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EXHIBIT 99.4
SHAREHOLDERS' AGREEMENT
This SHAREHOLDERS' AGREEMENT (this "AGREEMENT") is made and
entered into as of May 26, 2000, by and between The Prudential Insurance Company
of America ("PRUDENTIAL"), Gateway Recovery Trust, (individually "GATEWAY" and,
collectively with Prudential, "PRUDENTIAL/GATEWAY") TCW Special Credits Fund IV,
TCW Special Credit Plus Fund, TCW Special Credits Trust IV, TCW Special Credits
Trust IVA, TCW Special Credits, as investment manager of the Weyerhaeuser
Company Master Retirement Trust Separate Account, OCM Real Estate Opportunities
Fund A, L.P., OCM Real Estate Opportunities Fund B, L.P., and Oaktree Capital
Management, LLC as investment manager of Gryphon Domestic VII, LLC Separate
Account (collectively, the "OAKTREE ENTITIES").
W I T N E S S E T H
WHEREAS, Prudential, Gateway and each of the Oaktree Entities
hold the number of shares of Common Stock (as defined herein) of The Peregrine
Real Estate Trust f/k/a/ Commonwealth Equity Trust, a trust organized under the
laws of the State of California (together with any successor, the "COMPANY"), as
are set forth opposite its name on Schedule 1 hereto; and
WHEREAS, Prudential/Gateway and the Oaktree Entities deem it
to be in their best interests to regulate certain of their rights in connection
with their interests in the Company, and desire to enter into this Agreement in
order to effectuate this purpose;
NOW, THEREFORE, in consideration of the agreements and mutual
covenants set forth herein, the parties agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the
following terms have the following meanings:
"ACQUIROR" has the meaning assigned to such term in SECTION 2.
"AFFILIATE" of a Holder means any Person which directly or
indirectly controls, is controlled by, or is under common control with such
Person. "Control," "controlled by" and "under common control with" means direct
or indirect possession of the power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
contract or otherwise); PROVIDED that control shall be conclusively presumed
when any Person or entity or affiliated group directly or indirectly owns ten
percent (10%) or more of the securities having ordinary voting power for the
election of a majority of the directors of a corporation.
"AGREEMENT" means this Agreement, as the same shall be amended
from time to time.
"BUSINESS DAY" means a day other than Saturday, Sunday or any
other day on which banks are authorized or obligated to close in San Francisco,
State of California.
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"COMMON STOCK" means the Company's common shares of beneficial
interest, and any securities issued in substitution or exchange therefor.
"COMPANY" has the meaning assigned to such term in the
recitals.
"NOTES" means the issued and outstanding 8.5% secured notes of
the Company due October 1, 2000, and any indebtedness issued in substitution or
exchange therefor.
"PERSON" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or agency or political
subdivision thereof.
"PRO RATA PORTION" shall mean, with respect to Gateway or
Prudential, the result realized by dividing (i) the number of shares of Common
Stock described on Schedule 1 hereto which are then held by Prudential or
Gateway (as applicable) by (ii) the total number of shares of Common Stock
described on Schedule 1 hereto then held by the Oaktree Entities, Prudential and
Gateway.
"SECURITIES" shall mean the shares of Common Stock and any
securities convertible or exercisable into shares of Common Stock, and whenever
an amount of Securities is calculated or used in any provision of this
Agreement, convertible or exercisable securities shall be counted as the number
of shares of Common Stock issuable upon such conversion or exercise.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"TRANSFER" means to issue, sell, assign, or otherwise
transfer for value the Securities.
"TRANSFER NOTICE" has the meaning assigned to it in SECTION 2.
SECTION 2. DRAG-ALONG.
(a) COMMON STOCK SALE. If the Oaktree Entities elect to
Transfer a number of shares of Common Stock equal to seventy-five percent (75%)
or more of the aggregate number of shares of Common Stock held by the Oaktree
Entities on the date hereof as set forth on Schedule 1 hereto to a third party
other than an Affiliate of any of the Oaktree Entities (an "Acquiror"), then the
Acquiror shall have the right, at its option, to simultaneously purchase from
Prudential/Gateway, and Prudential/Gateway will have an obligation to sell, all
(but not less than all) of the Common Stock held by Prudential/Gateway at the
same price per share, with the same form of consideration and upon the same
terms and conditions. Prudential/Gateway agrees to vote all shares of Common
Stock held by such entities in favor of any merger, consolidation or similar
transaction pursuant to which the Oaktree Entities would Transfer seventy-five
percent (75%) or more of the aggregate number of shares of Common Stock held by
the Oaktree Entities if such transaction is voted for by the Oaktree Entities.
The rights and obligations set forth in this Section 2 shall terminate
concurrent with any termination of the agreements of Prudential/Gateway set
forth in Section 5 resulting from an election to terminate
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the agreement of Prudential/Gateway set forth in Section 5 hereof permitted
pursuant to the terms of Section 5 hereof.
(b) EXERCISE OF RIGHTS. To exercise this drag-along right, the
Oaktree Entities shall provide written notice (a "Transfer Notice") to each of
Prudential and Gateway no later than fifteen (15) Business Days prior to the
date of the proposed Transfer of Common Stock containing all of the terms of the
transaction and identifying the name and address of the Acquiror.
SECTION 3. TAG-ALONG. With the exception of Transfers by the
Oaktree Entities of an aggregate of twenty-five percent (25%) or less of the
aggregate number of shares of Common Stock held by the Oaktree Entities on the
date hereof as set forth on Schedule 1 hereto, at least twenty (20) days prior
to any subsequent Transfer by any Oaktree Entities (the "Selling Oaktree
Entity") to any person or entity other than (a) partners of any Oaktree Entity
pursuant to in-kind distributions (so long as no sale of such shares is then
contemplated), (b) pursuant to a sale on a national securities exchange, an
automated quotation system or over the counter system, or (c) an Affiliate of
such Oaktree Entity if such Affiliate has first agreed in writing to be bound by
the terms of this Agreement, the Selling Oaktree Entity shall provide to
Prudential/Gateway a Transfer Notice explaining the terms of such Transfer and
identifying the name and address of the potential Acquiror. Upon receipt of such
Transfer Notice, each of Prudential and Gateway shall have the right, upon
delivery of a written request to the Selling Oaktree Entity within twenty (20)
days of the date the Transfer Notice is received by Prudential/Gateway, to cause
to be sold to the potential Acquiror its Pro-Rata Portion of the total number of
shares of Common Stock which are proposed to be sold by the Selling Oaktree
Entity in the Transfer Notice at the same price and on the same terms and
conditions contained in the Transfer Notice delivered in connection with such
proposed transaction, simultaneously with (and conditioned upon) the Transfer
described in the Transfer Notice. The rights and obligations set forth in this
Section 3 shall terminate concurrent with any termination of the agreements of
Prudential/Gateway set forth in Section 5 resulting from an election to
terminate the agreement of Prudential/Gateway set forth in Section 5 hereof
permitted pursuant to the terms of Section 5 hereof.
SECTION 4. CONVERSION. The Oaktree Entities agree that they
will not (a) exchange Notes held by the Oaktree Entities into Common Stock at an
exchange price less than the greater of (i) fifty cents ($.50) per share of
Common Stock to be issued in such exchange or (ii) ten cents ($.10) per share
less than the highest price paid by the Company to purchase any share of Common
Stock following the date of this Agreement and prior to the date of such
exchange of Notes for Common Stock or (b) effect any subsequent exchange of
Notes into the Company's Common Stock at an exchange price that is less than the
exchange price of the first exchange of Notes into Common Stock by the Oaktree
Entities. The rights and obligations set forth in this Section 4 shall terminate
concurrent with any termination of the agreements of Prudential/Gateway set
forth in Section 5 resulting from an election to terminate the agreement of
Prudential/Gateway set forth in Section 5 hereof permitted pursuant to the terms
of Section 5 hereof.
SECTION 5. MERGER. Each of the parties hereto agrees that it
will (a) execute a written consent in the form attached hereto as Exhibit A
approving the proposed merger of the
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Company with and into Newco (the "Merger"), pursuant to a merger agreement in
substantially the form attached hereto as Exhibit B, (b) contribute all of the
shares of beneficial interests in the Company that it owns to a newly-formed
entity that will have no assets or liabilities and will, following such
contribution, be wholly-owned by the parties hereto in the relative percentages
set forth on Schedule A attached hereto ("Newco") and that will have a
declaration of trust in substantially the form attached hereto as Exhibit C,
provided, that in the case of Prudential/Gateway, such contribution shall occur
immediately prior to, and substantially concurrently with, the consummation of
the Merger, (c) vote all equity interests of Newco and the Company held by such
party to approve the Merger and (d) take all commercially reasonable actions as
a shareholder of Newco and the Company, as applicable, that are necessary to
cause Newco and the Company, respectively, to consummate the Merger. The
agreements of each party contained in this Section 5 shall continue until
December 31, 2000 (the "Initial Term") and for successive six months periods
thereafter (the "Successive Terms") unless such party shall give written notice
to each other party hereto not less than one month prior to the expiration of
the Initial Term or the applicable Successive Term that it elects to terminate
its agreements under this Section 5, in which case the agreement of such party
under this Section 5 shall terminate on the last day of the Initial Term or the
applicable Successive Term, as applicable.
SECTION 6. REPRESENTATIONS. Each party hereto represents and
warrants that (i) it is the legal and beneficial owner of the shares or Common
Stock set forth opposite its name on Schedule 1 hereto, and (ii) this Agreement
has been duly authorized by all necessary corporate, partnership or trust
action, has been validly executed and delivered by such party, and constitutes
the valid and binding obligation of such party, enforceable against such party
in accordance with this Agreement's terms.
SECTION 7. EQUITABLE RELIEF. The parties hereto agree and
declare that legal remedies may be inadequate to enforce the provisions of this
Agreement and that equitable relief, including specific performance and
injunctive relief, may be used to enforce such provisions.
SECTION 8. NOTICES. All notices, requests and other
communications hereunder must be in writing and will be deemed to have been duly
given only if delivered personally or by facsimile transmission or mailed (first
class postage prepaid) to the parties at the following addresses or facsimile
numbers:
If to Prudential, to: The Prudential Insurance Company of America
Prudential Capital Group
Four Gateway Center, 7th Floor
100 Mulberry Street
Newark, New Jersey 07102
Facsimile: (973) 802-2333
Attention: Gwen Foster
If to Gateway, to: c/o Prudential Capital Group
Four Gateway Center, 7th Floor
100 Mulberry Street
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Newark, New Jersey 07102
Facsimile: (973) 802-2333
Attention: Gwen Foster
If to the Oaktree Entities, to: Oaktree Capital Management, LLC
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
Attention: Richard Masson, Principal
Facsimile: (213) 830-6494
Attention: Kenneth Liang, Managing Director
Facsimile: (213) 830-8522
with a copy to: Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street, 30th Floor
Los Angeles, California 90017
Facsimile: (213) 629-5063
Attention: Deborah Baumgart
All such notices, requests and other communications will be deemed given upon
receipt (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice,
request or other communication is to be delivered pursuant to this Section). Any
party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.
SECTION 9. WAIVER. No failure or delay on the part of the
parties or any of them in exercising any right, power or privilege hereunder,
nor any course of dealing between the parties or any of them shall operate as a
waiver of any such right, power or privilege nor shall any single or partial
exercise of any such right, power or privilege preclude the simultaneous or
later exercise of any other right, power or privilege. The rights and remedies
herein expressly provided are cumulative and are not exclusive of any rights or
remedies which the parties or any of them would otherwise have.
SECTION 10. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original but
all of which together shall constitute one and the same instrument.
SECTION 11. GOVERNING LAW. This Agreement shall be construed
in accordance with and governed by the laws of the State of California without
regard to principles of conflict of laws.
SECTION 12. AMENDMENT OR TERMINATION. The provisions of this
Agreement relating to Common Stock may be amended or terminated at any time only
by an instrument in writing signed by each of the parties hereto.
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SECTION 13. BENEFIT AND BINDING EFFECT. Subject to compliance
with the terms of this Agreement regarding Transfer of Securities, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns provided that the provisions of this
Agreement that are binding upon the Oaktree Parties and Prudential/Gateway shall
not be enforceable against successors and assigns of the Oaktree Parties and
Prudential/Gateway, respectively, if and to the extent that Prudential/Gateway
or the Oaktree Parties, respectively, notify the other parties or their
successors or assigns that the provisions of this Agreement shall not be binding
upon or inure to the benefit of such successors or assigns.
SECTION 14. SEVERABILITY. In the event that any one or more of
the provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders' Agreement as of the day and year first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ GWENDOLYN FOSTER
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Name: Gwendolyn Foster
Title: Vice President
GATEWAY RECOVERY TRUST
By:/s/ GWENDOLYN FOSTER
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Name: Gwendolyn Foster
Title: Vice President
TCW SPECIAL CREDITS FUND IV
By: TCW Special Credits,
Its: General Partner
By: TCW Asset Management Company,
Its: Managing General Partner
By:/s/ RICHARD MASSON
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Name: Richard Masson
Title: Authorized Signatory
By:/s/ KENNETH LIANG
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Name: Kenneth Liang
Title: Authorized Signatory
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TCW SPECIAL CREDITS PLUS FUND
By: TCW Special Credits,
Its: General Partner
By: TCW Asset Management Company,
Its: Managing General Partner
By: /s/ RICHARD MASSON
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Name: Richard Masson
Title: Authorized Signatory
By:/s/ KENNETH LIANG
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Name: Kenneth Liang
Title: Authorized Signatory
TCW SPECIAL CREDITS TRUST IV
By: Trust Company of the West, Trustee
By:/s/ RICHARD MASSON
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Name: Richard Masson
Title: Authorized Signatory
By:/s/ KENNETH LIANG
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Name: Kenneth Liang
Title: Authorized Signatory
TCW SPECIAL CREDITS TRUST IVA
By: Trust Company of the West, Trustee
By:/s/ RICHARD MASSON
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Name: Richard Masson
Title: Authorized Signatory
By:/s/ KENNETH LIANG
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Name: Kenneth Liang
Title: Authorized Signatory
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OCM REAL ESTATE OPPORTUNITIES
FUND A, L.P.
By: Oaktree Capital Management, LLC
Its: General Partner
By:/s/ RICHARD MASSON
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Name: Richard Masson
Title: Principal
By:/s/ KENNETH LIANG
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Name: Kenneth Liang
Title: Managing Director and General
Counsel
OCM REAL ESTATE OPPORTUNITIES
FUND B, L.P.
By: Oaktree Capital Management, LLC
Its: General Partner
By:/s/ RICHARD MASSON
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Name: Richard Masson
Title: Principal
By:/s/ KENNETH LIANG
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Name: Kenneth Liang
Title: Managing Director and General
Counsel
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GRYPHON DOMESTIC VII, LLC SEPARATE
ACCOUNT
By: Oaktree Capital Management, LLC
Its: Investment Manager
By:/s/ RICHARD MASSON
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Name: Richard Masson
Title: Principal
By:/s/ KENNETH LIANG
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Name: Kenneth Liang
Title: Managing Director and General
Counsel
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WEYERHAEUSER COMPANY MASTER RETIREMENT TRUST
By: TCW Special Credits,
Its: Investment Manager
By: TCW Asset Management Company
Its: Managing General Partner
By:/s/ RICHARD MASSON
-------------------------
Name: Richard Masson
Title: Authorized Signatory
By:/s/ KENNETH LIANG
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Name: Kenneth Liang
Title: Authorized Signatory
