1
EXHIBIT 10.3
SHARE PURCHASE AGREEMENT
dated as of December 13, 1996
Between
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.........................................-8-
2.3 The Closing......................................................-8-
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.........................-9-
3.1 Organization and Related Matters.................................-9-
3.2 Capital Stock; Title to Shares...................................-9-
3.3 Financial Statements............................................-10-
3.4 SEC Reports.....................................................-11-
3.5 Authorization; No Conflicts.....................................-12-
3.6 Legal Proceedings...............................................-12-
3.7 Compliance with Law and Permits.................................-13-
3.8 Dividends and Other Distributions...............................-13-
3.9 Certain Interests...............................................-13-
3.10 No Brokers or Finders...........................................-14-
3.11 Employee Benefit Plans..........................................-14-
3.12 Labor Matters...................................................-15-
3.13 Properties......................................................-15-
3.14 Tax Matters.....................................................-17-
3.15 Material Contracts..............................................-19-
3.16 Insurance.......................................................-20-
3.17 Environmental Matters...........................................-20-
3.18 Trust Records; Accounting Records...............................-21-
3.19 New York Stock Exchange Listing.................................-21-
3.20 Disclosure of Facts.............................................-21-
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.........................-21-
4.1 Organization and Related Matters................................-21-
4.2 Authorization...................................................-21-
4.3 No Conflicts....................................................-22-
4.4 No Brokers or Finders...........................................-22-
4.5 Legal Proceedings...............................................-22-
4.6 Investment Representation.......................................-22-
4.7 Legends; Stop-Transfer Orders...................................-22-
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......................................................-23-
5.3 Conduct of Business.............................................-24-
5.4 Prohibition of Solicitation.....................................-26-
5.5 Notification of Certain Matters.................................-27-
5.6 Permits and Approvals...........................................-27-
SECTION 6. ADDITIONAL CONTINUING COVENANTS AND AGREEMENTS..................-28-
6.1 Use of Proceeds.................................................-28-
6.2 Appointment of Trust Managers...................................-28-
6.3 Environmental Matters...........................................-29-
6.4 Status for REIT Ownership and Income Tests......................-29-
6.5 Prohibited Transactions.........................................-29-
6.6 Seller/Buyer Registration Rights Agreement......................-29-
6.7 REIT Qualification..............................................-29-
6.8 Services by Buyer...............................................-29-
SECTION 7. GENERAL CONDITIONS OF PURCHASE..................................-30-
7.1 No Orders.......................................................-30-
7.2 Approvals.......................................................-30-
7.3 Absence of Litigation...........................................-30-
7.4 New York Stock Exchange.........................................-30-
SECTION 8. CONDITIONS TO OBLIGATIONS OF BUYER..............................-30-
8.1 Settlement Agreement............................................-30-
8.2 Accuracy of Seller's Representations and Warranties.............-30-
8.3 Performance by Seller...........................................-30-
8.4 No Material Adverse Change......................................-31-
8.5 Certification by Seller.........................................-31-
8.6 Opinion of Seller's Counsel.....................................-31-
8.7 No Other Business Combination Transaction.......................-31-
SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER.............................-31-
9.1 Settlement Agreement............................................-31-
9.2 Accuracy of Buyer's Representations and Warranties..............-32-
9.3 Buyer's Performance.............................................-32-
9.4 Certification by Buyer..........................................-32-
9.5 Opinion of Buyer's Counsel......................................-32-
SECTION 10. TERMINATION OF OBLIGATIONS; SURVIVAL...........................-32-
10.1 Termination of Agreement........................................-32-
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10.2 Effect of Termination...........................................-33-
10.3 Survival of Representations and Warranties......................-33-
SECTION 11. INDEMNIFICATION...............................................-33-
11.1 Obligations of Seller...........................................-33-
11.2 Obligations of Buyer............................................-34-
11.3 Procedure.......................................................-34-
11.4 Survival........................................................-35-
11.5 Notice by Seller................................................-35-
SECTION 12. GENERAL.......................................................-35-
12.1 Amendments; Waivers.............................................-35-
12.2 Schedules; Exhibits; Integration................................-35-
12.3 Best Efforts; Further Assurances................................-36-
12.4 Governing Law...................................................-36-
12.5 No Assignment...................................................-36-
12.6 Headings........................................................-36-
12.7 Counterparts....................................................-36-
12.8 Publicity and Reports...........................................-36-
12.9 Confidentiality.................................................-36-
12.10 Parties in Interest.............................................-37-
12.11 Notices.........................................................-37-
12.12 Expenses........................................................-38-
12.13 Remedies; Waiver................................................-38-
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 Seller Benefit Plans
SCHEDULE 3.13 Properties and Encumbrances
SCHEDULE 3.14 Taxes
SCHEDULE 3.15 Material Contracts
SCHEDULE 3.16 Insurance
SCHEDULE 3.17 Environmental Compliance
SCHEDULE 3.18 Trust Records
SCHEDULE 5.3 Conduct of Business
SCHEDULE 8.6 List of Opinions of Seller'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 13, 1996, by and between AMERICAN INDUSTRIAL PROPERTIES REIT, a
Texas real estate investment trust ("SELLER"), and USAA REAL ESTATE COMPANY, a
Delaware corporation ("BUYER").
R E C I T A L S
A. Seller qualifies and operates as a real estate investment trust for
federal income tax purposes.
B. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, a certain number of Seller's Common Shares (as defined herein) upon the
terms and subject to the conditions set forth in this Agreement.
C. The proceeds from the sale of Seller's Common Shares are to be used for
the purposes set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION
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 between
Seller and Buyer, as amended from time to time pursuant to the terms of this
Agreement, together with all Exhibits and all Schedules attached hereto.
"ALTERNATIVE PROPOSAL" has the meaning set forth in Section 5.4(a)
of this Agreement.
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"APPROVAL" means any approval, authorization, consent, qualification
or registration, or any waiver of the foregoing, or any notice, statement or
other communication required to be filed with or delivered to any Governmental
Entity or any other Person.
"ASSOCIATE" of a Person means
(i) a corporation or organization (other than Seller or a party to
this Agreement) of which such Person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10% or more of any class of equity
securities;
(ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar capacity; and
(iii) any relative or spouse of such Person who has the same
residence as such Person.
"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in Section
3.3(a) of this Agreement.
"AUDITORS" means Ernst & Young, LLP, independent public accountants
to Seller.
"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 Seller'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.
"CODE" means the Internal Revenue Code of 1986, as amended and, as
applicable, the regulations promulgated thereunder.
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"COMMON SHARES" means common shares of beneficial interest, par
value $.10 per share, of Seller.
"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.
"ENCUMBRANCE" means any claim, charge, easement, encumbrance, lease,
covenant, security interest, lien, option, pledge, rights of others,
preferential right, right of first refusal or restriction (whether on voting,
sale, transfer, disposition or otherwise), whether imposed by agreement,
understanding, law, equity or otherwise, except that "Encumbrance" does not
include any such item that (i) is reflected in the Audited Financial Statements
or (ii) constitutes a statutory lien arising in the ordinary course of business.
"ENVIRONMENTAL CLAIMS" means any of the following to the extent they
relate to, or arise out of, directly or indirectly, Environmental Noncompliance
with respect to the Properties or actual or alleged Environmental Conditions or
any Notification which may lead to: (i) claims, demands, suits, causes of action
for personal injury, death or property damage; (ii) claims for actual or
threatened damages to natural resources; (iii) claims for the recovery of
response costs, or administrative or judicial orders directing the performance
of investigations, response or remedial actions under any Environmental Law;
(iv) a requirement to implement "corrective action" pursuant to any restitution,
contribution or equitable indemnity to third parties or any Governmental Entity;
(v) fines, penalties, liens against the Properties; (vi) claims for injunctive
relief or other orders or notices of violation from any Governmental Entity; or
(vii) with regard to any present or former employees, tenants or guests,
exposure to or injury from Environmental Conditions.
"ENVIRONMENTAL CONDITIONS" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, any actual or potential drinking or water supply,
subsurface strata, or air, including ambient air, relating to or arising out of
the use, handling, storage, treatment, recycling, generation, transportation,
release, spilling, leaking, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, disposal, dumping or threatened release of Hazardous
Materials from, in, on, or onto the Properties.
"ENVIRONMENTAL NONCOMPLIANCE" means any of the following to the
extent they are applicable to the Properties or alleged to be applicable to the
Properties or to Seller, Subsidiaries or a Seller Partnership: (i) the Release
of any Hazardous Material into the environment, any storm drain, sewer, septic
system or publicly-owned treatment works, in violation of any effluent or
emission limitations, standards or other criteria or guidelines established by
any Environmental Law; (ii) any noncompliance of physical structure, equipment,
process or premises with the requirements of building or fire codes, zoning or
land use regulations or ordinances or conditional use permits; (iii) any
noncompliance with federal, state or local requirements governing occupational
safety and health;
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(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
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
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"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 Seller, any
Subsidiary or any Seller Partnership is a party or by which any such Person or
any of their respective Properties are bound that currently is in effect and (a)
after December 31, 1995 obligates Seller, any Subsidiary or any Seller
Partnership to pay an amount equal to $100,000 or more, (b) is one of the group
of Tenant Leases that is anticipated by Seller to produce 66 2/3% of Seller's
gross income during the fiscal year ending December 31, 1997, such group of
Tenant Leases calculated beginning with the Tenant Lease that is anticipated to
produce the most gross income during such period and thereafter in descending
order of magnitude of gross income anticipated to be earned during such period
under each other Tenant Lease until such percentage of gross income is reached,
(c) is a Tenant Lease involving the lease of space in excess of 10,000 square
feet for any Property, (d) other than any Tenant Lease, has an unexpired term as
of December 31, 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 Seller, any Subsidiary or any Seller Partnership, (f)
provides for the extension of credit by Seller, any Subsidiary or any Seller
Partnership or a line of credit to Seller, any Subsidiary or any Seller
Partnership in excess of $50,000, (g) provides for a guaranty or indemnity by
Seller, any Subsidiary or any Seller Partnership, (h) grants a power of
attorney, agency or similar authority to another Person, (i) contains an option
to purchase or a right of first refusal relating to any of the Properties, (j)
relates to the sale or issuance of any equity securities of Seller or securities
exercisable for or convertible into any equity
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securities of Seller, or (k) any other Contract that is not within the general
descriptions of clauses (a) through (j) (i.e., is not a Tenant Lease or within
any of the other general categories listed above) but is material to the
business, financial condition, assets, results of operations or prospects of
Seller, Subsidiaries or Seller Partnerships.
"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 by Seller,
Subsidiaries and Seller 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 Seller, Pure World, Inc., Xxxxxx Xxxxxxx, et. al.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement between Buyer and Seller to be executed contemporaneously with the
Closing.
"REIT" has the meaning set forth in Section 3.14(b) of this
Agreement.
"RELEASE" means releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, ejecting, escaping, leaching, disposing,
seeping, infiltrating, draining or dumping of any Hazardous Material. This term
shall be interpreted to include both the present and past tense, as appropriate.
"SCHEDULE" means any schedule attached to this Agreement.
"SEC" means the Securities and Exchange Commission or any successor
entity.
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"SEC FILINGS" has the meaning set forth in Section 3.4 of this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" means American Industrial Properties REIT, a Texas real
estate investment trust.
"SELLER BENEFIT PLANS" has the meaning set forth in Section 3.11 of
this Agreement.
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section
11.2 of this Agreement.
"SELLER PARTNERSHIPS" has the meaning set forth in Section 3.1 of
this Agreement.
"SELLER PERMITS" has the meaning set forth in Section 3.7(b) of this
Agreement.
"SETTLEMENT AGREEMENT" shall mean the settlement agreement by and
among Seller, Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx on the one hand and Pure
World, Inc., Xxxx X. Xxxxxxx and Xxxxxx Xxxxxxx 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.
"TAXES" has the meaning set forth in Section 3.14(a) of this
Agreement.
"TAX RETURN" has the meaning set forth in Section 3.14(b) of this
Agreement.
"TENANT LEASES" has the meaning set forth in Section 3.13(b) of this
Agreement.
"TRUST MANAGERS" means the Trust Managers of Seller.
"UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.3(b) of this Agreement.
"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.
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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 Seller Partnership shall be deemed
to be knowledge of Seller.
SECTION 2. PURCHASE AND SALE
2.1 PURCHASE AND SALE OF THE SHARES. Subject to the terms and conditions
set forth herein, on the Closing Date, Seller shall issue to Buyer, and Buyer
shall purchase from Seller, an aggregate of 924,600 Common Shares (the
"SHARES").
2.2 PURCHASE PRICE; PAYMENT. The cash purchase price for each Common Share
shall be $2.75 per Common Share, and the aggregate cash purchase price for the
Shares (the "PURCHASE PRICE") shall be Two Million Five Hundred Forty-Two
Thousand Six Hundred Fifty Dollars ($2,542,650), payable on the Closing Date by
wire transfer of immediately available funds to an account designated by Seller.
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 &
XxXxxx, L.L.P., counsel to Seller, on the same day or within one (1) business
day 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
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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
Seller represents and warrants to, and agrees 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 Texas. Seller has
all necessary power and authority to execute, deliver and perform this
Agreement. Schedule 3.1 lists all Subsidiaries (the "SUBSIDIARIES") and all
Seller Partnerships (the "SELLER PARTNERSHIPS") of Seller and correctly sets
forth Seller's ownership interest therein, the jurisdiction in which each
Subsidiary and each Seller Partnership is organized and each jurisdiction in
which Seller, each Subsidiary and each Seller Partnership is and is required to
be qualified or licensed to do business as a foreign Person. Each Subsidiary and
each Seller Partnership is duly organized, validly existing and, with respect to
each Subsidiary, in good standing under the laws of the jurisdiction of its
incorporation or organization. Seller, Subsidiaries and Seller Partnerships have
all necessary power (whether corporate, partnership or other power, as
applicable) and authority to own their respective properties and assets and to
carry on their respective businesses as now conducted. Seller, Subsidiaries and
Seller Partnerships are duly qualified or licensed to do business as foreign
Persons in good standing in all jurisdictions in which the character or the
location of the assets owned or leased by any of them or the nature of the
business conducted by any of them requires licensing or qualification, except
where the failure to be so qualified or licensed is not and will not be material
to their respective businesses, financial condition, assets, results of
operations or prospects. Schedule 3.1 correctly lists the current Trust
Managers, directors, general partners and executive officers of Seller,
Subsidiaries and Seller Partnerships. True, correct and complete copies of the
Charter Documents and the charter or organizational documents of Subsidiaries
and Seller Partnerships (including the declaration of trust, articles or
certificate of incorporation, bylaws and partnership agreements, as applicable)
as in effect on the date hereof have been delivered to Buyer. Seller is
registered and is a reporting company under the Exchange Act. Neither any
Subsidiary nor any Seller Partnership is registered or is a reporting company
under the Exchange Act. Except as listed on Schedule 3.1, Seller does not
directly or indirectly own or control any equity interest in any Person.
3.2 CAPITAL STOCK; TITLE TO SHARES. The authorized Capital Stock of Seller
consists of 10,000,000 Common Shares of which 9,075,400 Common Shares are issued
and outstanding. Seller owns all of the outstanding Capital Stock of
Subsidiaries free and clear of any Encumbrances, equities and claims except as
specified in Schedule 3.2. Seller owns the equity interest in each Seller
Partnership free and clear of any Encumbrances, equities and claims except as
specified in Schedule 3.2. No Common Shares or Capital Stock of any Subsidiary
are held in treasury. Except as set forth in Schedule 3.2 or as contemplated in
this Agreement, there are no outstanding Contracts or other
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rights to subscribe for or purchase, or Contracts or other obligations to issue
or grant any rights to acquire, any Common Shares, any Capital Stock of any
Subsidiary or any Seller Partnership or to restructure or recapitalize Seller,
any Subsidiary or any Seller Partnership. Except as set forth in Schedule 3.2,
there are no outstanding Contracts of Seller, any Subsidiary or any Seller
Partnership to repurchase, redeem or otherwise acquire any of their respective
Common Shares or Capital Stock, as applicable. No bonds, debentures, notes or
other indebtedness having general voting rights (or convertible into securities
having general voting rights) of Seller, any Subsidiary or any Seller
Partnership are issued or outstanding. There are no voting trusts or other
agreements or understandings to which Seller, any Subsidiary or any Seller
Partnership is a party or is bound, or to the knowledge of Seller, to which any
other Person is a party or is bound, with respect to the voting of the Common
Shares or the Capital Stock of any Subsidiary or any Seller Partnership. All
issued and outstanding Common Shares and Capital Stock of all Subsidiaries and
Seller Partnerships were duly authorized and validly issued at the time of
issuance and are fully paid and nonassessable. There are no preemptive rights in
respect of any Common Shares or Capital Stock of any Subsidiary or any Seller
Partnership. Upon the issuance of the Shares to Buyer at the Closing, the Shares
will have been validly issued and be validly outstanding, fully paid and
nonassessable, and the issuance of such Shares is not and will not be subject to
preemptive rights of any other shareholder of Seller. 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 Seller with
respect to priority in payment of dividends and the distribution of assets upon
any liquidation of Seller, and there are no shares of any class of Capital Stock
of Seller having any priority in respect thereof.
3.3 FINANCIAL STATEMENTS.
(a) AUDITED FINANCIAL STATEMENTS. Seller has delivered to Buyer the
consolidated balance sheets of Seller (which reflect the financial position of
all Subsidiaries and Seller 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
Seller, Subsidiaries and Seller 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 Seller, any Subsidiary or any Seller
Partnership. Seller has not received any annual management letters from the
Auditors since March 29, 1996.
(b) UNAUDITED FINANCIAL STATEMENTS. Seller has delivered to Buyer the
consolidated balance sheets of Seller (which reflect the financial position of
all Subsidiaries and Seller Partnerships), as of March 31, June 30 and September
30, 1996, and the respective related
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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 Seller,
Subsidiaries and Seller 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, Seller, Subsidiaries and Seller
Partnerships have conducted their respective businesses only in the ordinary
course and in a manner consistent with past practice and, whether or not in the
ordinary course of business, there has not been, occurred or arisen:
(i) any change in or event affecting the business of Seller,
Subsidiaries and Seller Partnerships that has had a material adverse
effect on such business or any materially adverse change or trend in the
business, financial condition, assets, results of operations or prospects
of Seller, Subsidiaries or Seller Partnerships, or
(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 Seller, any Subsidiary or any Seller Partnership that has
involved or may involve a Loss (whether or not covered by insurance) to
Seller, any Subsidiary or any Seller Partnership of more than $100,000
individually, or $300,000 in the aggregate.
(d) NO OTHER LIABILITIES OR CONTINGENCIES. Neither Seller nor any
Subsidiary nor any Seller Partnership has any material liability of any nature,
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. Seller 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 Seller since December 31, 1993 are
collectively referred to in this Agreement as the "SEC FILINGS." Seller has made
available to Buyer all SEC Filings. As of their respective dates, (x) each of
the SEC Filings, including the financial
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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 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 the Trust Managers and by all other necessary action on the part of Seller,
and no other proceedings on the part of Seller (including Trust Manager and
shareholder approval) are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. 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. Except as set forth in Schedule 3.5, the
execution, delivery and performance of this Agreement by Seller and the
consummation by Seller of the transactions contemplated hereby will not (i)
conflict with or result in the breach of any provisions of, or trigger any
preferential rights under, the Charter Documents or the charter or
organizational documents of Subsidiaries or Seller Partnerships, (ii) result in
a breach or violation of, a default under, or the triggering of any payment or
other material obligations pursuant to, or accelerate vesting under, any Seller
Benefit Plans or any grant or award thereunder or any employment or consulting
agreement or arrangement of Seller, any Subsidiary or any Seller Partnership,
(iii) violate, conflict with, result in a breach of any provision of, constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination or in a right of
termination or cancellation of, accelerate the performance required by, result
in the creation of any Encumbrance upon any Properties under, result in the
triggering of any rights under, or result in being declared void, voidable or
without further binding effect, any of the terms or provisions of any Material
Contract of Seller, any Subsidiary or any Seller Partnership or (iv) violate any
Law. Schedule 3.5 lists all Permits and Approvals required to be obtained by
Seller, Subsidiaries and Seller Partnerships to consummate the transactions
contemplated hereby. Except for matters identified in Schedule 3.5 as requiring
that certain actions be taken by or with respect to a third party or
Governmental Entity, the execution and delivery of this Agreement by Seller and
the consummation of the transactions contemplated hereby will not require the
consent, authorization or approval 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, Subsidiaries
or Seller 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 threatened, against or affecting Seller, any Subsidiary,
any Seller Partnership, any Trust Manager in his capacity as a trust manager of
Seller or any of the Properties which (i) questions the validity of this
Agreement, the Registration Rights Agreement, the Settlement Agreement or any
action taken or to
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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 Seller, any Subsidiary or any Seller
Partnership or on Seller's ability to perform this Agreement. To Seller's
knowledge, Schedule 3.6 lists each Order and each Action that (i) involves a
claim or potential claim of aggregate liability in excess of $50,000 against
Seller, any Subsidiary or any Seller Partnership that is not covered by
insurance, (ii) involves a claim or potential claim of aggregate liability
brought by Seller, any Subsidiary or any Seller Partnership against a tenant
under any Tenant Lease which Tenant Lease obligates such tenant to pay rent to
Seller, any Subsidiary or any Seller Partnership during the year ending December
31, 1996 in an amount equal to or in excess of $150,000, or (iii) that enjoins
or seeks to enjoin any activity by Seller, any Subsidiary or any Seller
Partnership. There is no matter as to which Seller, any Subsidiary or any Seller
Partnership has received any notice, claim or assertion in connection with which
any such Person has or may reasonably be expected to have any right to be
indemnified by Seller, any Subsidiary or any Seller Partnership.
3.7 COMPLIANCE WITH LAW AND PERMITS.
(a) Seller, Subsidiaries and Seller Partnerships are organized and have
conducted their respective businesses in accordance with applicable Laws,
neither Seller nor any Subsidiaries or Seller Partnerships has received any
notice of violation of any Laws which remains uncorrected, and the respective
forms, procedures and practices of Seller, Subsidiaries and Seller Partnerships
are in compliance with all such Laws, to the extent applicable, the violation of
which would have a material adverse effect on the respective businesses,
financial condition, assets, results of operations or prospects of Seller,
Subsidiaries and Seller Partnerships.
(b) Except as set forth in Schedule 3.7, Seller, Subsidiaries and Seller
Partnerships hold all permits, licenses, variances, exemptions, authorizations,
orders and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "SELLER PERMITS") and Seller,
Subsidiaries and Seller Partnerships are in compliance with the terms of the
Seller Permits relating to each such Person, except where the failure to hold
such Seller Permits or be in compliance therewith would not, individually or in
the aggregate, have a material adverse effect on the business, financial
condition, assets, results of operations or prospects of Seller, Subsidiaries or
Seller Partnerships. Seller has made available to Buyer correct and complete
copies of all Seller Permits. Except as set forth in Schedule 3.7, to the
knowledge of the Seller, no investigation or review by any Governmental Entity
with respect to the Seller Permits is pending or threatened.
3.8 DIVIDENDS AND OTHER DISTRIBUTIONS. Except as set forth in Schedule
3.8, there has been no dividend or other distribution of assets or securities by
Seller or Seller Partnerships (other than Seller Partnerships in which Seller
owns 100% beneficial interest) whether consisting of money, property or any
other thing of value, declared, issued or paid to or for the benefit of Seller
subsequent to the date of the Audited Financial Statements.
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3.9 CERTAIN INTERESTS. Except as set forth in Schedule 3.1 and Schedule
3.9, no Affiliate of Seller, any Subsidiary or any Seller Partnership, nor any
of their respective officers, Trust Managers, directors or partners, nor any
Associate of any such individual, has any material interest in any property used
in or pertaining to the respective businesses of Seller, any Subsidiary or any
Seller Partnership. Except as set forth in Schedule 3.1 and Schedule 3.9, no
such Person is indebted or otherwise obligated to Seller, any Subsidiary or any
Seller Partnership. Except as set forth in Schedule 3.9, Seller, Subsidiaries
and Seller Partnerships are not indebted or otherwise obligated to any such
Person, except for amounts due under normal arrangements applicable to all
employees generally as to salary or reimbursement of ordinary business expenses
not unusual in amount or significance. Except as set forth in Schedule 3.1 and
Schedule 3.9, there are no material transactions between Seller, any Subsidiary
or any Seller Partnership and any Affiliate of Seller, any Subsidiary or any
Seller Partnership or any Associate of any such Affiliate that have continuing
obligations of any party thereunder. Except as set forth in Schedule 3.9, the
consummation of the transactions contemplated by this Agreement will not (either
alone, or upon the occurrence of any act or event, or with the lapse of time, or
both) result in any compensation or severance or other payment or benefit
arising or becoming due from Seller, any Subsidiary or any Seller Partnership or
any of its assigns to any Person.
3.10 NO BROKERS OR FINDERS. No agent, broker, finder, or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of
Seller or any of its Affiliates in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this
Agreement, is or will be entitled to any brokerage or finder's or similar fee or
other commission as a result of this Agreement or 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 Seller, any Subsidiary, or any
Seller Partnership is a party or by which either Seller, any Subsidiary, or any
Seller Partnership is bound (collectively, the "SELLER BENEFIT PLANS"),
including (i) any profit-sharing, deferred compensation, bonus, stock option,
stock purchase, pension, retainer, consulting, retirement, severance, welfare or
incentive plan, agreement or arrangement, (ii) any plan, agreement or
arrangement providing for "fringe benefits" or perquisites to employees,
officers, directors, trust managers or agents, including benefits relating to
automobiles, clubs, vacation, child care, parenting, sabbatical, sick leave,
medical, dental, hospitalization, life insurance and other types of insurance,
(iii) any employment agreement not terminable on 30 days (or less) written
notice or (iv) any other "employee benefit plan" within the meaning of Section
3(3) of ERISA. True and complete copies of the Seller Benefit Plans, current
descriptive booklets and summary plan descriptions of the Seller Benefit Plans,
any relevant trust agreements or insurance policies or contracts and, if
applicable, the most recent annual return on Form 5500 (or equivalent form) have
been made available to Buyer. To the extent applicable, the Seller Benefit Plans
comply, in all material respects, with the requirements of ERISA and the Code.
Except as set forth in Schedule 3.11, no Seller Benefit Plan is or is intended
to be a stock bonus, pension or profit-sharing plan within the meaning of
Section 401(a) of the Code. Neither any Seller Benefit Plan nor Seller, any
Subsidiary, or any Seller Partnership has
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incurred any liability or penalty under Section 4975 of the Code or Section
502(i) of ERISA. Each Seller Benefit Plan has been maintained and administered
in all material respects in compliance with its terms and with ERISA and the
Code to the extent applicable thereto. Except as set forth in Schedule 3.11,
there are no pending, or to the knowledge of Seller threatened, claims (other
than pursuant to the terms of any such plan) against or otherwise involving any
of the Seller Benefit Plans and no Action has been brought against or with
respect to any Seller Benefit Plan, and neither Seller nor any Subsidiary nor
any Seller Partnership has incurred any liability to any party with respect to
any Seller Benefit Plan. All contributions required to be made to the Seller
Benefit Plans have been made or provided for. Except as set forth in Schedule
3.11, neither Seller nor any Subsidiary nor any Seller Partnership maintains or
contributes to any plan or arrangement which provides or has any liability to
provide life insurance or medical or other employee welfare benefits to any
employee or former employee upon his retirement or termination of employment and
neither Seller nor any Subsidiary nor any Seller Partnership has represented,
promised or contracted (whether in oral or written form) to any employee or
former employee that such benefits would be provided. Except as set forth in
Schedule 3.11, the execution of, and performance of the transactions
contemplated by, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent event) constitute an event under any Seller Benefit
Plan or other policy, arrangement or any trust or loan that will or may result
in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee. No Seller Benefit Plan
is subject to Title IV of ERISA and neither Seller nor any Subsidiary nor any
Seller Partnership has, within six years prior to the date of this Agreement,
contributed to or had any obligation to contribute to any employee benefit plan
subject to Title IV of ERISA. For purposes of this Section 3.11, (i) the term
"Seller" includes any entity required to be aggregated with the Seller pursuant
to Code Section 414(b), (c), (m) or (o) and (ii) provisions of ERISA or the Code
include regulations prescribed under such provisions.
3.12 LABOR MATTERS. Neither Seller nor any Subsidiary nor any Seller
Partnership is a party to or bound by any collective bargaining or other labor
union contracts. There is no pending or, to the knowledge of Seller, threatened
labor dispute, strike or work stoppage against Seller, any Subsidiary, or any
Seller Partnership. Neither Seller nor any Subsidiary nor any Seller
Partnership, nor their respective representatives or employees, has committed
any unfair labor practices in connection with the operation of the respective
businesses of Seller, each Subsidiary, and each Seller Partnership, and there is
no pending or, to the knowledge of Seller, threatened charge or complaint
against Seller, any Subsidiary, or any Seller Partnership by the National Labor
Relations Board or any comparable state agency. Seller, Subsidiaries, and Seller
Partnerships are in compliance with all applicable Laws respecting employment,
consulting, employment practices, wages, hours, and terms and conditions of
employment.
3.13 PROPERTIES.
(a) Schedule 3.13 contains a complete and correct list of all real
property owned or leased by Seller, each Subsidiary and each Seller Partnership
(collectively, the "PROPERTIES"). Except as set forth in Schedule 3.13, Seller,
Subsidiary or Seller Partnership, as applicable, owns good and
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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) Seller 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 and expiration date) of each lease with
respect to the Properties (collectively, the "TENANT LEASES"), the square feet
for each of the Tenant Leases, the monthly base rental rates for each of the
Tenant Leases and the security deposits for each of the Tenant Leases. Other
than the Tenant Leases, no party has been granted any license, lease or other
material right relating to the use or possession of the Properties which is
material to the use or value of the Properties. Except as set forth in Schedule
3.13, all of the Tenant Leases are valid and subsisting and in full force and
effect with respect to Seller, Subsidiaries and Seller Partnerships and, to
Seller's knowledge, with respect to any other party thereto, and no tenant of
the Properties is more than 30 days delinquent on its rental as of October 31,
1996 except as set forth in Schedule 3.13. To Seller's knowledge, no tenant of
the Properties has initiated or threatened bankruptcy since January 1, 1996. No
tenant of the Properties is an Affiliate or Associate of Seller, any Subsidiary
or any Seller Partnership. Except as set forth in Schedule 3.13, there are no
contracts or other material obligations outstanding for the sale, exchange or
transfer of the Properties or any portion thereof. There are no attachments,
executions, assignments for the benefit of creditors, receiverships,
conservatorship or voluntary or involuntary proceedings in bankruptcy or
pursuant to any other debtor relief laws filed by, or pending against, Seller,
Subsidiaries, Seller Partnerships or the Properties. Except as set forth in
Schedule 3.13, since January 1, 1996, no tenants have terminated their leases
prior to expiration and, to Seller's knowledge, have no intent to do so.
(c) Except as set forth in Schedule 3.13 there is no pending condemnation
or similar proceeding affecting the land, the improvements or the personalty
situated at the Properties or any portion thereof, and neither Seller nor any
Subsidiary nor any Seller Partnership has received any written notice and has no
knowledge that any such proceeding is contemplated.
(d) The continued ownership, operation, use and occupancy of the land or
the improvements thereon do not violate any zoning, building, administrative or
other law, ordinance, order or regulation or any restrictive covenant applicable
to the Properties, the violation of which would have a material adverse effect
on the business, financial condition, assets, results of operations or prospects
of Seller, Subsidiaries or Seller Partnerships, as applicable, and no written
notice of any such violation has been received by Seller, any Subsidiary or any
Seller Partnership from any Governmental Entity.
(e) Seller, Subsidiaries or Seller Partnerships, as applicable, currently
has in place title, liability, casualty and other insurance coverage with
respect to the Properties in such amounts as are reasonable and customary for
properties similar to the Properties. Each of such policies is in full force
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and effect, and all premiums due and payable thereunder have been, and on the
Closing Date will be, fully paid when due. No notice of cancellation has been
received, or to the knowledge of Seller threatened, with respect thereto.
(f) Except as set forth in Schedule 3.13, there is no Action pending, or
to the knowledge of Seller contemplated, by any Governmental Entity or third
party to levy any special assessments against the Properties that, if
successful, would have a material adverse effect on the business, financial
condition, assets, results of operations or prospects of Seller.
(g) To Seller's knowledge, each unsatisfied brokerage obligation that is
in excess of $25,000 with respect to the Properties is set forth on Schedule
3.13.
(h) To Seller's knowledge and except as set forth on Schedule 3.13, no
capital expenditures are contemplated by Seller to be incurred by Seller, any
Subsidiary or any Seller Partnership within twelve months after the date of this
Agreement in excess of $50,000 per Property with respect to any Property.
(i) Except as set forth in Schedule 3.13, all management contracts with
respect to the Properties are terminable by Seller on 30 days notice.
(j) To Seller's knowledge, except for customary easements for access to
building systems or utilities and except as set forth in Schedule 3.13, each
Property is an independent unit which does not now rely on any facilities (other
than facilities of municipalities or public utilities) located on any property
that is not part of the Property for the furnishing to the Property of any
essential building systems or utilities (including drainage facilities, catch
basins and retention ponds) that if the owner of the Property could not avail
the use of which, would materially detract from the value of the Property or
materially interfere with the use of the Property.
3.14 TAX MATTERS.
(a) For purposes of this Agreement, "TAXES" means any federal (including,
without limitation, tax on its undistributed taxable income, alternative minimum
tax, tax on certain sale proceeds or other nonqualifying income from foreclosure
property or on income from prohibited transactions, and any taxes imposed upon
Seller, Subsidiaries or Seller Partnerships under Section 857 or Section 4981 of
the Code), state, county, local or foreign taxes, charges, fees, levies, or
other assessments, including, without limitation, all net income, gross income,
sales and use, ad valorem, 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
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including, without limitation, any notices or information reports or returns
required to be filed by Seller, Subsidiaries or Seller Partnerships with respect
to their respective operations, income, assets and shareholders or partners in
order to maintain Seller's status as a real estate investment trust ("REIT")
under the Code.
(c) Seller elected to be taxed as a REIT under Sections 856 through 860 of
the Code effective for its taxable year ended December 31, 1985 (the "INITIAL
REIT YEAR"). Seller, since the Initial REIT Year through the end of the
immediately preceding taxable year, has always qualified as a REIT under the
Code. At all times from and after the Initial REIT Year to the date hereof,
Seller has complied with, and through the Closing Date will comply with, all
applicable Code and regulatory requirements necessary to maintain its
qualification as a REIT under the Code and has otherwise operated, and through
the Closing Date will have otherwise operated, in the manner necessary to
maintain its qualification as a REIT under the Code. No dividend will be
required to be distributed before December 31, 1996 in order for Seller to
maintain its qualification as a REIT under the Code.
(d) Except as disclosed in Schedule 3.14, Seller, Subsidiaries and Seller
Partnerships have (i) filed all Tax Returns required to be filed by applicable
Law since December 31, 1990, and all such Tax Returns were in all material
respects (and, as to Tax Returns not filed as of the date hereof but filed on or
before the Closing Date, will be in all material respects) true, complete and
correct and filed on a timely basis and (ii) within the time and in the manner
prescribed by law, paid (and until the Closing Date will pay within the time and
in the manner prescribed by law) all material Taxes that were or are due and
payable.
(e) Except as set forth in Schedule 3.14, Seller, Subsidiaries and Seller
Partnerships have established (and until the Closing Date will maintain) on
their respective books and records reserves adequate to pay all Taxes of Seller,
Subsidiaries and Seller Partnerships not yet due and payable in accordance with
GAAP which are reflected in the Audited Financial Statements and Unaudited
Financial Statements to the extent required by GAAP.
(f) Except as disclosed in Schedule 3.14, as of the date hereof, there are
no, and, as of the Closing Date, there will be no, material Tax liens upon the
assets of Seller, Subsidiaries and Seller Partnerships, except liens for Taxes
not yet due.
(g) Except as disclosed in Schedule 3.14, Seller, Subsidiaries, and Seller
Partnerships have complied (and until the Closing Date will comply) in all
material respects with the provisions of the Code relating to the payment and
withholding of Taxes, including the withholding and reporting requirements under
Code Sections 1441 through 1464, 3401 through 3406, and 6041 through 6049, as
well as similar provisions under any other laws, and have, within the time and
in the manner prescribed by law, withheld from employee wages and paid over to
the proper governmental authorities all material amounts required by applicable
Law.
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(h) Except as disclosed in Schedule 3.14, Seller, Subsidiaries and Seller
Partnerships have not executed any outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns.
(i) No notice of any material deficiency for any Taxes has been received
by Seller, any Subsidiary or any Seller Partnership that has not been resolved
and paid in full or otherwise settled, no audits or other administrative
proceedings or court proceedings are presently pending or, to Seller's
knowledge, threatened with regard to any Taxes or Tax Returns of Seller,
Subsidiaries or Seller Partnerships, and no notice of any material claim has
been received by Seller, any Subsidiary or any Seller Partnership from any
authority in a jurisdiction where Seller, Subsidiaries or Seller Partnerships do
not file Tax Returns that Seller, any Subsidiary or any Seller Partnership is or
may be subject to Tax in that jurisdiction.
(j) Seller, Subsidiaries and Seller Partnerships have not received a Tax
Ruling or entered into a Closing Agreement with the Internal Revenue Service
that would have any continuing effect after the Closing Date.
(k) Seller 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 Seller, any
Subsidiary or any Seller Partnership for all taxable periods or years ending on
or prior to the Closing Date.
(l) Neither Seller nor any Subsidiary nor any Seller Partnership is
required to include in income any adjustment pursuant to Code Section 481(a) by
reason of a voluntary change in federal income tax accounting method (other than
a change of federal income tax accounting method required as a result of a
change in law) initiated by Seller, and the Internal Revenue Service has not
proposed any such adjustment or change in accounting method.
(m) Seller has made available to Buyer all relevant information with
respect to the federal income tax net operating loss carryovers of Seller as of
December 31, 1995, based on the federal income Tax Returns filed by Seller as of
such date.
(n) For all taxable years from and including its Initial REIT Year through
the Closing Date, (i) Seller has maintained permanent records containing the
information required to be maintained by Code Section 857(a)(2) and Treasury
Regulation Sections 1.857-(8)(a), 1.857-8(c) and 1.857-8(e) and (ii) Seller has
demanded the written statements from its shareholders required by Treasury
Regulation Section 1.857-8(d) in accordance with Treasury Regulation Section
1.857- 8(e).
3.15 MATERIAL CONTRACTS. Schedule 3.15 sets forth an accurate list of all
Material Contracts of Seller, Subsidiaries and Seller Partnerships. Seller has
made available to 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, Seller, Subsidiaries and Seller Partnerships are not in violation
of or default in any material respect (nor is there any waiver in effect of any
event that would constitute a
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default but for such waiver) under, and no event has occurred that (with notice
or the lapse of time or both) would constitute a violation of or default under,
any Material Contract. Except as set forth in Schedule 3.15, to the knowledge of
Seller, no other party to any Material Contract is in breach of the terms,
provisions and conditions of such Material Contract and no other party to any
Material Contract has notified Seller, any Subsidiary or any Seller Partnership
that it intends to terminate or modify a Material Contract.
3.16 INSURANCE. Schedule 3.16 sets forth a complete and correct list of
all insurance policies, except for title insurance policies, currently in force
insuring against risks of Seller, Subsidiaries and Seller Partnerships. Seller,
Subsidiaries and Seller Partnerships are in compliance with the terms of such
policies applicable to them and there are no claims by Seller, any Subsidiary or
any Seller Partnership under any such policy as to which any insurance company
is denying liability or defending under a reservation of rights clause.
3.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth in the documentation provided to Seller pursuant
to Section 3.17(b) and in Schedule 3.17, there is no material Environmental
Noncompliance with respect to any Property and there are no material
Environmental Claims with respect to any Property or the Seller, any Subsidiary
or any Seller Partnership or, to the knowledge of Seller, any tenants under any
of the Tenant Leases. All material permits, consents, licenses, certificates,
approvals, registrations, and authorizations in connection with environmental
matters (collectively, "ENVIRONMENTAL PERMITS") which are required by any Law
have been obtained and are valid. The Properties (and all uses thereof and
operations conducted thereon) comply in all material respects with all
Environmental Permits. All operations on or at the Properties conducted by
Seller are and have been conducted in all material respects in compliance with
applicable Environmental Laws. Except as set forth in the documentation provided
to Seller pursuant to Section 3.17(b) and in Schedule 3.17, Seller has not
received any Notification from any Governmental Entity seeking any information
or alleging any violation of any Law regarding Environmental Conditions. Except
as set forth in the documentation provided to Seller pursuant to Section 3.17(b)
and in Schedule 3.17, Seller has not caused or given its verbal or written
authorization to cause, and has no knowledge of, any Release of any Hazardous
Materials on-site or off-site of the Properties in violation of any
Environmental Law.
(b) Seller has made available to 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
Seller has not received any other written report containing any evidence of
Environmental Noncompliance.
(c) Except as set forth in the documentation provided to Seller pursuant
to Section 3.17(b) and in Schedule 3.17, there is not now, nor has there been in
the past, any "friable" asbestos (as the term "friable" is defined under 40
C.F.R. Section 61.141) or friable asbestos containing materials located on,
incorporated in, or otherwise contained in the Properties or any portion
thereof,
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and there are not now, and have not in the past been, any underground storage
tanks located on the Properties or any portion thereof.
(d) Except as set forth in the documentation provided to Seller pursuant
to Section 3.17(b), and in Schedule 3.17, none of the tenants under any Tenant
Lease handle or store any Hazardous Material as a principal or primary business.
3.18 TRUST RECORDS; ACCOUNTING RECORDS. The minute books of Seller
accurately reflect in all material respects all actions taken to the date of
this Agreement by the holders of Common Shares, the Trust Managers and
committees of the Trust Managers, except for those matters set forth in Schedule
3.18 for which minutes of such actions have not yet been prepared or approved.
The share certificate books and records of Seller accurately reflect the
ownership of the Common Shares. Seller maintains accounting records which fairly
reflect, in all material respects, Seller's transactions.
3.19 NEW YORK STOCK EXCHANGE LISTING. The outstanding Common Shares are
listed on the New York Stock Exchange. The 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 Seller,
Subsidiaries or the Seller Partnerships that Seller has not disclosed to Buyer
that materially adversely affect, or insofar as Seller can reasonably foresee,
will materially adversely affect, the business, financial condition, assets,
results of operations or prospects of Seller, Subsidiaries or Seller
Partnerships.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to, and agrees with, Seller 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
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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 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 to assure compliance
with applicable securities laws.
4.7 LEGENDS; STOP-TRANSFER ORDERS.
(a) All certificates for the Shares may bear legends in substantially the
following form:
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE
AND, ACCORDINGLY, MAY BE OFFERED, SOLD, TRANSFERRED OR PLEDGED
ONLY IN A TRANSACTION WHICH IS REGISTERED UNDER SUCH ACT AND SUCH
LAWS OR IS EXEMPT FROM SUCH REGISTRATION REQUIREMENT."
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(b) The certificates for Shares may also bear any legend required by any
applicable state blue sky law.
(c) The certificates for the Shares will also bear a legend relating to
restrictions on transfer imposed pursuant to the percentage ownership limitation
contained in the Charter Documents.
(d) Seller 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 covenants and agrees to take such actions, or refrain from taking such
actions, as are set forth in this Section 5.
5.1 ACCESS. Seller shall, and shall cause the Subsidiaries and Seller
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 Seller,
Subsidiaries and Seller 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 Seller, Subsidiaries and Seller 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 Seller, obtaining any necessary
Approvals of, or Permits for, the transactions contemplated by this Agreement
and conducting an evaluation of the organization and business of Seller. From
the date of this Agreement up to and including the Closing Date, Seller will
permit, and cause Subsidiaries and Seller Partnerships to 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 Seller shall approve in Seller's sole
discretion, including intrusive sampling studies to ascertain whether or not
there are any Hazardous Materials on, in, or under the Properties.
5.2 MATERIAL ADVERSE CHANGES; SEC FILINGS; REPORTS; FINANCIAL STATEMENTS.
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(a) Seller shall promptly notify Buyer of any event of which Seller
obtains knowledge which has had or might reasonably be expected to have a
material adverse effect on Seller's business or which if known as of the date
hereof would have been required to be disclosed to Buyer.
(b) Seller will, and will cause the Subsidiaries and Seller 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, Seller agrees with and for the benefit of Buyer that Seller shall not, and
Seller shall cause Subsidiaries and Seller Partnerships not to, without the
prior written consent of Buyer, which consent may not unreasonably be withheld:
(a) conduct the business of Seller, Subsidiaries and Seller 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 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 Seller, any Subsidiary or any
Seller Partnership of more than $50,000 individually or in the aggregate except
for (i) liabilities (other than indebtedness for borrowed money) incurred in the
ordinary course of business consistent with past practices (including, but not
limited to, tenant improvements and capital improvements to Properties) 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 Seller
Partnerships; or
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(h) amend the Charter Documents or the charter or organizational documents
of the Subsidiaries or Seller 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 Seller, Subsidiaries or
Seller 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 Seller, Subsidiaries, or Seller 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 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 Seller,
Subsidiaries or Seller Partnerships to any employee who is not an officer, Trust
Manager, director or partner of Seller, Subsidiaries or Seller Partnerships as
salary or wages or under any bonus, insurance, welfare, severance, deferred
compensation, pension, retirement, profit sharing, 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 Seller, Subsidiaries or Seller Partnerships,
or (iii) enter into, adopt, amend in any material respect (except as required by
law) or terminate any Seller Benefit Plan or any agreement, arrangement, plan or
policy between Seller, Subsidiaries or Seller Partnerships, as applicable, and
one or more of its Trust Managers, directors, partners, officers, employees or
independent contractors; or
(l) make any tax election other than in connection with maintaining
Seller's qualification as a REIT or take any action that would cause Seller not
to qualify as a REIT, or fail to take any reasonable action to preserve Seller's
qualification as a REIT; or
(m) make any change in any significant accounting principles or practices
used by Seller, Subsidiaries or Seller 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 Seller,
Subsidiaries or Seller Partnerships; or
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(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 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. Seller 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) 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, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
Common Shares of Seller (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
represents and warrants to Buyer that there are no existing activities,
discussions or negotiations with any Person with respect to an Alternative
Proposal. Seller hereby agrees 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
with respect to an Alternative Proposal.
(b) UNSOLICITED OFFERS. Nothing contained in Section 5.4(a) shall prohibit
the Trust Managers 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, 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, Seller receives from such Person
an executed confidentiality agreement in customary form on terms not less
favorable in any material respect to Seller than the terms of the letter
agreement, dated July 12, 1996 by and between Buyer and Seller (the
"CONFIDENTIALITY AGREEMENT"), (3) Seller keeps Buyer informed of the status of
any such discussions or negotiations and (4) Seller shall not disclose the terms
of this Agreement and other information
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with respect to transactions among Seller 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 to terminate this Agreement or
affect any other obligation of Seller under this Agreement.
(c) BUYER'S CONTINUING RIGHTS. Seller shall be permitted to enter into a
binding agreement relating to an Alternative Proposal only if the Trust Managers
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 to liability for breach of their fiduciary duties to Seller's
shareholders. The terms of any Alternative Proposal to which Seller is a party
in which Seller 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 Seller
shall not be the surviving entity of such transaction, upon consummation of such
transaction Seller shall cause such third party to assume the obligations of
Seller 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 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 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 of
documentation evidencing the incurrence of such expenses.
5.5 NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt notice to
Buyer, and Buyer shall give prompt notice to Seller, of (a) the occurrence, or
failure to occur, of any event that causes any representation or warranty
contained in this Agreement to be untrue or inaccurate at any time from the date
of this Agreement to the Closing Date and (b) any failure of Buyer 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 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 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 shall use its best efforts to obtain such Approval
prior to the Closing Date.
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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, legal and fairness opinion 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 APPOINTMENT OF TRUST MANAGERS.
(a) Effective as of the Closing Date, Seller shall increase the number of
its Trust Managers from three (3) to five (5), and Seller shall appoint two (2)
individuals designated by Buyer to fill the vacancies caused by the increase in
the number of Trust Managers under this Section 6.2(a). In addition, at the
first annual meeting and all subsequent annual meetings of shareholders after
the number of Trust Managers has been increased to five (5) under this Section
6.2(a), Seller shall nominate, and use its best efforts to have such persons
elected (which efforts shall include, without limitation, including Buyer's
nominees in management's slate for nomination and election and solicitation of
proxies on their behalf), two (2) designees of Buyer (which may be different
persons than the persons initially appointed as Trust Managers pursuant to the
first sentence of this Section 6.2(a) if such initial designees shall have died,
resigned, been removed or declined to be nominated) as Trust Managers. During
such time as Seller shall have individuals designated by Buyer serving as Trust
Managers pursuant to this Section 6.2(a), and except as otherwise provided in
Section 6.2(b) hereof, the number of Trust Managers shall consist of not more
than five (5) persons, including the designees of Buyer. Such designees of Buyer
shall hold office until resignation, removal, death or expiration of the term
for which he or she was appointed and any successive term for which such
representative is duly elected as a Trust Manager by the shareholders of Seller.
In the event of the death, resignation or removal from office of a designee of
Buyer serving as a Trust Manager pursuant to the first sentence of this Section
6.2(a), the Buyer shall be entitled to appoint a replacement designee as Trust
Manager prior to the date Trust Managers are to be elected at the first annual
meeting after the number of Trust Managers has been increased to five (5)
pursuant to this Section 6.2(a).
(b) ADDITIONAL APPOINTMENTS. In addition to Buyer's rights under Section
6.2(a), at any time during the three (3) year period commencing on the Closing
Date, Buyer may, by notice in writing to Seller, require Seller to increase the
number of Trust Managers from five (5) to seven (7) and to appoint two (2)
individuals designated by Buyer in such written notice to fill such resulting
vacancies. In addition, including Buyer's rights under Section 6.2(a), at the
first annual meeting and all subsequent annual meetings of shareholders after
notice by Buyer pursuant to the first sentence of this Section 6.2(b), Seller
shall nominate four (4) designees of Buyer (which may be different persons than
those persons initially appointed as Trust Managers pursuant to such first
sentence if such initial designees shall have died, resigned, been removed or
declined to be nominated) as Trust Managers. During such time as Seller shall
have designees of Buyer serving as Trust Managers pursuant to this Section
6.2(b), the Trust Managers shall consist of not more than seven (7) persons,
including designees of Buyer. Such designees of Buyer shall hold office until
resignation, removal, death or
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expiration of the term for which he or she was appointed and any successive term
for which such representative is duly elected as a Trust Manager by the
shareholders of Seller. In the event of the death, resignation or removal from
office of a designee of Buyer serving as a Trust Manager pursuant to the first
sentence of this Section 6.2(b), the Buyer shall be entitled to appoint a
replacement designee as Trust Manager.
(c) QUALIFICATIONS. Each of the representatives designated by Buyer in
accordance with this Section 6.2 shall be a Person selected by Buyer in its sole
discretion; provided, however, that any such person may not have been involved
in any of the events described in Item 401(d)(1)- (4) of Regulation S-K
promulgated under the Exchange Act.
(d) COMMITTEES. At any time that Buyer shall have exercised its rights
under this Section 6.2 to appoint a designee as Trust Manager, Seller shall
appoint at least one of Buyer's designees on each committee of the Trust
Managers, and each such committee shall contain no more than three (3) members
until expiration of the latest term of office of any designee of Buyer pursuant
to Section 6.2(a) or 6.2(b).
6.3 ENVIRONMENTAL MATTERS. Seller 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.
6.4 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 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).
6.5 PROHIBITED TRANSACTIONS. Seller shall not effect any business
transactions, or agree to effect any business transactions, with Affiliates,
Trust Managers or employees of Seller except in the ordinary course of business
and unless the consideration paid by Seller in any such business transaction is
fair value at market rates.
6.6 SELLER/BUYER REGISTRATION RIGHTS AGREEMENT. Contemporaneously with the
Closing, Buyer and Seller shall enter into a Registration Rights Agreement
substantially in the form of Exhibit B.
6.7 REIT QUALIFICATION. Seller shall take all actions necessary to
maintain Seller's qualification as a REIT and, without the written consent of
Buyer, shall take no action that would cause Seller not to qualify as a REIT or
fail to take any action that would preserve Seller's qualification as a REIT.
6.8 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 Seller at fair market rates.
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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 Seller 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.
7.4 NEW YORK STOCK EXCHANGE. The Shares shall have been approved for
listing, upon official notice of issuance, on the New York Stock Exchange.
Seller shall have received a letter or other assurance from the New York Stock
Exchange confirming that approval by Seller's shareholders of the issuance of
the Shares is not required under the rules of the New York Stock Exchange.
Seller will use its best efforts to maintain the listing of its Common Shares on
the New York Stock Exchange.
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 SELLER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Seller set forth in this Agreement shall be
true and correct at the Closing Date as if made on and as of the Closing Date.
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8.3 PERFORMANCE BY SELLER. Seller shall have in all material respects
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by Seller
on or before the 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 Seller, and Seller shall not have
sustained any material Loss or damage to its assets (including those of
Subsidiaries and Seller 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. Buyer shall have received a certificate,
dated as of the Closing Date, signed by the President of Seller, 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.
8.6 OPINION OF SELLER'S COUNSEL. Buyer shall have received from counsel
for Seller 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 shall not have
entered into an agreement relating to an Alternative Proposal and its Trust
Managers shall not have recommended an Alternative Proposal.
SECTION 9. CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to effect the Closing shall be subject to the
following conditions, except to the extent waived in writing by Seller:
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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 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 and its 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 shall have received from counsel to
Buyer an opinion, dated as of the Closing Date, in form and substance reasonably
satisfactory to Seller 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 and Seller.
(b) CONDITIONS TO BUYER'S PERFORMANCE NOT MET. By Buyer with written
notice to Seller if the Closing Date has not occurred on or before December 31,
1996. 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 PERFORMANCE NOT MET. By Seller with written
notice to Buyer if the Closing Date has not occurred on or before December 31,
1996. Notwithstanding the foregoing, Seller may not exercise any right to
terminate this Agreement pursuant to this paragraph if Seller 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.
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(d) MISREPRESENTATION OR MATERIAL BREACH. By Buyer or Seller with written
notice to the other party if there has been a misrepresentation or material
breach on the part of Seller 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 or Seller 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
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 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 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. Seller agrees 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 in, or pursuant to, this Agreement, or (b) any pending
or threatened Action brought by Seller'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,
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directly or indirectly, the transactions contemplated under this Agreement;
provided, however, that Seller 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. As a condition to the rights of any of the Buyer Indemnified
Parties under this Section 11, Seller may require that any such Person provide a
written undertaking that such Person will repay to Seller any amount expended by
Seller to indemnify, defend or hold harmless such Person in the event and to the
extent a court determines that Seller'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 its 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 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.
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
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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 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. Seller 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.
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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 the USAA Group. Buyer
shall remain liable to Seller for the payment of the Purchase Price and 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. Seller 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 Seller or Buyer, as the case may be, shall
advise Seller or Buyer in writing that a particular action is required by
applicable Law (in which event the party taking such
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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.
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 Xxxxxx X. XxXxxxxxx Freeway
XX-00 Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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If to Seller, addressed to:
American Industrial Properties REIT
0000 Xxxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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 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 and Seller 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 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 and Seller, 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. Xxxxxxx Xxxxxx
Senior Vice President - Operations
"SELLER"
AMERICAN INDUSTRIAL PROPERTIES REIT
By:_____________________________________
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
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