedule 3.14, the Trust, Subsidiaries and
Trust 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 the Trust, any Subsidiary or any Trust 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 and the
Trust's knowledge, threatened with regard to any Taxes or Tax Returns of the
Trust, Subsidiaries or Trust Partnerships, and no notice of any material claim
has been received by the Trust, any Subsidiary or any Trust Partnership from any
authority in a jurisdiction where the Trust,
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Subsidiaries or Trust Partnerships do not file Tax Returns that the Trust, any
Subsidiary or any Trust Partnership is or may be subject to Tax in that
jurisdiction.
(j) The Trust, Subsidiaries and Trust Partnerships have not received a Tax
Ruling or entered into a Closing Agreement with the Internal Revenue Service
that would have any continuing effect after the Closing Date.
(k) The Trust has made available (or, with respect to all Tax Returns
filed after the date hereof, will make available) to Buyer complete and accurate
copies of all Tax Returns, and amendments thereto, filed by the Trust, any
Subsidiary or any Trust Partnership for all taxable periods or years ending on
or prior to the Closing Date.
(l) Neither the Trust nor any Subsidiary nor any Trust 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 the Trust, and the Internal Revenue Service has not
proposed any such adjustment or change in accounting method.
(m) The Trust has made available to Buyer all relevant information with
respect to the federal income tax net operating loss carryovers of the Trust as
of December 31, 1995, based on the federal income Tax Returns filed by the Trust
as of such date.
(n) For all taxable years from and including its Initial REIT Year through
the Closing Date, (i) the Trust 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) the Trust
has demanded the written statements from its shareholders required by Treasury
Regulation Section 1.857-8(d) in accordance with Treasury Regulation Section
1.857-8(e).
3.15 MATERIAL CONTRACTS. Schedule 3.15 sets forth an accurate list of all
Material Contracts of the Trust, Subsidiaries and Trust Partnerships. The Trust
has made available to Buyer 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, the Trust, Subsidiaries and Trust 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 and the Trust, 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
the Trust, any Subsidiary or any Trust 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 the Trust, Subsidiaries and Trust Partnerships. The
Trust, Subsidiaries and Trust Partnerships are in compliance
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with the terms of such policies applicable to them and there are no claims by
the Trust, any Subsidiary or any Trust 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 the Trust
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 Trust, any
Subsidiary or any Trust Partnership or, to the knowledge of Seller and the
Trust, 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 the Trust are and have been conducted in all material respects in
compliance with applicable Environmental Laws. Except as set forth in the
documentation provided to the Trust pursuant to Section 3.17(b) and in Schedule
3.17, the Trust 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
the Trust pursuant to Section 3.17(b) and in Schedule 3.17, the Trust 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) The Trust has made available to Buyer true, correct, and complete
copies of all written reports of any environmental assessment, compliance or
regulatory audit, inspection, or investigation of the Properties in its
possession, and the Trust has not received any other written report containing
any evidence of Environmental Noncompliance.
(c) Except as set forth in the documentation provided to the Trust
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 the Trust
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 and the
Trust accurately reflect in all material respects all actions taken to the date
of this Agreement by the shareholder of Seller, the holders of Common Shares,
the Board of Directors of Seller, the Trust
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Managers and committees of the Trust Managers, as applicable, 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 the
Trust accurately reflect the ownership of the Common Shares. The Trust maintains
accounting records which fairly reflect, in all material respects, the Trust's
transactions.
3.19 NEW YORK STOCK EXCHANGE LISTING. The outstanding Common Shares are
listed on the New York Stock Exchange. The sale and delivery of the Shares to
Buyer pursuant to this Agreement along with the subsequent sale and delivery of
any other Common Shares to Buyer 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 the Trust,
Subsidiaries or the Trust Partnerships that the Trust has not disclosed to Buyer
that materially adversely affect, or insofar as Seller and the Trust can
reasonably foresee, will materially adversely affect, the business, financial
condition, assets, results of operations or prospects of the Trust, Subsidiaries
or Trust Partnerships.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to, and agrees with, Seller and the Trust as
follows:
4.1 ORGANIZATION AND RELATED MATTERS. Buyer is a corporation duly
organized and validly existing under the laws of the State of Delaware. Buyer
has all necessary corporate power and corporate authority to carry on its
business as now being conducted. Buyer has all necessary corporate power and
corporate authority to execute, deliver and perform this Agreement and the
transactions contemplated hereby. USAA beneficially owns, and at Closing will
beneficially own, directly or indirectly, all of the capital stock of Buyer.
4.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement by Buyer has been duly and validly authorized by Buyer and by all
other necessary corporate action on the part of Buyer and no other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement or
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Buyer and constitutes the legally valid and binding
obligation of Buyer, enforceable against Buyer 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. The execution and delivery
of this Agreement by Buyer 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 material Contracts of Buyer, other than any filing required
under the Exchange Act.
4.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement by Buyer will not violate the provisions of, or constitute a breach or
default (whether upon lapse of time and/or
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the occurrence of any act or event or otherwise) under, (a) Buyer's certificate
of incorporation and bylaws, pursuant to which Buyer was organized and by which
Buyer is governed, (b) any Law to which Buyer is subject or (c) any Contract to
which Buyer is a party that is material to the financial condition, results of
operations or conduct of the business of Buyer.
4.4 NO BROKERS OR FINDERS. No agent, broker, finder or investment or
commercial banker, or other Person or firms engaged by or acting on behalf of
Buyer or their respective 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.
4.5 LEGAL PROCEEDINGS. There is no Order or Action pending against or, to
the knowledge of Buyer, affecting Buyer that individually or when aggregated
with one or more other Actions has, or if determined adversely would have, a
material adverse effect on the business, properties, or financial condition of
Buyer or on Buyer's ability to perform this Agreement.
4.6 INVESTMENT REPRESENTATION. Buyer is acquiring the Shares from Seller
for Buyer's own account, for investment purposes only and not with a view to or
for sale in connection with the distribution thereof. Buyer agrees to execute
any further certificate or other document representing Buyer's investment intent
or as to any other matter reasonably requested by Seller or the Trust to assure
compliance with applicable securities laws.
4.7 LEGENDS; STOP-TRANSFER ORDERS.
(a) The certificates for the Shares will bear a legend relating to
restrictions on transfer imposed pursuant to the percentage ownership limitation
contained in the Charter Documents.
(b) The Trust may impose appropriate stop-transfer instructions relating
to the restrictions set forth herein.
4.8 STATUS FOR REIT OWNERSHIP AND INCOME TESTS. At the Closing, applying
the stock ownership rules of Code Section 856(h), Buyer will be treated as a
corporation, and the Shares that it owns will be treated as owned
proportionately by Buyer's policyholders (its "shareholders" for this purpose).
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 and the Trust, jointly and severally, covenant and agree to take such
actions, or refrain from taking such actions, as are set forth in this Section
5.
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5.1 ACCESS. The Trust shall, and shall cause the Subsidiaries and Trust
Partnerships to, authorize and permit Buyer 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 the
Trust, Subsidiaries and Trust Partnerships as Buyer may from time to time
reasonably request, and to make copies of such books, records and other
documents and to discuss the business of the Trust, Subsidiaries and Trust
Partnerships with Buyer and its partners and their respective officers,
employees, accountants and counsel, as Buyer considers necessary or appropriate
for the purposes of familiarizing itself with the business of the Trust,
obtaining any necessary Approvals of, or Permits for, the transactions
contemplated by this Agreement and conducting an evaluation of the organization
and business of the Trust. From the date of this Agreement up to and including
the Closing Date, the Trust will permit, and cause Subsidiaries and Trust
Partnerships to permit, Buyer and its partners, and their respective 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 the Trust shall
approve in the Trust's sole discretion, including intrusive sampling studies to
ascertain whether or not there are any Hazardous Materials on, in, or under the
Properties.
5.2 MATERIAL ADVERSE CHANGES; SEC FILINGS; REPORTS; FINANCIAL STATEMENTS.
(a) The Trust shall promptly notify Buyer of any event of which Seller or
the Trust obtains knowledge which has had or might reasonably be expected to
have a material adverse effect on the Trust's business or which if known as of
the date hereof would have been required to be disclosed to Buyer.
(b) The Trust will, and will cause the Subsidiaries and Trust Partnerships
to, furnish to Buyer as soon as available copies of all SEC Filings, reports,
renewals, filings, certificates, statements and other documents filed with any
Governmental Entity.
5.3 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 December 24,
1996, the Trust agrees with and for the benefit of Buyer that the Trust shall
not, and the Trust shall cause Subsidiaries and Trust Partnerships not to,
without the prior written consent of Buyer, which consent may not unreasonably
be withheld:
(a) conduct the business of the Trust, Subsidiaries and Trust Partnerships
in any manner except in the ordinary course consistent with past practices; or
(b) purchase any real property; or
(c) 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
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any shares of its Capital Stock, as applicable, except for dividends the record
date of which is after the Closing Date; or
(d) issue, sell, redeem or acquire for value, or agree to do so, any debt
obligations, Common Shares or Capital Stock; or
(e) incur or agree to incur any obligation or liability (absolute or
contingent) that individually calls for payment by the Trust, any Subsidiary or
any Trust 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)
and (ii) liabilities arising out of, incurred in connection with, or related to
the consummation of the transactions contemplated by this Agreement; or
(f) merge, 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
(g) change the number of Trust Managers or the Board of Directors of any
of the Subsidiaries, or admit any additional partners to the Trust Partnerships;
or
(h) amend the Charter Documents or the charter or organizational documents
of the Subsidiaries or Trust Partnerships; or
(i) 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
(j) cancel, satisfy or prepay any debt, obligation, liability or
encumbrance, or waive any claim or right of value of the Trust, Subsidiaries or
Trust Partnerships; or
(k) (i) increase in any manner the compensation or fringe benefits
(including, but not limited to, severance benefits) payable or to become payable
by the Trust, Subsidiaries, or Trust Partnerships to any officer, Trust Manager,
director, partner, consultant or independent contractor as salary or wages or
under any bonus, insurance, welfare, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without limitation, the
granting of any stock option or stock appreciation right or performance or
restricted
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stock award), stock purchase or other employee benefit plan, (ii) increase in
any manner the compensation or fringe benefits (including, but not limited to,
severance benefits) payable or to become payable by the Trust, Subsidiaries or
Trust Partnerships to any employee who is not an officer, Trust Manager,
director or partner of the Trust, Subsidiaries or Trust Partnerships as salary
or wages or under any bonus, insurance, welfare, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of any stock option or stock appreciation right
or performance or restricted stock award) stock 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 the Trust, Subsidiaries or Trust
Partnerships, or (iii) enter into, adopt, amend in any material respect (except
as required by law) or terminate any Trust Benefit Plan or any agreement,
arrangement, plan or policy between the Trust, Subsidiaries or Trust
Partnerships, as applicable, and one or more of its Trust Managers, directors,
partners, officers, employees or independent contractors; or
(l) make any tax election other than in connection with maintaining the
Trust's qualification as a REIT or take any action that would cause the Trust
not to qualify as a REIT, or fail to take any reasonable action to preserve the
Trust's qualification as a REIT; or
(m) make any change in any significant accounting principles or practices
used by the Trust, Subsidiaries or Trust Partnerships, except as required by the
SEC; or
(n) 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 the Trust,
Subsidiaries or Trust Partnerships; or
(o) 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
(p) incur any indebtedness for borrowed money or assume, endorse (other
than endorsements of negotiable instruments in the ordinary course of business),
guarantee or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the liabilities or obligations of any Person; or
(q) take any action that would, or fail to take any action which failure
would, result in any of Seller's and the Trust's representations and warranties
set forth in this Agreement not being true; or
(r) agree to or make any commitment to take any action prohibited by this
Section 5.3.
5.4 PROHIBITION OF SOLICITATION.
(a) GENERAL PROHIBITION. The Trust shall not, and it shall direct and use
its best efforts to cause its officers, Trust Managers, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it), and Seller to not, directly or indirectly,
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) with respect to a merger, acquisition,
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consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or Common Shares of the Trust (any such
proposal or offer being hereinafter referred to as an "ALTERNATIVE PROPOSAL") or
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any Person relating to an Alternative
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Alternative Proposal. Except as disclosed to Buyer in writing prior to the date
of this Agreement, Seller and the Trust represent and warrant to Buyer that
there are no existing activities, discussions or negotiations with any Person
with respect to an Alternative Proposal. Seller and the Trust hereby agree to
notify Buyer immediately if any inquiries or proposals are received by, any
information is requested from, or any negotiations or discussions are sought to
be initiated or continued with Seller or the Trust with respect to an
Alternative Proposal.
(b) UNSOLICITED OFFERS. Nothing contained in Section 5.4(a) shall prohibit
the Trust Managers or Board of Directors of Seller from: (i) furnishing
information to or entering into discussions or negotiations with any Person that
makes an unsolicited bona fide Alternative Proposal if, and only to the extent
that, (1) prior to furnishing such information to, or entering into discussions
or negotiations with, such Person, the Trust or Seller provides written notice
to Buyer to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such Person, (2) prior to furnishing such
information to, or entering into discussions or negotiations with, such Person,
the Trust or Seller receives from such Person an executed confidentiality
agreement in customary form on terms not less favorable in any material respect
to the Trust or Seller than the terms of the letter agreement, dated July 12,
1996 by and between Buyer and the Trust (the "CONFIDENTIALITY AGREEMENT"), (3)
the Trust or Seller keeps Buyer informed of the status of any such discussions
or negotiations and (4) the Trust and Seller shall not disclose the terms of
this Agreement and other information with respect to transactions among Seller,
the Trust and Buyer except as permitted under Section 12.9 hereto; and (ii) to
the extent applicable, complying with Rule 14e-2 promulgated under the Exchange
Act with regard to an Alternative Proposal. Nothing in this Section 5.4 shall
permit Seller or the Trust to terminate this Agreement or affect any other
obligation of Seller or the Trust under this Agreement.
(c) BUYER'S CONTINUING RIGHTS. Seller or the Trust shall be permitted to
enter into a binding agreement relating to an Alternative Proposal only if the
Trust Managers or the Board of Directors of Seller, as applicable, determine,
after considering the advice of its legal counsel, that the failure to
consummate such a transaction might reasonably be expected to subject the Trust
Managers or Board of Directors of Seller to liability for breach of their
fiduciary duties to the Trust's or Seller's shareholders. The terms of any
Alternative Proposal to which the Trust or Seller is a party in which the Trust
is the surviving entity shall provide that Buyer shall have the right, at its
election, to purchase the Shares upon payment of the Purchase Price prior to
consummation of any such transaction. In the event that the Trust shall not be
the surviving entity of such transaction, upon consummation of such transaction
the Trust and Seller shall cause such third party to assume the obligations of
Seller and the Trust under this Agreement and Buyer shall have the right, at its
election, to acquire, upon payment of the Purchase Price, such securities or
other property as it would have been
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entitled to receive upon exchange of the Shares if Buyer had purchased the
Shares immediately prior to the consummation of such transaction.
(d) REIMBURSEMENT OF EXPENSES. If for any reason, regardless of fault, the
Shares are not sold by Seller to Buyer, Seller or the Trust shall reimburse
Buyer for all out-of-pocket expenses incurred by Buyer in connection with the
transactions contemplated by this Agreement upon the submission by Buyer to
Seller and the Trust of documentation evidencing the incurrence of such
expenses.
5.5 NOTIFICATION OF CERTAIN MATTERS. Seller and the Trust shall give
prompt notice to Buyer, and Buyer shall give prompt notice to Seller and the
Trust, 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 Buyer, the Trust 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.
5.6 PERMITS AND APPROVALS.
(a) Seller, the Trust and Buyer each agree to cooperate and use their best
efforts to obtain (and will immediately prepare all registrations, filings and
applications, requests and notices preliminary to all) Approvals and Permits
that may be necessary or which may be reasonably requested by Seller, the Trust
or Buyer to consummate the transactions contemplated by this Agreement.
(b) To the extent that the Approval of a third party with respect to any
Material Contract is required in connection with the transactions contemplated
by this Agreement, Seller and the Trust shall use their best efforts to obtain
such Approval prior to the Closing Date.
SECTION 6. ADDITIONAL CONTINUING COVENANTS AND AGREEMENTS
6.1 USE OF PROCEEDS. The proceeds from the sale of the Shares to Buyer,
net of any costs (including any accounting and legal costs and expenses)
associated with the transactions contemplated by this Agreement, shall be
applied by Seller to expenses provided for in the Settlement Agreement and
general reserves.
6.2 ENVIRONMENTAL MATTERS. Seller and the Trust will advise Buyer 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.
6.3 STATUS FOR REIT OWNERSHIP AND INCOME TESTS. Following the Closing, and
at all subsequent times during which Buyer owns any of the Shares, applying the
stock ownership rules of
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Code Section 856(h), Buyer will be treated as a corporation, and the Shares that
it owns will be treated as owned proportionately by Buyer's policyholders (its
"shareholders" for this purpose).
6.4 PROHIBITED TRANSACTIONS. The Trust shall not effect any business
transactions, or agree to effect any business transactions, with Affiliates,
Trust Managers or employees of the Trust except in the ordinary course of
business and unless the consideration paid by the Trust in any such business
transaction is fair value at market rates.
6.5 REGISTRATION RIGHTS AGREEMENT. Contemporaneously with the Closing,
Buyer and the Trust shall enter into a Registration Rights Agreement
substantially in the form of Exhibit B.
6.6 REIT QUALIFICATION. The Trust shall take all actions necessary to
maintain the Trust's qualification as a REIT and, without the written consent of
Buyer, shall take no action that would cause the Trust not to qualify as a REIT
or fail to take any action that would preserve the Trust's qualification as a
REIT.
6.7 SERVICES BY BUYER. To the extent permitted by law and the Charter
Documents, Buyer shall have the right to provide management and leasing services
to the Trust at fair market rates.
SECTION 7. GENERAL CONDITIONS OF PURCHASE
The obligations of the parties to effect the Closing shall be subject to
the following conditions unless waived in writing by all parties:
7.1 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 Closing Date.
7.2 APPROVALS. To the extent required by applicable Law, all Permits and
Approvals required to be obtained in connection with the Closing from any
Governmental Entity or any consent from a third party material to the Trust or
its business shall have been received or obtained on or prior to the Closing
Date.
7.3 ABSENCE OF LITIGATION. No Action before any Governmental Entity
pertaining to the transactions contemplated by this Agreement shall have been
instituted on or before the Closing Date whether or not Buyer or its Affiliates
is a party.
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7.4 NEW YORK STOCK EXCHANGE. The Trust will use its best efforts to
maintain the listing of its Common Shares on the New York Stock Exchange.
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SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to effect the Closing shall be subject to the
following conditions except to the extent waived in writing by Buyer:
8.1 SETTLEMENT AGREEMENT. The final settlement of the Pure World
Litigation by the court overseeing such settlement shall have occurred on or
before the Closing Date.
8.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Seller and the Trust set forth in this Agreement shall be true and
correct at the Closing Date as if made on and as of the Closing Date.
8.3 PERFORMANCE BY SELLER AND THE TRUST. Seller and the Trust 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 and the Trust on or before the Closing Date,
including the covenants set forth in Section 5.
8.4 NO MATERIAL ADVERSE CHANGE. During the period from the date of the
Audited Financial Statements to the Closing Date, (i) there shall not have been
any material adverse change in the business, assets, prospects, financial
condition or the results of operations of the Trust, and the Trust shall not
have sustained any material Loss or damage to its assets (including those of
Subsidiaries and Trust Partnerships), except for Losses covered by insurance,
that adversely affects its ability to conduct a material part of its business
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 Buyer, significantly impair the marketability or value of the
Shares, (iii) the trading in any securities of the Company shall not have been
suspended or limited by the 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.
8.5 CERTIFICATION BY SELLER AND THE TRUST. Buyer shall have received a
certificate, dated as of the Closing Date, signed by the President of Seller and
by the President of the Trust, certifying, in such detail as Buyer and its
counsel reasonably may request, that the conditions specified in Section 8.1,
Section 8.2, Section 8.3, and Section 8.4 have been fulfilled.
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8.6 OPINION OF SELLER AND THE TRUST'S COUNSEL. Buyer shall have received
from counsel for Seller and the Trust an opinion, dated as of the Closing Date,
in form and substance reasonably satisfactory to Buyer as to the matters set
forth in Schedule 8.6.
8.7 NO OTHER BUSINESS COMBINATION TRANSACTION. Seller or the Trust shall
not have entered into an agreement relating to an Alternative Proposal and the
Board of Directors of Seller or the Trust Managers shall not have recommended an
Alternative Proposal.
SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER AND THE TRUST
The obligations of Seller and the Trust to effect the Closing shall be
subject to the following conditions, except to the extent waived in writing by
Seller and the Trust:
9.1 SETTLEMENT AGREEMENT. The final settlement of the Pure World
Litigation by the court overseeing such settlement shall have occurred on or
before the Closing Date.
9.2 ACCURACY OF BUYER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Buyer set forth in this Agreement shall be
true and correct at the Closing Date as if made on and as of the Closing Date.
9.3 BUYER'S PERFORMANCE. Buyer 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 Buyer
on or before the Closing Date.
9.4 CERTIFICATION BY BUYER. Seller and the Trust shall have received a
certificate, dated as of the Closing Date, signed by the President or a Vice
President of Buyer, certifying, in such detail as Seller, the Trust and their
counsel reasonably may request, that the conditions specified in Section 9.2 and
Section 9.3 have been fulfilled.
9.5 OPINION OF BUYER'S COUNSEL. Seller and the Trust shall have received
from counsel to Buyer an opinion, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Trust as to the matters set forth in
Schedule 9.5.
SECTION 10. TERMINATION OF OBLIGATIONS; SURVIVAL
10.1 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:
(a) MUTUAL CONSENT. By mutual consent in writing of Buyer, the Trust and
Seller.
(b) CONDITIONS TO BUYER'S PERFORMANCE NOT MET. By Buyer with written
notice to Seller and the Trust if the Closing Date has not occurred on or before
December 31, 1996.
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Notwithstanding the foregoing, Buyer may not exercise any right to terminate
this Agreement pursuant to this paragraph if Buyer has breached in any material
respect its covenants or agreements set forth in this Agreement in any manner
that shall have proximately contributed to the failure of the Closing Date to
occur on or before December 31, 1996.
(c) CONDITIONS TO SELLER'S AND THE TRUST'S PERFORMANCE NOT MET. By Seller
and the Trust with written notice to Buyer if the Closing Date has not occurred
on or before December 31, 1996. Notwithstanding the foregoing, Seller and the
Trust may not exercise any right to terminate this Agreement pursuant to this
paragraph if Seller or the Trust has breached in any material respect its
covenants or agreements set forth in this Agreement in any manner that shall
have proximately contributed to the failure of the Closing Date to occur on or
before December 31, 1996.
(d) MISREPRESENTATION OR MATERIAL BREACH. By Buyer, Seller or the Trust
with written notice to the other party if there has been a misrepresentation or
material breach on the part of Seller, the Trust or Buyer, respectively, 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 ten business days after receipt of notice from Buyer, Seller or the Trust
of the terminating party's intention to terminate.
(e) ENVIRONMENTAL NONCOMPLIANCE. By Buyer in the event of the discovery of
any Release or other matter prior to the Closing Date which, if known to Seller
or the Trust as of the date of this Agreement, would have constituted a breach
of the representations and warranties contained in Section 3.17.
10.2 EFFECT OF TERMINATION. In the event that this Agreement shall be
terminated pursuant to Section 10.1, all 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 10.1 shall 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.
10.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in or made pursuant to this Agreement shall expire on the
third anniversary of the Closing except that (a) the representations and
warranties contained in Section 3.2 shall continue forever (subject to all
defenses of Seller and the Trust 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 11 with respect to the breach of any representation or
warranty prior to the applicable expiration date, such representation or
warranty
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shall continue indefinitely until such claim is finally resolved. All covenants
and agreements of the parties hereto shall be continuing and shall survive the
Closing Date pursuant to the terms thereof.
SECTION 11. INDEMNIFICATION
11.1 OBLIGATIONS OF SELLER AND THE TRUST. Seller and the Trust, jointly
and severally, agree to indemnify, defend and hold harmless Buyer and its
officers, employees, agents, directors and Affiliates (collectively, the "BUYER
INDEMNIFIED PARTIES") from and against any and all Losses of the Buyer
Indemnified Parties (as incurred) as a result of, or based upon, relating to or
arising out of, directly or indirectly, the transactions contemplated hereby or
by the Registration Rights Agreement, including, without limitation, as a
consequence of (a) any inaccuracy in, or breach or nonperformance of, any of the
representations, warranties, covenants or agreements made by Seller and the
Trust in, or pursuant to, this Agreement, or (b) any pending or threatened
Action brought by the Trust's shareholders or creditors or any other Person
other than the Buyer Indemnified Parties or their creditors relating to, or
arising out of or in connection with, directly or indirectly, the transactions
contemplated under this Agreement; provided, however, that Seller and the Trust
shall not be obligated to indemnify, defend or hold harmless any of the Buyer
Indemnified Parties for any claims based solely on actions taken by any of the
Buyer Indemnified Parties other than the performance of the covenants and
agreements to be undertaken by Buyer pursuant to the terms and conditions of
this Agreement and any other action authorized in writing by Seller and the
Trust. As a condition to the rights of any of the Buyer Indemnified Parties
under this Section 11, Seller and the Trust may require that any such Person
provide a written undertaking that such Person will repay to Seller or the
Trust, as applicable, any amount expended by Seller or the Trust to indemnify,
defend or hold harmless such Person in the event and to the extent a court
determines that Seller's and the Trust's indemnification or defense of such
Person is prohibited by applicable Law.
11.2 OBLIGATIONS OF BUYER. Buyer agrees to indemnify, defend and hold
harmless Seller and the Trust and their Trust Managers, officers, employees,
agents, directors and Affiliates (collectively, the "SELLER INDEMNIFIED
PARTIES") from and against any 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 Buyer in, or
pursuant to, this Agreement, or (b) any pending or threatened Action brought by
Buyer's policyholders or creditors relating to, or arising out of or in
connection with, directly or indirectly, the transactions contemplated under
this Agreement; provided, however, that Buyer 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 and the Trust pursuant to the terms and conditions of this Agreement and
any other action authorized in writing by Buyer. As a condition to the rights of
any of the Seller Indemnified Parties under this Section 11, Buyer may require
that any such Person provide a written undertaking that such Person will repay
to Buyer any amount expended by Buyer to indemnify, defend or hold harmless such
Person in the event and to the extent a court determines that Buyer's
indemnification or defense of such Person is prohibited by applicable Law.
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11.3 PROCEDURE.
(a) NOTICE. Any party seeking indemnification with respect to any Loss
shall give notice to the party required to provide indemnity hereunder (the
"INDEMNIFYING PARTY") on or before the date specified in Section 11.4.
(b) DEFENSE OF CLAIM. If any claim, demand or liability is asserted by any
third party against any Indemnified Party, the Indemnifying Party shall have the
right, unless otherwise precluded by applicable law, to conduct and control the
defense, compromise or settlement of any Action or threatened Action brought
against the Indemnified Party in respect of matters embraced by the indemnity
set forth in this Section 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.
11.4 SURVIVAL. The indemnity set forth in this Section 11 shall survive
the Closing or 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 which such representation
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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 clause (b) of Sections 11.1 or 11.2, forever.
11.5 NOTICE BY SELLER AND THE TRUST. Seller, the Trust and Buyer agree to
notify in writing the other party 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 party),
whether before or after Closing.
SECTION 12. GENERAL
12.1 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.
12.2 SCHEDULES; EXHIBITS; INTEGRATION. Each Exhibit and Schedule delivered
pursuant to the terms of this Agreement shall be in writing and shall constitute
a part of the Agreement. This Agreement, together with such Exhibits and
Schedules, constitutes the entire agreement among the parties pertaining to the
subject matter hereof and supersedes all prior agreements and understandings of
the parties in connection therewith.
12.3 BEST EFFORTS; FURTHER ASSURANCES. Each party will use its best
efforts to cause all conditions to its obligations to be timely satisfied and to
perform and fulfill all obligations on its part to be performed and fulfilled
under this Agreement. The parties shall cooperate with each other in such
actions and in securing requisite Approvals. Each party shall execute and
deliver such further certificates, agreements and other documents and take such
other actions as the other party may reasonably request to consummate or
implement the transactions contemplated hereby or to evidence such events or
matters, including the seeking of any necessary shareholder approvals.
12.4 GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT
TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION (WHETHER OF THE STATE OF TEXAS
OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF TEXAS.
12.5 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 Buyer may assign its rights hereunder (including but not
limited to its rights under Section 11) to any member of
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the USAA Group. Buyer shall remain liable to Seller for the payment of the
Purchase Price and for other obligations of Buyer hereunder notwithstanding a
permitted assignment.
12.6 HEADINGS. The descriptive headings of the Sections and subsections of
this Agreement are for convenience only and do not constitute a part of this
Agreement.
12.7 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 party.
12.8 PUBLICITY AND REPORTS. The Trust and Buyer shall coordinate all
publicity relating to the transactions contemplated by this Agreement and no
party shall issue any press release, publicity statement or other public notice
relating to this Agreement, or the transactions contemplated by this Agreement,
without obtaining the prior consent of the other party, except to the extent
that independent legal counsel to the Trust or Buyer, as the case may be, shall
advise the Trust or Buyer 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).
12.9 CONFIDENTIALITY. All information disclosed by any party (or its
representatives) to the other party whether before or after the date hereof, in
connection with the transactions contemplated by, or the discussions and
negotiations preceding, this Agreement to 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 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) may otherwise be required by Law to be disclosed or (c) to the
extent such duty as to confidentiality is waived in writing by the other party.
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 party
all documents (and reproductions thereof) received by it or its representatives
from such other party (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.
12.10 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
to the benefit of each party, and nothing in this Agreement, express or implied,
is intended to confer upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement. Nothing in this Agreement is
intended to relieve or discharge the obligation of any third Person to or to
confer any right of subrogation or action over or against any party to this
Agreement.
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12.11 NOTICES. Any notice or other communication hereunder must be given
in writing and (a) either delivered in person, (b) transmitted by telex, telefax
or telecopy mechanism, (c) mailed by first class mail, return receipt requested,
or (d) delivered by overnight mail or courier service, as follows:
If to Buyer, addressed to:
USAA Real Estate Company
8000 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Freeway
▇▇-▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller or the Trust, addressed to:
American Industrial Properties REIT
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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.
12.12 EXPENSES. Seller, the Trust and Buyer shall pay their 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 their respective financial advisers,
accountants and counsel.
12.13 REMEDIES; WAIVER. All rights and remedies existing under this
Agreement and any related agreements or documents are cumulative to and not
exclusive of any rights or remedies otherwise available under applicable Law. No
failure on the part of any party to exercise or delay in exercising any right
hereunder shall be deemed a waiver thereof, nor shall any single or partial
exercise preclude any further or other exercise of such or any other right.
Buyer, Seller and the Trust
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shall be entitled to seek any equitable remedy to the extent such remedy is
available under applicable Law.
12.14 REPRESENTATION BY COUNSEL; INTERPRETATION. Seller, the Trust and
Buyer each acknowledge 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 Buyer, Seller and the Trust, and no rule of strict construction shall
be applied against any party to this Agreement.
12.15 SEVERABILITY. If any provision of this Agreement is determined to be
invalid, illegal or unenforceable by any Governmental Entity, the remaining
provisions of this Agreement to the extent permitted by Law shall remain in full
force and effect to the extent permitted by Law, and the parties hereby to the
same extent waive any provision of Law that renders any provision hereof
prohibited or unenforceable in any respect.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officers as of the day and year first
above written.
"BUYER"
USAA REAL ESTATE COMPANY
By:_____________________________________
T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Senior Vice President - Operations
"SELLER"
AMERICAN INDUSTRIAL PROPERTIES REIT,
INC.
By:_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
"TRUST"
AMERICAN INDUSTRIAL PROPERTIES REIT
By:_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
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