<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. )*
MERIDIAN INDUSTRIAL TRUST, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.001 par value
------------------------------------------
(Title of Class of Securities)
589643105
---------
(CUSIP Number)
Ellen Kendall, Esq. Gary Smith, Esq.
c/o Prudential Real Estate Investors O'Melveny & Myers LLP
8 Campus Drive The Citicorp Center
Parsippany, New Jersey 07054 153 East 53rd Street, 54th Floor
(201) 683-1696 New York, New York 10022-4611
(212) 326-2000
John Westney, Esq.
The Prudential Realty Group
One Ravinia Drive, Suite 1400
Atlanta, Georgia 30346
(770) 395-8466
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 24, 1997
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
/ /.
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
- --------
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("ACT") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
CUSIP No. 589643105
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
The Prudential Insurance Company of America
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
(Intentionally Omitted)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC and OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES BENEFICIALLY 8,505,438 Shares
OWNED BY EACH
REPORTING PERSON
8 SHARED VOTING POWER
506,894 Shares
9 SOLE DISPOSITIVE POWER
7,491,650 Shares
10 SHARED DISPOSITIVE POWER
-0- Shares
Page 2 of 26 Pages
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- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,012,332 Shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.64%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IC, CO, IA
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Page 3 of 26 Pages
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CUSIP No. 589643105
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
Strategic Performance Fund-II, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
(Intentionally Omitted)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES BENEFICIALLY -0- Shares
OWNED BY EACH
REPORTING PERSON
8 SHARED VOTING POWER
-0- Shares
9 SOLE DISPOSITIVE POWER
1,013,788 Shares
10 SHARED DISPOSITIVE POWER
-0- Shares
Page 4 of 26 Pages
<PAGE> 5
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,013,788 Shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.78%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
Page 5 of 26 Pages
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CUSIP No. 589643105
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
The Prudential Variable Contract Real Property Partnership
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
(Intentionally Omitted)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES BENEFICIALLY -0- Shares
OWNED BY EACH
REPORTING PERSON
8 SHARED VOTING POWER
506,894 Shares
9 SOLE DISPOSITIVE POWER
506,894 Shares
10 SHARED DISPOSITIVE POWER
-0- Shares
Page 6 of 26 Pages
<PAGE> 7
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
506,894 Shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.89%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
Page 7 of 26 Pages
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ITEM 1. SECURITY AND THE ISSUER
This Statement on Schedule 13D (this "Statement") relates to
the common stock, par value $.001 per share (the "Shares"), of Meridian
Industrial Trust, Inc. (the "Company").
The name and address of the principal executive offices of the
Company is 455 Market Street, 17th Floor, San Francisco, California 94105.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed by The Prudential Insurance Company of
America, a New Jersey corporation ("Prudential"), Strategic Performance Fund-II,
Inc., a Maryland corporation ("SPF-II"), and The Prudential Variable Contract
Real Property Partnership, a New Jersey general partnership ("Prudential
Variable Contract Partnership"; and collectively with Prudential and SPF-II, the
"Reporting Parties"), in each case, with respect to the acquisition by the
Reporting Parties of Shares from the Company on September 24, 1997.
Prudential directly holds an aggregate of 7,491,650 Shares.
Prudential holds 3,801,703 of such Shares for its general account, 808,888 of
such Shares on behalf of the Chevron Separate Account, 1,106,931 of such Shares
on behalf of the Strategic Performance Fund-I Separate Account, and 1,774,128 of
such Shares on behalf of a single client insurance company separate account
contained in Group Annuity Contract No. GA-9032 (the "Western Conference of
Teamsters Separate Account"; and collectively with the Chevron Separate Account
and the Strategic Performance Fund-I Separate Account, the "Separate Accounts").
The Separate Accounts are not legal entities separate from Prudential for
purposes of this Statement.
SPF-II directly holds an additional 1,013,788 Shares and
Prudential Variable Contract Partnership directly holds an additional 506,894
Shares. Prudential may be deemed to be the beneficial owner of the 1,013,788
Shares held by SPF-II by virtue of its power to direct the vote with respect to
such Shares pursuant to that certain Investment Advisory Agreement dated as of
February 1, 1997 by and between SPF-II and Prudential Investment Corporation, a
New Jersey corporation wholly owned by Prudential (the "SPF-II Management
Agreement"). Prudential may also be deemed to be the beneficial owner of the
506,894 Shares held by Prudential Variable Contract Partnership by virtue of its
power to direct the vote with respect to such Shares pursuant to that certain
Investment Management Agreement dated as of April 29, 1988 by and between
Prudential Variable Contract Partnership and Prudential (the "Prudential
Variable Contract Partnership
Page 8 of 26 Pages
<PAGE> 9
Management Agreement"). The foregoing description of the SPF-II Management
Agreement and the Prudential Variable Contract Partnership Management Agreement
is qualified in its entirety by reference to such Agreements, copies of which
are filed as Exhibits X and XI hereto, respectively, and are incorporated herein
by reference.
Prudential is an insurance company and the address of its
principal business and principal office is Prudential Plaza, 751 Broad Street,
Newark, New Jersey 07102. SPF-II is a corporation and a private real estate
investment trust principally engaged in the business of investing in a portfolio
of professionally managed real property. The address of SPF-II's principal
business and principal office is 8 Campus Drive, 4th Floor, Parsipanny, New
Jersey 07054. Prudential Variable Contract Partnership is a general partnership
and its principal business is to own, operate, sell, and lend monies secured by
an interest in real estate and acquire real property. The address of Prudential
Variable Contract Partnership's principal business and principal office is 8
Campus Drive, 4th Floor, Parsipanny, New Jersey 07054.
During the past five years, none of the Reporting Parties and,
to the knowledge of each Reporting Party, none of the executive officers or
directors of any of the Reporting Parties has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
During the past five years, none of the Reporting Parties and,
to the knowledge of each Reporting Party, none of the executive officers or
directors of any of the Reporting Parties has been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction as a result of
which such person was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Certain information required by Item 2 concerning the
directors and executive officers of each of the Reporting Parties, entities
controlling the Reporting Parties and their directors and executive officers is
set forth on Schedule A hereto, which Schedule A is incorporated herein by
reference.
Page 9 of 26 Pages
<PAGE> 10
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The 3,801,703 Shares held by Prudential on behalf of its
general account were purchased from the Company on September 24, 1997 for a
purchase price of $75,000,000. The source of the funds used to pay the purchase
price is the working capital of Prudential.
The 1,774,128 Shares held by Prudential on behalf of the
Western Conference of Teamsters Separate Account were purchased from the Company
on September 24, 1997 for a purchase price of $35,000,000. The source of funds
used to pay the purchase price is the funds held by Prudential on behalf of the
Western Conference of Teamsters Separate Account.
Pursuant to a Contribution Agreement (SPF-I Separate Account)
(the "SPF-I Contribution Agreement") dated as of September 24, 1997 by and
between Prudential, on behalf of the Strategic Performance Fund-I Separate
Account, and the Company, Prudential sold and transferred to the Company on
September 24, 1997, certain industrial/warehouse facilities and related personal
property in return for cash and 1,106,931 Shares. In addition, pursuant to a
Contribution Agreement (Chevron Separate Account) (the "Chevron Contribution
Agreement"; and together with the SPF-I Contribution Agreement, the
"Contribution Agreements") dated as of August 27, 1997 by and between
Prudential, on behalf of the Chevron Separate Account, and the Company,
Prudential sold and transferred to the Company on August 29, 1997, certain other
industrial/warehouse facilities and related personal property in return for cash
and 808,888 Shares. The foregoing description of the SPF-I Contribution
Agreement and the Chevron Contribution Agreement is qualified in its entirety by
reference to such Contribution Agreements, copies of which are filed as Exhibits
I and II hereto, respectively, and are incorporated herein by reference.
The 1,013,788 Shares held by SPF-II were purchased from the
Company on September 24, 1997 for a purchase price of $20,000,000. The source of
the funds used to pay the purchase price is the capital of SPF-II available for
investments.
The 506,894 Shares held by Prudential Variable Contract
Partnership were purchased from the Company on September 24, 1997 for a purchase
price of $10,000,000. The source of the funds used to pay the purchase price is
the capital of Prudential Variable Contract Partnership available
for investments.
Page 10 of 26 Pages
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ITEM 4. PURPOSE OF TRANSACTION
Prudential acquired and is holding the Shares on behalf of its
general account and on behalf of the Separate Accounts, and SPF-II and
Prudential Variable Contract Partnership acquired and are holding the Shares,
for investment purposes and without the intention of effecting a change in
control of the Company. Notwithstanding the foregoing, depending on market
conditions, any of the Reporting Parties may choose to acquire additional Shares
or dispose of some or all of its Shares.
Except as set forth in the next succeeding paragraph, no
Reporting Party, nor to any Reporting Party's knowledge, any of the Reporting
Parties or other persons identified on Schedule A has any plans or proposals
that would result in or relate to any of the transactions described in
paragraphs (a) through (j) of Item 4 of Schedule 13D.
Pursuant to the terms of the Amended and Restated Stock
Purchase Agreement dated as of June 12, 1997 by and between Prudential, on
behalf of its general account, and the Company (the "General Account Stock
Purchase Agreement"), and the terms of the letter agreement dated as of
September 24, 1997 by and between Prudential, on behalf of its general account,
and the Company (the "Director Nominee Letter Agreement"), the Company has
agreed to use its commercially reasonable efforts to cause the Board of
Directors of the Company to increase the size of the Board of Directors by one
person and to elect a designee of Prudential to fill such vacancy and to endorse
the selection of such designee for appointment as a member of the Board Affairs
Committee of the Board of Directors promptly after Prudential provides written
notice to the Company naming its designee and providing information regarding
such designee as the Company may be required to disclose to its stockholders.
The foregoing description of the General Account Stock Purchase Agreement and
the Director Nominee Letter Agreement is qualified in its entirety by reference
to such Agreements, copies of which are filed as Exhibits III and IV hereto,
respectively, and are incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Prudential beneficially owns 9,012,332 Shares, or
approximately 33.64% of the 26,787,319 Shares (excluding the 2,272,727 shares of
Series B Convertible Preferred Stock of the Company that are convertible into
Shares) issued and outstanding as of September 30, 1997 (after giving effect to
the issuance of 8,203,444 Shares to Prudential, SPF-II and Prudential Variable
Contract Partnership on September 24, 1997 and 808,888 Shares to the Chevron
Separate Account on August 29, 1997).
Page 11 of 26 Pages
<PAGE> 12
Of such 9,012,332 Shares, Prudential directly beneficially
owns 3,801,703 Shares for its general account and 3,689,947 Shares on behalf of
the Separate Accounts (i.e., 808,888 on behalf of the Chevron Separate Account,
1,106,931 on behalf of the SPF-I Separate Account and 1,774,128 on behalf of the
Western Conference of Teamsters Separate Account). In addition, Prudential may
be deemed to beneficially own 1,013,788 Shares held directly by SPF-II by virtue
of Prudential's right to direct the votes of such Shares in accordance with the
terms of the SPF-II Management Agreement,and Prudential may be deemed to
beneficially own 506,894 Shares held directly by Prudential Variable Contract
Partnership by virtue of Prudential's right to direct the votes of such Shares
in accordance with the terms of the Prudential Variable Contract Partnership
Management Agreement.
SPF-II directly beneficially owns 1,013,788 Shares or
approximately 3.78% of the 26,787,319 Shares issued and outstanding as of
September 30, 1997 (after giving effect to the issuance of 8,203,444 Shares to
Prudential, SPF-II and Prudential Variable Contract Partnership on September 24,
1997 and 808,888 Shares to the Chevron Separate Account on August 29, 1997), and
Prudential Variable Contract Partnership directly beneficially owns 506,894
Shares or approximately 1.89% of the 26,787,319 Shares issued and outstanding as
of September 30, 1997 (after giving effect to the issuance of 8,203,444 Shares
to Prudential, SPF-II and Prudential Variable Contract Partnership on September
24, 1997 and 808,888 Shares to the Chevron Separate Account on August 29, 1997).
Prudential Securities Inc., an indirect wholly-owned
subsidiary of Prudential ("PSI"), beneficially owns on the date hereof 1,512
Shares in certain discretionary accounts on behalf of clients of PSI. Prudential
disclaims beneficial ownership of such Shares because the management of PSI, and
not Prudential, directs the disposition and/or voting, if any, of such Shares.
(b) Prudential has the sole power to vote or direct the vote
and the sole power to dispose or direct the disposition of the 3,801,703 Shares
directly and beneficially owned by it on behalf of its general account and the
3,689,947 Shares directly and beneficially owned by it on behalf of the Separate
Accounts. Prudential has the sole power to direct the vote with respect to the
1,013,788 Shares held directly by SPF-II pursuant to the SPF-II Management
Agreement. Prudential also has the power to direct the vote with respect to the
506,894 Shares held directly by Prudential Variable Contract Partnership
pursuant to the
Page 12 of 26 Pages
<PAGE> 13
Prudential Variable Contract Partnership Management Agreement.
SPF-II has the sole power to direct the disposition of the
1,013,788 Shares held by SPF-II. Prudential Variable Contract Partnership has
the sole power to direct the dispositions of the 506,894 Shares held by it and
the power to direct the vote (along with Prudential pursuant to the Prudential
Variable Contract Partnership Management Agreement) of the 506,894 Shares held
by Prudential Variable Contract Partnership.
(c) Except as specified above in Item 3, none of the Reporting
Parties has effected any transactions in the Shares during the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF ISSUER
As described in Item 3 above, Prudential and the Company
entered into the SPF-I Contribution Agreement and the Chevron Contribution
Agreement pursuant to which Prudential obtained from the Company 1,106,931
Shares on behalf of the Strategic Performance Fund-I Separate Account and
808,888 Shares on behalf of the Chevron Separate Account. The foregoing
description of the SPF-I Contribution Agreement and the Chevron Contribution
Agreement is qualified in its entirety by reference to such Contribution
Agreements, copies of which are filed as Exhibits I and II hereto, respectively,
and are incorporated herein by reference.
As described in Item 4 above, Prudential, on behalf of its
general account, entered into the General Account Stock Purchase Agreement,
pursuant to which Prudential purchased 3,801,703 Shares from the Company. As
further described in Item 4 above, the General Account Stock Purchase Account
together with the Director Nominee Letter Agreement grants Prudential the right
to designate a nominee to the Board of Directors of the Company upon Prudential
providing certain written notice to the Company. The foregoing description of
the General Account Stock Purchase Agreement and the Director Nominee Letter
Agreement is qualified in its entirety by reference to such Agreements, copies
of which are filed as Exhibits III and IV hereto, respectively, and are
incorporated herein by reference.
In addition to the foregoing: (i) Prudential, on behalf of the
Western Conference of Teamsters Separate Account and the Company entered into
the Stock Purchase
Page 13 of 26 Pages
<PAGE> 14
Agreement dated as of June 12, 1997 (the "Western Conference of Teamsters Stock
Purchase Agreement"), pursuant to which Prudential, on behalf of the Western
Conference of Teamsters Separate Account, purchased from the Company 1,774,128
Shares; (ii) Prudential Variable Contract Partnership and the Company entered
into the Stock Purchase Agreement dated as of June 12, 1997 (the "Variable
Contract Stock Purchase Agreement"), pursuant to which Prudential Variable
Contract Partnership, purchased from the Company 506,894 Shares; and (iii)
SPF-II and the Company entered into the Stock Purchase Agreement dated as of
June 12, 1997 (the "SPF-II Stock Purchase Agreement"), pursuant to which SPF-II
purchased from the Company 1,013,788 Shares. The foregoing description of the
Western Conference of Teamsters Stock Purchase Agreement, the Variable Contract
Stock Purchase Agreement and the SPF-II Stock Purchase Agreement is qualified in
its entirety by reference to such Agreements, copies of which are filed as
Exhibits V, VI and VII hereto, respectively, and are incorporated herein by
reference.
Prudential, on behalf of its general account and on behalf of
the Western Conference of Teamsters Separate Account, SPF-II and Prudential
Variable Contract Partnership also entered into a Registration Rights Agreement
(the "Registration Rights Agreement") dated as of September 24, 1997 among the
Company and such parties. In addition, Prudential, on behalf of the Chevron
Separate Account and the Strategic Performance Fund-I Separate Account, entered
into the Amended and Restated Registration Rights Agreement (the "Amended and
Restated Registration Rights Agreement"; and together with the Registration
Rights Agreement, the "Registration Rights Agreements") dated as of September
24, 1997 among the Company and Prudential, on behalf of the Chevron Separate
Account and the Strategic Performance Fund-I Separate Account. Pursuant to the
terms of the Registration Rights Agreements, the Company has agreed, prior to
the date that is ninety days after the date of the Registration Rights
Agreements, to file a registration statement under Rule 415 of the Securities
Act of 1933, as amended (the "Shelf Registration"), registering the Shares to be
issued to Prudential and the other parties to the Registration Rights Agreements
pursuant to the Contribution Agreements and the Stock Purchase Agreements. The
Company agrees in the Registration Rights Agreements to use its best efforts to
keep such registration statement effective until the earlier of (i) the fifth
anniversary of the date on which the Shelf Registration is declared effective
and (ii) all of the Shares covered thereby have been sold. Prudential and the
other parties thereto have been granted certain other demand and piggyback
registration rights as set forth in the Registration Rights Agreements. The
foregoing description of the Registration Rights Agreements is qualified in its
entirety by reference to the Registration Rights Agreement and the Amended
Registration Rights Agreement, copies of
Page 14 of 26 Pages
<PAGE> 15
which are filed as Exhibits VIII and IX hereto, respectively, and are
incorporated herein by reference.
Finally, as described in Item 2 above, Prudential entered into
the SPF-II Management Agreement with SPF-II and the Prudential Variable Contract
Partnership Management Agreement with Prudential Variable Contract Partnership
pursuant to which Prudential has the right to direct the votes of the Shares
held by SPF-II and Prudential Variable Contract Partnership, respectively. The
foregoing description of the SPF-II Management Agreement and the Prudential
Variable Contract Partnership Management Agreement is qualified in its entirety
by reference to the SPF-II Management Agreement and the Prudential Variable
Contract Partnership Management Agreement, copies of which are filed as Exhibits
X and XI hereto, respectively, and are incorporated herein by reference.
The filing of this Statement should not be construed as an
admission that Prudential is or was for the purposes of Section 13 or Section 16
of the Securities Exchange Act of 1934, as amended, the beneficial owner of the
Shares listed herein.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit No. Description
----------- -----------
I SPF-I Contribution
Agreement
II Chevron Contribution
Agreement
III General Account Stock
Purchase Agreement
IV Director Nominee Letter
Agreement
V Western Conference of
Teamsters Stock
Purchase Agreement
VI Variable Contract Stock
Purchase Agreement
VII SPF-II Stock Purchase
Agreement
VIII Registration Rights
Agreement
IX Amended and Restated
Registration Rights
Agreement
Page 15 of 26 Pages
<PAGE> 16
Exhibit No. Description
----------- -----------
X SPF-II Management
Agreement
XI Prudential Variable
Contract Partnership
Management Agreement
XII Agreement Regarding
Joint Filing
Page 16 of 26 Pages
<PAGE> 17
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 3, 1997
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Robert W. Gradsden
-----------------------------------------------
Name: Robert W. Gradsden
Title: Vice President
STRATEGIC PERFORMANCE FUND-II, INC.
By: /s/ Joel W. Stoesser
-----------------------------------------------
Name: Joel W. Stoesser
Title: President
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, its
general partner
By: /s/ Roger S. Pratt
-----------------------------------------------
Name: Roger S. Pratt
Title: Vice President
Page 17 of 26 Pages
<PAGE> 18
SCHEDULE A
Additional information required by Item 2 of Schedule 13D.
1. PRUDENTIAL INSURANCE COMPANY OF AMERICA. Set forth below is the
name and business address of each executive officer or director of
Prudential. Each of such persons is a citizen of the United States of
America, except that Richard M. Thomson is a citizen of Canada.
DIRECTORS
PRINCIPAL OCCUPATION/
NAME TITLE ADDRESS
- ------ ----------------------- -----------
Franklin E. Agnew Business Consultant USX Tower
Suite 660
600 Grant Street
Pittsburgh, PA 15219
Frederic K. Becker President Wilentz Goldman & Spitzer
90 Woodbridge Center Drive
Suite 900
Woodbridge, NJ 07095
James G. Cullen Vice Chairman Bell Atlantic Corp.
1310 North Court House Road
11th Floor
Arlington, VA 22201
Carolyne K. Davis Health Care Advisor Ernst & Young
1225 Connecticut Avenue, NW
Washington, DC 20036
Roger A. Enrico Chief Executive Officer PepsiCo
700 Anderson Hill Road
Purchase, NY 10577
Allan D. Gilmour Former Vice Chairman, The Prudential Insurance
Ford Motor Company Company of America
751 Broad Street
Newark, NJ 07102
William H. Gray III President and CEO United Negro College
Fund, Inc.
8260 Willow Oaks Corp. Drive
P.O. Box 10444
Fairfax, VA 22031-4511
Jon F. Hanson Chairman Hampshire Management Company
235 Moore Street, Suite 200
Hackensack, NJ 07601
Page 18 of 26 Pages
<PAGE> 19
Glen H. Hiner Chairman and CEO Owens Corning
Owens Corning Parkwall
Toledo, OH 43659
Constance Horner Guest Scholar The Brookings Institution
1775 Massachusetts Avenue,
NW
Washington, DC 20036-2188
Gaynor N. Kelley Retired Chairman and CEO The Prudential Insurance
Company of America
751 Broad Street
23rd Floor
Newark, NJ 07102
Burton G. Malkiel Professor Princeton University Dept.
of Economics
110 Fisher Hall
Prospect Avenue
Princeton, NJ 08544-1021
Arthur F. Ryan Chairman, CEO and The Prudential Insurance
President Company of America
751 Broad Street
Newark, NJ 07102
Ida F.S. Schmertz Principal Investment Strategies
International
c/o The Prudential Insurance
Company of America
751 Broad Street
23rd Floor
Newark, NJ 07102
Charles R. Sitter Former President Exxon Corporation
5959 Las Colinas Boulevard
Irving, TX 75039-2298
Donald L. Staheli Chairman and CEO Continental Grain Company
277 Park Avenue
New York, NY 10172
Richard M. Thomson Chairman and CEO The Toronto-Dominion Bank
P.O. Box 1
Toronto-Dominion Centre
Toronto, Ontario
Canada M5K 1A2
James A. Unruh Chairman and CEO Unisys Corporation Township
Line and Union Meetings
Roads
P.O. Box 500
Blue Bell, PA 19424-0001
P. Roy Vagelos, M.D. Former Chairman and CEO Merck & Co., Inc.
One Crossroads Drive
Building A, 3rd Floor
Bedminster, NJ 07921
Page 19 of 26 Pages
<PAGE> 20
Stanley C. Van Ness, Esq. Counselor at Law Picco Herbert Kennedy
One State Street Square
Suite 1000
Trenton, NJ 08607-1388
Paul A. Volcker Chairman and CEO Wolfensohn & Co., Inc.
599 Lexington Avenue
New York, New York 10022
Joseph H. Williams Director The Williams Companies, Inc.
One Williams Center
Tulsa, OK 74172
EXECUTIVE OFFICERS
PRINCIPAL OCCUPATION/
NAME TITLE ADDRESS
- ------ ------------------------- -----------
Arthur F. Ryan Chairman of the Board, The Prudential Insurance
Chief Executive Company of America
Officer and President Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
E. Michael Caulfield Chief Executive Officer, The Prudential Insurance
Money Management Group Company of America
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
Michele Darling Executive Vice President, The Prudential Insurance
Human Resources Company of America
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
Mark B. Grier Chief Financial Officer The Prudential Insurance
Company of America
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
Roger A. Lawson Executive Vice President, The Prudential Insurance
Marketing and Planning Company of America
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
John V. Scicutella Operations and Systems The Prudential Insurance
Executive Officer Company of America
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
Page 20 of 26 Pages
<PAGE> 21
2. STRATEGIC PERFORMANCE FUND II, INC. SPF-II has four shareholders. The
shareholders of SPF-II that may be deemed to control SPF-II are the Chrysler
Pension Fund, a trust which owns 25.2% of the shares of SPF-II as of September
24, 1997, the Virginia Retirement System, a public retirement plan which owns
39.4% of SPF-II as of September 24, 1997, and the Prudential Retirement System
for U.S. Employees and Special Agents, a trust which owns 23.6% of SPF-II as of
September 24, 1997 (collectively, the "Major SPF-II Shareholders"). The
principal business address of Chrysler Pension Fund is 1000 Chrysler Drive,
Auburn Hills, Michigan 48236; the principal business address of the Virginia
Retirement System is 209 South LaSalle, Chicago, Illinois 60604-1295; and the
principal business address of the Prudential Retirement System for U.S.
Employees and Special Agents is 751 Broad Street, Newark, New Jersey
07102-3777.
Set forth below is the name and business address of each
executive officer or director of SPF-II. Each of such persons is a citizen of
the United States of America.
DIRECTORS
PRINCIPAL OCCUPATION/
NAME TITLE ADDRESS
- ------ --------------------------- -----------
Joel W. Stoesser Managing Director Prudential Real Estate
Investors
8 Campus Drive
4th Floor
Parsippany, NJ 07054
Dale Taysom Managing Director Prudential Real Estate
Investors
One Ravinia Drive
Suite 1400
Atlanta, GA 30346-2110
Blake Eagle Chairman Massachusetts Institute of
Technology
Center for Real Estate
120 Massachusetts Avenue
Building W31-310
Cambridge, MA 02139-4307
John F. Goydas Former Managing Director 217-55 Peck Avenue
of J.P. Morgan Investment Hollis Hills, NY 11427
Management, Inc.
Page 21 of 26 Pages
<PAGE> 22
EXECUTIVE OFFICERS
PRINCIPAL OCCUPATION/
NAME TITLE ADDRESS
- ------ ------------------------ -----------
Joel W. Stoesser President Strategic Performance Fund
II, Inc.
8 Campus Drive
4th Floor
Parsippany, NJ 07054
Jose Gener Vice President And Strategic Performance Fund
Treasurer II, Inc.
8 Campus Drive
4th Floor
Parsippany, NJ 07054
Joseph D. Margolis Secretary Strategic Performance Fund
II, Inc.
8 Campus Drive
4th Floor
Parsippany, NJ 07045
Peter Eckert Comptroller Strategic Performance
Fund II, Inc.
8 Campus Drive
4th Floor
Parsippany, NJ 07045
Set forth below is the name and business address of each executive
officer or director of each Major SPF-II Shareholder. Each of such persons is a
citizen of the United States of America.
A. Virginia Retirement System
TRUSTEES
PRINCIPAL OCCUPATION/
NAME TITLE ADDRESS
- ------ ------------------------ -----------
Edwin T. Burton, III Retired c/o Virginia Retirement
Systems
1200 E. Main Street
Richmond, VA 23718
R. William Bayliss, III Executive Vice President Wheat First Burcher Singer
and Branch Manager P.O. Box 437
Winchester, VA 22604
Joseph L. Boyd Dean-School of Business, Northfolk State University
Norfolk State University School of Business
Norfolk, VA 23504
Donald L. Cahill Police Officer-Prince 1 County Complex
William County Prince William, VA 22192
Page 22 of 26 Pages
<PAGE> 23
Stuart W. Connock Retired c/o Virginia Retirement
Systems
1200 E. Main Street
Richmond, VA 23718
Clifford A. Cutchins, III Retired c/o Virginia Retirement
Systems
1200 E. Main Street
Richmond, VA 23718
Elise Lindbloom Emanuel Guidance Counselor 110 Willow Drive
Williamsburg, VA 23185
Charles B. Walker Chief Financial Officer Ethyl Corporation
330 S. Fourth Street
Richmond, VA 23219
Janes C. Wheat III Partner Riverfront Partners
901 East Byrd Street
Richmond, VA 23219
EXECUTIVE OFFICERS
PRINCIPAL OCCUPATION/
NAME TITLE ADDRESS
- ------ ------------------------- -----------
Donna M. Blateclay Asst. Director of Benefit c/o Virginia
Programs Retirement Systems
120 E. Main Street
Richmond, VA 23718
Wallace G. Harris Deputy Director c/o Virginia
Retirement Systems
120 E. Main Street
Richmond, VA 23718
William H. Leighty Director c/o Virginia
Retirement Systems
120 E. Main Street
Richmond, VA 23718
Gary L. Smith Asst. Director of Finance c/o Virginia
Retirement Systems
120 E. Main Street
Richmond, VA 23718
Erwin H. Will, Jr. Chief Investment Officer c/o Virginia
Retirement Systems
120 E. Main Street
Richmond, VA 23718
B. CHRYSLER PENSION FUND
TRUSTEE
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Occupation/
Name Title Address
- ---- --------------------- -------
Bankers Trust Company N/A Bankers Trust Company
4 Exchange Place
Jersey City, NJ 07302
EXECUTIVE OFFICERS
Principal Occupation/
Name Title Address
- ---- --------------------- -------
Russell Flynn Director of Treasurer's Chrysler Pension Fund
Department 1000 Chrysler Drive
Auburn Hills, MI 48236
Thomas Capo Treasurer Chrysler Pension Fund
1000 Chrysler Drive
Aururn Hills, MI 48236
</TABLE>
C. PRUDENTIAL RETIREMENT SYSTEM FOR U.S. EMPLOYEES AND SPECIAL AGENTS
(See Section 1 of this Schedule A for information regarding directors and
executive officers of Prudential Retirement System for U.S. Employees and
Special Agents)
3. PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP. The partners of
Prudential Variable Contract Partnership are Prudential, Pruco Life Insurance
Company, an Arizona corporation that is wholly owned by Prudential, and Pruco
Life Insurance Company of New Jersey, a New Jersey corporation that is wholly
owned by Pruco Life ("Pruco Life of New Jersey"; and together with Pruco Life
Insurance Company, the "Remaining
Page 23 of 26 Pages
<PAGE> 24
General Partners"). Each Remaining General Partner is controlled by Prudential.
Pruco Life Insurance Company is an insurance company and the
address of its principal business and principal office is 213 Washington Street,
Newark, New Jersey 07102. Pruco Life of New Jersey is an insurance company and
the address of its principal business and principal office is 213 Washington
Street, Newark, New Jersey 07102.
Set forth below is the name and business address of each
executive officer or director of each partner of Prudential Variable Contract
Partnership. Each of such persons is a citizen of the United States of America,
except that Kiyofumi Sakaguchi is a citizen of Japan.
A. PRUCO LIFE INSURANCE COMPANY
DIRECTORS
PRINCIPAL OCCUPATION/
NAME TITLE ADDRESS
- ------ ------------------------- -----------
James John Avery, Jr. Senior Vice President and Prudential Insurance
Chief Actuary, Executive Company of America
Management 213 Washington Street
Newark, NJ 07102
William M. Bethke Chief Investment Officer Gateway Center Two
McCarter Highway & Market
Street
Newark, NJ 07102
Ira Jeffrey Kleinman Executive Vice President Prudential Insurance
and Chief Marketing Company of America
International Executives 751 Broad Street
Newark, NJ 07102
Mendel A. Melzer Chief Investment Offices, Prudential Insurance
PIA Company of America
751 Broad Street
Newark, NJ 07102
Esther Hook Milnes Vice President and Prudential Insurance
Actuary, Executive Company of America
Management 213 Washington Street
Newark, NJ 07102
Edward Issac Price Senior Vice President, Prudential Insurance
Executive Management Company of America
213 Washington Street
Newark, NJ 07102
Kiyofumi Sakaguchi President, International Prudential Insurance
Executive Company of America
751 Broad Street
Newark, NJ 07102
Page 24 of 26 Pages
<PAGE> 25
EXECUTIVE OFFICERS
NAME PRINCIPAL OCCUPATION/ ADDRESS
- ------ TITLE -----------
---------------------
Esther Hook Milnes President Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102
Susan Louise Blount Secretary Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102
Charles Edward Chaplin Treasurer Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102
Linda Dougherty Comptroller Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102
B. PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DIRECTORS
PRINCIPAL OCCUPATION/
NAME TITLE ADDRESS
- ------ -------------------------- -----------
James John Avery, Jr. Senior Vice President and Prudential Insurance
Chief Actuary, Executive Company of America
Management 213 Washington Street
Newark, NJ 07102
William M. Bethke Chief Investment Officer Gateway Center Two
McCarter Highway & Market
Street
Newark, NJ 07102
Ira Jeffrey Kleinman Executive Vice President Prudential Insurance
and Chief Marketing Company of America
International Executives 751 Broad Street
Newark, NJ 07102
Mendel A. Melzer Chief Investment Offices, Prudential Insurance
PIA Company of America
751 Broad Street
Newark, NJ 07102
Esther Hook Milnes Vice President and Prudential Insurance
Actuary, Executive Company of America
Management 213 Washington Street
Newark, NJ 07102
Edward Issac Price Senior Vice President, Prudential Insurance
Executive Management Company of America
213 Washington Street
Newark, NJ 07102
Page 25 of 26 Pages
<PAGE> 26
EXECUTIVE OFFICERS
PRINCIPAL OCCUPATION/
NAME TITLE ADDRESS
- ------ ----------------------- -----------
Esther Hook Milnes President Pruco Life Insurance Company
of New Jersey
213 Washington Street
Newark, New Jersey 07102
Susan Louise Blount Secretary Pruco Life Insurance Company
of New Jersey
213 Washington Street
Newark, New Jersey 07102
Martin Pfinsgraff Treasurer Pruco Life Insurance Company
of New Jersey
213 Washington Street
Newark, New Jersey 07102
Charles Edward Chaplin Treasurer Pruco Life Insurance Company
of New Jersey
213 Washington Street
Newark, New Jersey 07102
Linda Dougherty Comptroller Pruco Life Insurance Company
of New Jersey
213 Washington Street
Newark, New Jersey 07102
C. PRUDENTIAL INSURANCE COMPANY OF AMERICA
(See Section 1 of this Schedule A)
During the past five years, to the knowledge of each Reporting
Party, none of the Major SPF-II Shareholders or Remaining Partners (as defined
above, and collectively referred to hereinafter as the "Related Parties") or the
executive officers or directors of any of the Related Parties has been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors).
During the past five years, to the knowledge of each Reporting
Party, none of the Related Parties or the executive officers or directors of any
of the Related Parties has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Page 26 of 26 Pages
<PAGE> 27
EXHIBIT INDEX
Exhibit No. Description Page No.
----------- ----------- --------
I SPF-I Contribution I1-I56
Agreement
II Chevron II1-II59
Contribution
Agreement
III General Account III1-IV29
Stock Purchase
Agreement
IV Director Nominee IV1-IV2
Letter Agreement
V Western Conference V1-V28
of Teamsters Stock
Purchase Agreement
VI Variable Contract VI1-VI28
Stock Purchase
Agreement
VII SPF-II Stock VII1-VII28
Purchase
Agreement
VIII Registration VIII1-VIII19
Rights Agreement
IX Amended and IX1-IX17
Restated
Registration
Rights Agreement
X SPF-II Management X1-X8
Agreement
XI Prudential XI1-XI4
Variable Contract
Partnership
Management
Agreement
XII Agreement XII1
Regarding Joint
Filing
<PAGE> 1
EXHIBIT I
<PAGE> 2
CONTRIBUTION AGREEMENT
(SPF-I Separate Account)
by and between
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
a New Jersey corporation, on behalf of the
Strategic Performance Fund I Separate Account
and
MERIDIAN INDUSTRIAL TRUST, INC.,
a Maryland corporation
Date: September 24, 1997
I-1
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 - SALE OF PROPERTY.............................................................1
1.1 Real Property................................................................1
1.2 Personal Property............................................................1
1.3 Other Property Rights........................................................2
ARTICLE 2 - PURCHASE PRICE...............................................................2
2.1 Payment at Closing...........................................................2
2.2 Allocation of Purchase Price.................................................3
ARTICLE 3 - TITLE MATTERS................................................................3
3.1 Title to Real Property.......................................................3
3.2 Title Defects................................................................3
3.2.1 Certain Exceptions to Title............................................3
3.2.2 Discharge of Title Objections..........................................4
3.3 Title Insurance..............................................................4
ARTICLE 4 - MERIDIAN'S DUE DILIGENCE/CONDITION OF THE FACILITIES.........................5
4.1 Meridian's Inspection of the Facilities......................................5
4.2 Meridian's Inspection of Documents...........................................5
ARTICLE 5 - ADJUSTMENTS AND PRORATIONS...................................................7
5.1 Lease Rentals and Expenses...................................................7
5.1.1 Rents..................................................................7
5.1.2 Lease Expenses.........................................................7
5.2 Real Estate and Personal Property Taxes......................................7
5.3 Other Property Operating Expenses............................................8
5.4 Closing Costs................................................................9
5.5 Cash Security Deposits.......................................................9
5.6 Dividend Adjustment..........................................................9
5.7 Interest Adjustment..........................................................9
5.8 Apportionment Credit.........................................................9
5.9 Delayed Adjustment..........................................................10
ARTICLE 6 - CLOSING.....................................................................10
6.1 Closing.....................................................................10
6.2 Closing Date................................................................11
6.3 Title Transfer and Payment of Purchase Price................................12
6.4 Prudential's Closing Deliveries.............................................12
6.5 Meridian Closing Deliveries.................................................14
6.6 Delivery of Deeds...........................................................16
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 7 - CONDITIONS TO CLOSING.......................................................16
7.1 Conditions Precedent to Obligations of Prudential...........................16
7.2 Conditions Precedent to Obligations of Meridian.............................18
7.3 Waiver of Failure of Conditions Precedent...................................19
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES..............................................19
Meridian's Representations..................................................19
8.1.1 Organization, Good Standing and Authority............................19
8.1.2 Meridian's Authorization..............................................20
8.1.3 [Intentionally Omitted]...............................................20
8.1.4 Capitalization........................................................20
8.1.5 Conflicting Agreements and Other Matters..............................21
8.1.6 Due Execution, etc....................................................21
8.1.7 Litigation, Proceeding, etc...........................................22
8.1.8 No Default or Violation...............................................22
8.1.9 Status of Acquisition Common Stock....................................22
8.1.10 Governmental Consents, etc......................................22
8.1.11 Private Offering................................................23
8.1.12 ERISA...........................................................23
8.1.13 Insurance.......................................................24
8.1.14 Information Provided............................................24
8.1.15 No Other Liabilities............................................24
8.1.16 Taxes; REIT Status..............................................25
8.1.17 Compliance with Laws............................................25
8.1.18 Meridian Affiliates.............................................25
8.1.19 Material Contracts..............................................25
8.1.20 No Restrictions on Acquisition Common Stock.....................26
8.1.21 SEC Documents...................................................26
8.1.22 No Merger Agreements............................................26
8.1.23 Certain Actions by Meridian.....................................26
8.1.24 Facilities Sold "AS-IS".........................................27
8.2 Prudential's Representations................................................32
8.2.1 Prudential's Authorization............................................32
8.2.2 Investment Intent.....................................................32
8.2.3 Transfer Restrictions.................................................32
8.2.4 Stop Transfer Instruction.............................................34
8.2.5 Prudential Status.....................................................34
8.2.6 Authority.............................................................34
8.2.7 Access to Information.................................................34
8.2.8 Reliance..............................................................35
8.2.9 Separate Account Investors............................................35
8.2.10 Other Prudential's Representations..............................35
8.2.11 No Other Agreements.............................................36
8.3 General Provisions..........................................................36
</TABLE>
I-3
<PAGE> 5
<TABLE>
<S> <C>
8.3.1 No Representation As to Leases........................................36
8.3.2 Definition of "Prudential's Knowledge"................................36
8.3.3 Prudential's Representations Deemed Modified..........................36
8.3.4 Notice of Breach; Prudential's Right to Cure..........................37
8.3.5 Survival..............................................................37
8.3.6 Limitation on Prudential's Liability..................................37
ARTICLE 9 - COVENANTS...................................................................38
9.1.1 Confidentiality.......................................................38
9.1.2 Approvals not a Condition to Meridian's Performance...................38
9.1.3 Meridian's Indemnity; Delivery of Reports.............................39
9.1.4 Limit on Government Contacts..........................................39
9.1.5 Real Estate Investment Trust..........................................39
9.1.6 Conduct of Business...................................................39
9.1.7 Negative Covenants of Meridian........................................39
9.1.8 Maintenance of Books and Records......................................40
9.1.9 Party in Interest.....................................................40
9.1.10 Real Estate Operating Company.......................................40
9.1.11 Amendment to Investor Rights Agreement...............................40
9.1.12 Book Entry Shares....................................................40
9.1.13 Survival........................................................40
9.2 Prudential's Covenants......................................................41
9.2.1 Service Contracts.....................................................41
9.2.2 Maintenance of Facilities.............................................41
9.2.3 Access to Facilities..................................................41
9.2.4 Sale of Acquisition Common Stock by Prudential........................41
9.2.5 Meridian Audit Rights.................................................42
9.2.6 Survival..............................................................42
9.3 Mutual Covenants............................................................42
9.3.1 Publicity.............................................................42
9.3.2 Broker................................................................42
9.3.3 Tax Refunds and Credits...............................................42
9.3.4 Survival..............................................................43
9.3.5 Approvals.............................................................43
9.3.6 Notification of Certain Matters.......................................43
9.3.7 Further Assurances....................................................43
ARTICLE 10 - FAILURE OF CONDITIONS......................................................44
To Prudential's Obligations.................................................44
10.2 To Meridian's Obligations...................................................44
ARTICLE 11 - CONDEMNATION/CASUALTY......................................................44
11.1 Condemnation................................................................44
11.1.1 Right to Adjust.................................................44
</TABLE>
I-4
<PAGE> 6
<TABLE>
<S> <C> <C>
11.1.2 Assignment of Proceeds..........................................45
11.2 Destruction or Damage.......................................................45
11.3 Insurance...................................................................46
11.4 Effect of Termination.......................................................46
11.5 Waiver......................................................................46
ARTICLE 12 - [INTENTIONALLY OMITTED]....................................................46
ARTICLE 13 - LEASING MATTERS............................................................46
13.1 New Leases..................................................................46
13.2 Lease Expenses..............................................................47
13.3 Other Lease Activity........................................................48
13.4 Lease Enforcement...........................................................48
13.5 Lease Termination Prior to Closing..........................................48
ARTICLE 14 - MISCELLANEOUS..............................................................49
14.1 Assignment..................................................................49
14.2 Designation Agreement.......................................................49
14.3 Survival/Merger.............................................................50
14.4 Integration; Waiver.........................................................50
14.5 Governing Law...............................................................50
14.6 Captions Not Binding; Schedules and Exhibits................................50
14.7 Binding Effect..............................................................50
14.8 Severability................................................................50
14.9 Notices.....................................................................51
14.10 Counterparts................................................................52
14.11 No Recordation..............................................................52
14.12 Additional Agreements; Further Assurances...................................52
14.13 Construction................................................................52
14.14 Intentionally Omitted.......................................................53
14.15 Business Day................................................................53
14.16 Prudential's Maximum Aggregate Liability....................................53
14.17 WAIVER OF TRIAL BY JURY.....................................................53
</TABLE>
I-5
<PAGE> 7
EXHIBITS
Exhibit A List of Facilities and Legal Descriptions
Exhibit B List of Contracts
Exhibit C Certain Certificates of Occupancy, Licenses, Permits and
Personal Property
Exhibit D Allocated Purchase Prices
Exhibit E Form of Meridian's As-Is Certificate And Agreement
Exhibit F Form of Deed
Exhibit G Form of Bill of Sale
Exhibit H Form of Assignment of Leases
Exhibit I List of Tenants
Exhibit J Form of Assignment of Contracts
Exhibit K-1 Form of Tenant Estoppel Letter
Exhibit K-2 Form of Prudential's Estoppel Certificate
Exhibit L Form of Notice to Tenants
Exhibit M Form of Prudential's FIRPTA Affidavit
Exhibit N Title Reports
Exhibit O Litigation Notices, Condemnation Notices and
Governmental Violations
Exhibit P Designated Employees
Exhibit Q Form of Amended and Restated Registration Rights
Agreement
Exhibit R Form of Excepted Holder Agreement
Exhibit S Form of Opinion of Meridian's Counsel
Exhibit T Meridian's Audit Rights
SCHEDULES
Schedule 1 Certain Defined Terms
Schedule 8.1.4 Convertible Securities and Indebtedness; Stock
Voting, Transfer and Redemption Agreements
Schedule 8.1.5 Conflicting Agreements
Schedule 8.1.10 Required Government Consents
Schedule 8.1.15 Other Liabilities
Schedule 8.1.18 Assessable Shares
Schedule 8.1.22 Merger Agreements
Schedule 8.2.9 Separate Account Investors
I-6
<PAGE> 8
CONTRIBUTION AGREEMENT
(SPF-I Separate Account)
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made this 24th day of
September, 1997, by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a
New Jersey corporation, on behalf of the Strategic Performance Fund I Separate
Account (in such capacity "Prudential"), and MERIDIAN INDUSTRIAL TRUST, INC., a
Maryland corporation ("Meridian"). Capitalized terms used herein and not
otherwise defined shall have the meanings given to such terms in SCHEDULE 1
annexed hereto and by this reference incorporated herein.
W I T N E S S E T H:
In consideration of the mutual covenants and agreements set forth herein the
parties hereto do hereby agree as follows:
ARTICLE
1 - SALE OF PROPERTY
Prudential agrees to sell, transfer and assign and Meridian agrees to purchase,
accept and assume, subject to the terms and conditions stated herein, all of
Prudential's right, title and interest in and to each of the Facilities, as
defined below. As used in this Agreement, the term "FACILITY" means any one of
the five (5) industrial/warehouse facilities located on the parcels of Real
Property described in EXHIBIT A-1 through EXHIBIT A-5, attached hereto and
incorporated herein by this reference, together with such Real Property's
accompanying Personal Property and Other Property Rights, as described below,
and "FACILITIES" means every such Facility, collectively. The Facilities are
more particularly described as follows:
1.1 Real Property. Those certain parcels of real estate legally described
in EXHIBIT A-1 through EXHIBIT A-5 attached hereto and incorporated herein by
this reference, together with all buildings, improvements and fixtures located
thereon and all rights, privileges and appurtenances pertaining thereto
including all of Prudential's right, title and interest in and to all
rights-of-way, open or proposed streets, alleys, easements, strips or gores of
land adjacent to each such parcel (herein collectively called the "REAL
PROPERTY"); and
1.2 Personal Property. All tangible personal property owned by Prudential
(excluding any computer or computer equipment and software owned by Prudential
or Prudential's property manager), located on the Real Property, and used in the
ownership, operation and maintenance of the Real Property and all
nonconfidential books, records and files (excluding appraisals, budgets,
Prudential's strategic plans for the Facilities, internal analyses, marketing
information, submissions relating to Prudential's obtaining of corporate
authorization, attorney and accountant work product, or other information in the
possession or control of Prudential or Prudential's property manager(s) which
Prudential deems proprietary) relating to the Real Property (herein collectively
called the "PERSONAL PROPERTY"); and
I-7
<PAGE> 9
1.3 Other Property Rights. (a) Prudential's interest as landlord in all
leases encumbering the Real Property on the Closing Date (as defined in Section
6.2); (b) if and to the extent assignable by Prudential, (i) all service,
supply, maintenance, utility and commission agreements, all equipment leases,
and all contracts, subcontracts and agreements, if any, relating to the
construction of any unfinished tenant improvements and described in EXHIBIT B
attached hereto and incorporated herein by this reference, and (ii) all
licenses, permits and other written authorizations necessary for the use,
operation or ownership of the Real Property or Personal Property and in
Prudential's possession or control (the rights and interests of Prudential
described in clauses (a) through (b) hereinabove being herein collectively
called the "OTHER PROPERTY RIGHTS").
ARTICLE 2 - PURCHASE PRICE
The total purchase price to be paid by Meridian for the purchase of the
Facilities is the sum of THIRTY ONE MILLION, EIGHT HUNDRED FORTH-EIGHT THOUSAND
DOLLARS ($31,848,000.00) (the "PURCHASE PRICE"). Payment of the Purchase Price
shall be rendered in the form of: (a) cash in the sum of NINE MILLION, FIVE
HUNDRED FIFTY-FOUR THOUSAND FOUR HUNDRED DOLLARS ($9,554,400.00) in immediately
available funds (the "ACQUISITION CASH"); and (b) validly issued shares of
Meridian's Common Stock, par value $0.001 per share (the "ACQUISITION COMMON
STOCK") with an aggregate value of TWENTY-TWO MILLION, TWO HUNDRED NINETY-THREE
THOUSAND SIX HUNDRED DOLLARS ($22,293,600.00), which Acquisition Common Stock
shall be comprised of 1,106,931.5 shares of Meridian's Common Stock priced at
$20.14 per share. The Purchase Price shall be paid in the following manner:
2.1 Payment at Closing. On the Closing Date, Meridian shall (a) deposit,
or cause to be deposited with First American Title Insurance Company whose
mailing address is 30 North LaSalle Street, Suite 310, Chicago, Illinois 60602,
Attention: John C. ("Jack") Murray, Vice President & Special Counsel (the "TITLE
COMPANY") acting in its additional capacity as escrow agent ("ESCROW AGENT"),
the Acquisition Common Stock pursuant to Section 6.1(v), and (b) pay to
Prudential through Escrow Agent the Acquisition Cash, in immediately available
funds by wire transfer as more particularly set forth in Section 6.3. The
Acquisition Cash shall also be subject to the prorations and adjustments set
forth in Article 5 or as otherwise provided under this Agreement, plus any other
amounts required to be paid by Meridian at Closing.
2.2 Allocation of Purchase Price. The Purchase Price has been allocated to
each Facility by Prudential and Meridian as set forth in EXHIBIT D attached
hereto and by this reference incorporated herein (such portion being such
Facility's "ALLOCATED PURCHASE PRICE", subject in each instance to Closing
adjustments provided hereunder.
ARTICLE 3 - TITLE MATTERS
3.1 Title to Real Property. Meridian acknowledges that, prior to the
execution of this Agreement, Meridian has conducted an examination of the status
of title to the Facilities. Meridian has
I-8
<PAGE> 10
previously obtained (a) a commitment to issue an Owner's Policy of Title
Insurance with respect to each Facility, copies of which are attached hereto in
Exhibit N and incorporated herein by this reference, (each a "TITLE REPORT" and
collectively, the "TITLE REPORTS") from the Title Company, (b) copies of all
recorded documents referred to on Schedule B of each Title Report as exceptions
to coverage (the "TITLE DOCUMENTS"), and (c) a certified boundary survey of each
Facility (each a "SURVEY" and collectively, the "SURVEYS"). Meridian hereby
confirms its approval of the Title Reports and Surveys. Except as provided in
Section 3.2, Prudential shall convey and Meridian shall accept title to the
Facilities, subject to (i) exceptions to title appearing on Schedule B of the
Title Reports, including the Title Company's standard printed exceptions, (ii)
any and all applicable zoning and building ordinances and land use regulations,
(iii) such state of facts as are disclosed in the Survey with respect to each
Facility, (iv) such state of facts as would be disclosed by a physical
inspection of each Facility, (v) the liens of taxes not yet due and payable,
(vi) any exceptions caused by Meridian, its agents, representatives or
employees, (vii) such other exceptions with respect to each Facility as Title
Company shall commit to insure over, without any additional cost to Meridian,
whether such insurance is made available in consideration of payment, bonding,
indemnity of Prudential or otherwise, and (viii) the Leases (as defined in
Subsection 6.4(c)) (the foregoing exceptions described in clauses (i) through
(viii) being herein collectively called the "PERMITTED EXCEPTIONS").
Notwithstanding the foregoing, Prudential shall, at Prudential's expense, cause
to be removed from the Title Reports all mortgages, deeds of trust, mechanic's
liens, and other monetary liens and judgments described thereon. Meridian shall
pay any additional premiums required for the deletion of the "survey exception"
on Meridian's fee policy of title insurance and for the issuance of any desired
or applicable endorsements requested by Meridian which are available in the
state where each Facility is located. Meridian is aware that ALTA policies and
ALTA endorsements may not be available in all states in which the Facilities are
located.
3.2 Title Defects.
3.2.1 Certain Exceptions to Title. Meridian shall have the right to
object in writing to any title matters that are not Permitted Exceptions and
that, in Meridian's reasonable discretion, materially adversely affect title to,
or the value of, the Real Property with respect to any Facility which may appear
on supplemental title reports or updates to the Title Reports issued at the
request of Meridian after the end of the Due Diligence Period (herein
collectively called the "OTHER LIENS") within five (5) days after the receipt
thereof by Meridian. Unless Meridian shall timely object to such Other Liens,
all such Other Liens and any matters which do not, in Meridian's reasonable
discretion, materially adversely affect title to, or the value of, the Real
Property with respect to any Facility which are set forth in any such
supplemental reports or updates shall be deemed to constitute additional
Permitted Exceptions. Any exceptions which are timely objected to by Meridian
shall be herein collectively called the "TITLE OBJECTIONS." Prudential may elect
(but shall not be obligated) to remove, or cause to be removed at its expense,
any Title Objections, and shall be entitled to a reasonable adjournment of the
Closing (not to exceed thirty (30) days) for the purpose of such removal, which
removal will be deemed effected by the issuance of title insurance eliminating
or insuring against the effect of the Title Objections. Prudential shall notify
Meridian in writing within five (5) days after receipt of Meridian's notice of
Title Objections whether Prudential elects to remove the same. If Prudential is
unable to remove or endorse over any Title Objections prior to the Closing, or
if Prudential elects not to remove one or more Title Objections, Meridian may
elect to either (a) terminate this Agreement, in which event the parties shall
have no further
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rights or obligations hereunder except for obligations which expressly survive
the termination of this Agreement, or (b) waive such Title Objections, in which
event such Title Objections shall be deemed "Permitted Exceptions" and the
Closing shall occur as herein provided without any reduction of or credit
against the Purchase Price.
3.2.2 Discharge of Title Objections. If on the Closing Date there
are any Title Objections which Prudential has elected to pay and discharge,
Prudential may use any portion of the Acquisition Cash to satisfy the same,
provided Prudential shall deliver to Meridian at the Closing instruments in
recordable form and sufficient to satisfy such Title Objections of record,
together with the cost of recording or filing such instruments, or provided that
Prudential shall cause Title Company to insure over the same, without any
additional cost to Meridian, whether such insurance is made available in
consideration of payment, bonding, indemnity of Prudential or otherwise.
3.3 Title Insurance. At Closing, Title Company shall issue to Meridian, at
Meridian's sole cost and expense, an ALTA Owner's Form (or such other form of
Owner's Policy as may be promulgated in the state in which a particular Facility
is located) of title insurance policy in the form of the applicable Title Report
(each an "OWNER'S TITLE POLICY" and collectively, the "OWNER'S TITLE POLICIES"),
in the amount of the Allocated Purchase Price with respect to such Facility
insuring that fee simple title to such Facility or Facilities is vested in
Meridian subject only to the Permitted Exceptions with respect to such Facility;
provided, however, that at Meridian's option, Meridian may instruct the Title
Company to issue one or more Owner's Title Policies insuring the state of title
to multiple Facilities. Meridian shall be entitled to request that the Title
Company provide, at Meridian's sole cost and expense, such endorsements (or
amendments) to the Owner's Title Policies as Meridian may reasonably require,
provided that (a) such endorsements (or amendments) shall be at no cost or
additional liability to Prudential, (b) Meridian's obligations under this
Agreement shall not be conditioned upon Meridian's ability to obtain such
endorsements and, if Meridian is unable to obtain such endorsements, Meridian
shall nevertheless be obligated to proceed to close the transaction contemplated
by this Agreement (the "TRANSACTION") without reduction of or set off against
the Purchase Price, and (c) the Closing shall not be delayed as a result of
Meridian's request. Notwithstanding anything herein to the contrary, Meridian
covenants and agrees that upon Meridian's acquisition of the Facilities,
Meridian shall purchase the Owner's Title Policies from the Title Company.
ARTICLE 4 - MERIDIAN'S DUE DILIGENCE/CONDITION OF THE FACILITIES
4.1 Meridian's Inspection of the Facilities. Meridian acknowledges that
during the time period concluding prior to the execution of this Agreement (the
"DUE DILIGENCE PERIOD"), that Meridian has conducted its examinations,
inspections, testing, studies and/or investigations (herein collectively called
the "DUE DILIGENCE") of the Facilities (including for Hazardous Materials) and
information regarding the Facilities. Meridian and Prudential each acknowledge
and agree that Meridian shall have no additional period after the date hereof to
conduct further physical Due Diligence of the Facilities. At Closing and as a
material inducement for Prudential to consummate the Transaction, Meridian will
deliver, with respect to each Facility, a certification in the form of EXHIBIT E
attached hereto and incorporated herein
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by this reference, certifying that no representations or warranties concerning
the Facilities have been made except as expressly set forth herein.
4.2 Meridian's Inspection of Documents. Meridian acknowledges that prior
to Meridian's execution of this Agreement, Prudential made available to Meridian
and otherwise allowed Meridian access to copies of certain documents in
Prudential's possession applicable to the Facilities, including, but not limited
to, the Title Reports, the Title Documents, the Surveys, the Leases, other
reports and any available documents and other pertinent books and records which
pertain to the Facilities (collectively, the "DOCUMENTS") as Meridian has deemed
necessary or appropriate. Meridian has determined to its satisfaction the
assignability of any Documents to be assigned hereunder. Prudential shall
cooperate with Meridian (but shall not be obligated) to obtain any consents
required in connection with the assignment to Meridian of any of the Documents.
All of the Documents are confidential and, prior to such time, if any, that
Meridian takes title to the Facilities, shall not be distributed or disclosed by
Meridian to any person or entity not associated with Meridian (which obligation
of Meridian shall survive any termination of this Agreement). If the Transaction
fails to close for any reason whatsoever, Meridian shall return to Prudential
all of the Documents (together with all copies thereof made by or on behalf of
Meridian) which Prudential, its sales agents or brokers may have previously
delivered or made available or may hereafter deliver or make available to
Meridian in accordance with this Section 4.2 (which obligation of Meridian shall
survive any termination of this Agreement). BY FURNISHING TO MERIDIAN THE
DOCUMENTS, EXCEPT AS EXPRESSLY SET FORTH HEREIN, WHETHER HERETOFORE OR
HEREAFTER, NONE OF PRUDENTIAL, ITS SALES AGENTS OR BROKERS, NOR ANY PARTNER,
OFFICER, DIRECTOR, EMPLOYEE, AGENT OR ATTORNEY OF PRUDENTIAL, NOR ANY OTHER
PARTY RELATED IN ANYWAY TO ANY OF THE FOREGOING (ALL OF WHICH PARTIES ARE
COLLECTIVELY REFERRED TO AS THE "PRUDENTIAL PARTIES") SHALL BE DEEMED TO HAVE
MADE ANY REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE WHATSOEVER WITH
RESPECT TO ANY MATTER SET FORTH, CONTAINED OR ADDRESSED IN THE DOCUMENTS,
INCLUDING, BUT NOT LIMITED TO, THE ACCURACY AND COMPLETENESS THEREOF, AND
MERIDIAN SHALL CONFIRM INDEPENDENTLY ALL INFORMATION THAT IT CONSIDERS MATERIAL
TO ITS PURCHASE OF THE FACILITIES.
Meridian acknowledges that prior to Meridian's execution of this Agreement
Prudential has made available to Meridian, and Prudential hereby agrees to
continue to make available to Meridian and otherwise allow Meridian access to,
other non-confidential information regarding the Facilities, including, but not
limited to, information which may have related to their construction, history,
current economic and leasing status, physical condition and prospects for future
use or development, as Meridian has deemed appropriate. Meridian acknowledges
that Meridian has reviewed the Documents and the other information regarding the
Facilities with the assistance of such experts as Meridian deemed appropriate.
While Prudential has provided, and will continue to provide, the Documents and
such other information to Meridian and to cooperate with Meridian, PRUDENTIAL
HAS MADE IT CLEAR THAT IT IS UNWILLING TO SELL THE FACILITIES TO MERIDIAN UNLESS
PRUDENTIAL AND THE OTHER PRUDENTIAL PARTIES ARE EXPRESSLY RELEASED FROM
LIABILITY BY MERIDIAN FOR ANY AND ALL REPRESENTATIONS MADE IN ANY STATEMENTS
HERETOFORE OR HEREAFTER MADE, OR INFORMATION HERETOFORE OR HEREAFTER
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FURNISHED TO MERIDIAN OR ITS AGENTS OR REPRESENTATIVES BY THE PRUDENTIAL PARTIES
UNLESS SUCH REPRESENTATIONS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY
EXHIBIT HERETO. Consequently, Meridian, for Meridian and Meridian's successors
in interest, hereby releases the Prudential Parties from, and waives all claims
and liability against the Prudential Parties for, any and all representations
now or hereafter made, or information now or hereafter furnished, by the
Prudential Parties to Meridian or its agents or representatives (including, but
not limited to, representations regarding the ownership, operation, economic and
leasing status and physical and soil condition of the Facilities), unless the
representations are expressly set forth in this Agreement or any exhibit hereto.
The release of Prudential Parties set forth in this Section 4.2 shall be deemed
to be reaffirmed as of the Closing and shall survive the Closing and shall not
be merged therein. Meridian acknowledges and agrees that it (i) is familiar with
the physical condition of the Facilities, (ii) has completed its due diligence
with respect to the Facilities and the Documents to its satisfaction, (iii) is
acquiring the Facilities based exclusively upon its own investigations and
inspections of the Facilities and the Documents, and (iv) shall have not
additional period after the date hereof to conduct further physical due
diligence regarding the Facilities.
ARTICLE 5 - ADJUSTMENTS AND PRORATIONS
The following adjustments and prorations shall be made at Closing:
5.1 Lease Rentals and Expenses.
5.1.1 Rents. All collected rents and other payments from tenants
under the leases of the Facilities shall be prorated between Prudential and
Meridian as of the day prior to the Adjustment Date. Prudential shall be
entitled to all rents (including any percentage rent, additional rent and any
accrued tax and operating expense reimbursements and escalations), charges, and
other revenue of any kind attributable to any period under the Leases to but not
including the Adjustment Date. Meridian shall be entitled to all rents
(including any percentage rent, additional rent and any accrued tax and
operating expense reimbursements and escalations), charges and other revenue of
any kind attributable to any period under the Leases on and after the Adjustment
Date. Rents and expense escalations or other reimbursements due landlord under
the Leases not collected as of the Closing Date shall not be prorated at the
time of Closing, but Meridian shall make a good faith effort to collect the same
on Prudential's behalf and to tender the same to Prudential upon receipt (which
obligation of Meridian shall survive the Closing and not be merged therein);
provided, however, that all rents, escalations and other reimbursements due
landlord under the Leases collected by Meridian on or after the Closing Date
shall first be applied to all amounts due under the Leases at the time of
collection (i.e., current rents and sums due Meridian as the current owner and
landlord) with the balance (if any) payable to Prudential, but only to the
extent of amounts delinquent and actually due Prudential. Meridian shall not
have an exclusive right to collect the sums due Prudential under the Leases and
Prudential hereby retains its rights to pursue any tenant under the Leases for
sums due Prudential for periods attributable to Prudential's ownership of the
Facilities; provided, however, that Prudential shall not be permitted to
commence or pursue any legal proceedings against any tenant seeking eviction of
such tenant or the termination of the underlying lease. Prudential's rights
under the immediately preceding sentence shall survive the Closing and not be
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merged therein. Meridian shall receive a credit against the Acquisition Cash
portion of the Purchase Price for pre-paid rentals held by Prudential covering
the period post-Closing.
5.1.2 Lease Expenses. At Closing, Meridian shall reimburse
Prudential for the Lease Expenses (as defined in Section 13.2) to the extent
required by the terms of Section 13.2.
5.2 Real Estate and Personal Property Taxes. Real estate taxes, as opposed
to personal property taxes, shall be prorated only on the basis of real estate
taxes which become due and payable in the calendar year during which Closing
occurs, based upon the latest available tax bill and the number of days elapsed
in the calendar year of Closing, as of midnight of the day immediately preceding
the Adjustment Date. Personal property taxes shall be prorated as of the
Adjustment Date based upon the date they become due. Prudential shall be
entitled to all tax refunds and credits attributable to the Facilities prior to
the Adjustment Date. Meridian shall pay all real estate and personal property
taxes and shall be entitled to all tax refunds and credits attributable to the
Facilities after the Adjustment Date. If the real estate and/or personal
property tax rate and assessments have not been set for the calendar year in
which the Closing occurs, then the proration of such taxes shall be based upon
the rate and assessments for the preceding calendar year, and such proration
shall be adjusted between Prudential and Meridian upon presentation of written
evidence that the actual taxes paid for the calendar year in which the Closing
occurs differ from the amounts used at Closing and in accordance with the
provisions of Section 5.7. Prudential shall pay all installments of special
assessments due and payable prior to the Adjustment Date and Meridian shall pay
all installments of special assessments due and payable on and after the
Adjustment Date; provided, however, that Prudential shall not be responsible for
any installments of special assessments which have not been confirmed or which
relate to projects that have not been completed on the date hereof.
Notwithstanding the foregoing terms of this Section, Prudential shall have no
obligation to pay (and Meridian shall not receive a credit at Closing for) any
real estate or personal property taxes or special assessments to the extent that
Meridian is entitled after Closing to reimbursement of taxes and assessments, or
the recovery of any increase in taxes and assessments, from the tenants under
the Leases, regardless of whether Meridian actually collects such reimbursement
or increased taxes and assessments from such tenants, it being understood and
agreed by Meridian and Prudential that the burden of collecting such
reimbursements shall be solely on Meridian. In the event any Facility has been
assessed for property tax purposes at such rates as would result in reassessment
(i.e., "escape assessment" or "roll-back taxes") based upon the change in land
usage or ownership of such Facility, Meridian hereby agrees to pay all such
taxes and to indemnify and save Prudential harmless from and against all claims
and liability for such taxes. Such indemnity shall survive the Closing and not
be merged therein.
5.3 Other Property Operating Expenses. Operating expenses for the
Facilities shall be prorated as of midnight of the day prior to the Adjustment
Date. Prudential shall pay all utility charges and other operating expenses
attributable to the Facilities to, but not including the Adjustment Date (except
for those utility charges and operating expenses payable by tenants in
accordance with the Leases) and Meridian shall pay all utility charges and other
operating expenses attributable to the Facilities on or after the Adjustment
Date. To the extent that the amount of actual consumption of any utility
services is not determined prior to the Closing Date, a proration shall be made
at Closing based on the last available reading and post-closing adjustments
between Meridian and Prudential shall be made within twenty (20) days of the
date that actual consumption for such pre-closing period is determined, which
obligation shall
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survive the Closing and not be merged therein. Prudential shall not assign to
Meridian any deposits which Prudential has with any of the utility services or
companies servicing the Facilities. Meridian shall arrange with such services
and companies to have accounts opened in Meridian's name beginning at 12:01 a.m.
on the Closing Date. Notwithstanding the foregoing terms of this Section,
Prudential shall have no obligation to pay (and Meridian shall not receive a
credit at Closing for) any operating expenses to the extent that Meridian is
entitled after Closing to reimbursement of operating expenses, or the recovery
of any increase in operating expenses, from the tenants under the Leases,
regardless of whether Meridian actually collects such reimbursement or increased
operating expenses from such tenants, it being understood and agreed by Meridian
and Prudential that the burden of collecting such reimbursements shall be solely
on Meridian.
5.4 Closing Costs. Except as expressly provided herein, Meridian shall pay
all costs associated with Closing other than Prudential's attorney's fees and
costs. Without limiting the foregoing, Meridian shall pay all premiums and
charges of the Title Company for the Owner's Title Policies (including
endorsements requested by Meridian) to be issued pursuant to the Title Reports,
the cost of the Surveys, the cost of any Phase I environmental reports ordered
by Meridian, all recording and filing charges in connection with the instruments
by which Prudential conveys the Facilities and all escrow charges, all transfer
taxes, all costs of Meridian's Due Diligence and any other costs customarily
paid by the purchaser of real property pursuant to the customs of the state in
which each Facility is located. Each party shall pay its own attorneys. The
obligations of Meridian to pay applicable escrow charges shall survive the
termination of this Agreement.
5.5 Cash Security Deposits. At Closing, Prudential shall give Meridian a
credit against the Acquisition Cash in the aggregate amount of the unapplied
cash security deposits then held by Prudential under the Leases and any interest
thereon less, any administrative or similar charges to which Prudential may be
entitled under applicable law.
5.6 Dividend Adjustment. Prudential shall pay to Meridian, promptly after
receipt of dividends for the quarter ended September 30, 1997, an amount equal
to the product of (x) Accrued Dividends Per Share multiplied by (y) 1,106,931.5
shares (the "Dividend Adjustment"). Payment of such Dividend Adjustment shall be
made in the manner as set forth in Section 5.8 or as otherwise agreed to by
Prudential and Meridian.
5.7 Interest Adjustment. At Closing Meridian shall pay to Prudential
interest at the rate of 5.5% per annum on the Acquisition Cash portion of the
Purchase Price for the number of days from and including the Adjustment Date to
and excluding the Closing Date. Such interest shall be calculated as simple
interest at a per diem rate equal to 5.5% divided by 365 days.
5.8 Apportionment Credit. In the event the apportionments to be made at
the Closing result in a credit balance (i) to Meridian, such sum shall be paid
(at Prudential's option) at the Closing by giving Meridian a credit against the
Acquisition Cash in the amount of such credit balance or without reduction of
the Acquisition Cash by giving Meridian a certified or bank check payable to the
order of Meridian, or (ii) to Prudential, Meridian shall pay the amount thereof
to Prudential at the Closing by wire transfer of immediately available funds to
the account or accounts to be designated by Prudential for the payment
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of the Acquisition Cash. Notwithstanding anything herein to the contrary, if the
aggregate adjustments and prorations payable by Prudential to Meridian at
Closing equal or exceed $100,000.00, then Prudential may, in its sole
discretion, elect to give Meridian a credit (a) solely against the Acquisition
Cash or (b) on a pro rata basis against each of the Acquisition Cash and the
number of share of Acquisition Common Stock to be delivered at Closing.
5.9 Delayed Adjustment. If at any time following the Closing Date, the
amount of an item listed in any section of this Article 5 shall prove to be
incorrect (whether as a result in an error in calculation or a lack of complete
and accurate information as of the Closing), the party in whose favor the error
was made shall promptly pay to the other party the sum necessary to correct such
error upon receipt of proof of such error, provided that such proof is delivered
to the party from whom payment is requested on or before one (1) year after
Closing. The provisions of this Section 5.8 shall survive the Closing and not be
merged therein.
ARTICLE 6 - CLOSING
Meridian and Prudential hereby agree that the Transaction shall be consummated
as follows:
6.1 Closing. Meridian and Prudential hereby agree that the Transaction
shall be consummated via a Closing in escrow with the Escrow Agent. The Escrow
Agent shall be paid a closing escrow fee in the total sum of Seven Hundred Fifty
Dollars ($750.00) for services as Escrow Agent. Meridian and Prudential shall
each pay one-half of such closing escrow fee. On the Closing Date, Escrow Agent
shall close escrow by:
(i) Recording all documents as may be necessary to clear title to each
Facility in accordance with the requirements of this Agreement;
(ii) Recording the Deeds (as hereinafter defined);
(iii) Paying all closing costs and making all prorations in accordance
with the terms of this Agreement and a statement of adjustments and
prorations prepared by Escrow Agent and approved by Meridian and
Prudential, copies of which statement shall be signed in multiple
originals by Meridian and Prudential and delivered to Escrow Agent
prior to the Closing Date;
(iv) Delivering to Meridian the Owner's Title Policies, closing
statement(s) duly executed by Meridian, Prudential and Escrow Agent,
and an original of each of the documents described in Sections
6.4(b) through (p) (the Deeds referred to in Section 6.4(a) to be
delivered by Escrow Agent to Meridian after return from the
recorder's office); and
(v) Delivering to Prudential the following: (a) by wire transfer to be
received by Prudential's bank not later than 12:00 p.m. Eastern
Time, on the Closing Date, or as otherwise may be directed by
written instructions from Prudential the Acquisition Cash plus or
minus closing
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adjustments and prorations; (b) by delivering to Prudential a share
certificate representing the total number of shares of Acquisition
Common Stock; and (c) delivering to Prudential, on or promptly after
the Closing Date, a closing statement fully executed by Prudential,
Meridian and Escrow Agent, a copy of the Title Policies, conformed
copies of the recorded Deeds, and an original of each of the
documents described in Sections 6.5(b) through (i), and copies of
the documents described in Section 6.5(j).
In the event that Meridian or Prudential execute separate escrow
instructions, such separate escrow instructions shall constitute separate
agreements between Escrow Agent on the one hand, and Meridian or Prudential, as
the case may be, on the other hand, and shall not constitute agreements between
Meridian and Prudential. Such separate escrow instructions shall be enforceable
only to the extent not inconsistent with this Agreement.
6.2 Closing Date. Subject to Prudential's right to extend the Closing as
provided in this Agreement, the Transaction shall close ("CLOSING") on the date
that Meridian's shareholders vote to approve the issuance of approximately
7,096,513 shares of Meridian's Common Stock to The Prudential Insurance Company
of America and to three accounts managed by The Prudential Insurance Company of
America as described in that certain Notice of Special Meeting, Proxy Statement
and Proxy Card for Special Meeting of Stockholders of Meridian distributed to
the shareholders of Meridian on September 5, 1997, which vote is scheduled to
occur on September 24, 1997 (the "CLOSING DATE") time being of the essence with
respect to such Closing Date. Closing may, at Prudential's election, be either
by a so-called "New York style" closing or through escrow. The Closing shall
take place at 12:00 p.m. Eastern Time in the offices of Prudential's attorneys.
Meridian and Prudential shall conduct a "pre-closing" no later than two (2)
business days prior to the Closing Date. Meridian and Prudential, separately or
collectively, as appropriate for each item, shall escrow with the Title Company
no later than one (1) business day prior to the Closing Date fully executed,
notarized and recordable Deeds (as hereinafter defined) for the Real Property,
bills of sale for the Personal Property, and each of the additional items listed
in Sections 6.4 and 6.5, such documents to be held by the Title Company pursuant
to an escrow letter to be provided by Prudential on or before the Closing Date.
Title transfer and payment of the Purchase Price is to be completed on the
Closing Date as set forth in Section 6.3. Time is of the essence with respect to
the Closing Date.
6.3 Title Transfer and Payment of Purchase Price. Provided all conditions
precedent to Prudential's obligations hereunder have been satisfied, Prudential
agrees to convey title to each Facility to Meridian by the Deeds upon
confirmation of receipt of the Purchase Price as set forth below. Provided all
conditions precedent to Meridian's obligations hereunder have been satisfied,
Meridian agrees to deliver the Purchase Price, as specified in Article 2, by
timely delivering the same to the Escrow Agent no later than 12:00 p.m. Eastern
Time on the Closing Date.
6.4 Prudential's Closing Deliveries. At the Closing, Prudential shall
deliver or cause to be delivered to Meridian the following:
(a) Deeds. A Deed with respect to each Facility in the form of
EXHIBIT F attached hereto and incorporated herein by this reference, conveying
to Meridian the Real Property with respect to each
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such Facility, subject only to the Permitted Exceptions (each individually a
"DEED" and collectively, the "DEEDS").
(b) Bill of Sale. A bill of sale with respect to each Facility in
the form of EXHIBIT G attached hereto and incorporated herein by this reference
conveying all of Prudential's right, title and interest in and to the Personal
Property with respect to each such Facility.
(c) Assignment of Tenant Leases. An assignment and assumption of
tenant leases with respect to each Facility, in the form of EXHIBIT H attached
hereto and incorporated herein by this reference (each individually an
"ASSIGNMENT OF LEASES" and collectively, the "ASSIGNMENTS OF LEASES")
transferring all of the landlord's interest in the tenant space leases for the
tenants for each such Facility as identified on EXHIBIT I (the "TENANTS")
attached hereto and incorporated herein by this reference (as updated at
Closing) and any amendments, guarantees and other documents relating thereto
(herein collectively called the "LEASES"), together with all assignable non-cash
security deposits deposited by the Tenants thereunder and not applied by
Prudential in accordance with the terms of the Leases.
(d) Assignment of Equipment Leases, Commission Agreements and
Service Contracts. An assignment and assumption of equipment leases, commission
agreements, service contracts, warranties and guaranties and the Other Property
Rights with respect to each Facility (to the extent the same are not transferred
by the applicable Deed, Bill of Sale or Assignment of Leases with respect to
such Facility) in the form of EXHIBIT J attached hereto and incorporated herein
by this reference (each individually an "ASSIGNMENT OF CONTRACTS" and
collectively, the "ASSIGNMENTS OF CONTRACTS"), transferring, to the extent
assignable, without liability or expense to Prudential, all of Prudential's
interest in the equipment leases and any lease commission agreements in effect
at each such Facility on the Closing Date, all uncanceled service contracts
encumbering such Facility on the Closing Date, all warranties and guaranties
which remain in effect with respect to such Facility on the Closing Date and any
Other Property Rights with respect to such Facility not otherwise transferred to
Meridian (all of the foregoing being herein collectively called the
"CONTRACTS"). Prudential shall not assign any existing management agreement or
any contracts or policies of insurance for the Facilities.
(e) Estoppel Letters. Executed estoppel letters, with respect to
each of the Facilities, from each of the Tenants. All of such estoppel letters
shall be dated no earlier than forty-five (45) days prior to the Adjustment Date
and shall be substantially in the form which such Tenant is required to provide
pursuant to the terms of such Tenant's Lease or, if no form is specified in any
of the Leases, in the form of EXHIBIT K-1 attached hereto and incorporated
herein by this reference. In the event Prudential cannot for any reason obtain a
tenant estoppel letter from a Tenant from whom an estoppel letter is required,
Prudential, at its option, may deliver to Meridian a seller's (landlord)
estoppel letter in the form of EXHIBIT K-2 attached hereto and incorporated
herein by this reference. Prudential's liability under Prudential's estoppel
letters shall expire and be of no further force or effect on the one-hundred and
eightieth (180th) day following the Closing Date; provided, however, that if
Prudential shall obtain an estoppel certificate from any such Tenant after
delivery of such Prudential's estoppel letter with respect to such Tenant,
Prudential's (landlord) estoppel letter shall, as of the date of such Tenant's
estoppel letter, be without further force or effect.
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(f) Notice to Tenants. A single form letter in the form of EXHIBIT L
attached hereto and incorporated herein by this reference to each Tenant under
the Leases, duplicate copies of which would be sent notifying it of the sale of
its respective Facility to Meridian and advising it that all future payments of
rent and other payments due under its respective Lease are to be made to
Meridian at an address designated by Meridian.
(g) Non-Foreign Status Affidavit. A non-foreign status affidavit in
the form of EXHIBIT M attached hereto and incorporated herein by this reference,
as required by Section 1445 of the Internal Revenue Code.
(h) Evidence of Authority. Documentation sufficient to establish the
due authorization of Prudential's sale of the Facilities and Prudential's
delivery of the documents required to be delivered by Prudential pursuant to
this Agreement which documentation shall consist of the certificate described in
Section 7.2(f) and a certificate of an Assistant Secretary of Prudential with
respect to the authority to act on behalf of Prudential of the individual
executing on behalf of Prudential all documents contemplated by this Agreement.
Prudential shall deliver to Title Company such documents as may be reasonably
required by Title Company to evidence the capacity of Prudential and the
authority of the person executing any documents on behalf of Prudential.
(i) Prudential's Certificate. The certificate of Prudential
certifying to the matters set forth in Section 8.2.
(j) Facility Documents. (i) To the extent in the possession of
Prudential or any of the current managers of the Facilities, (A) the original
(or, if unavailable, a copy) of the existing certificate of occupancy for each
Facility, and (B) all original (or, if unavailable, copies of) certificates,
licenses, permits, authorizations and approvals issued for or with respect to
each Facility by governmental and quasi-governmental authorities having
jurisdiction; and (ii) all non-proprietary books and records located at each
Facility and/or at the office of Prudential's building manager relating to such
Facility and the ownership and operation thereof (the items described in clauses
(i) and (ii) being herein collectively called the "PROPERTY DOCUMENTS").
(k) Letters of Credit as Tenant Security Deposits. With respect to
any security deposits which are letters of credit, Prudential shall, if the same
are assignable, (i) deliver to Meridian at the Closing such letters of credit,
(ii) execute and deliver such other instruments as the issuers of such letters
of credit shall reasonably require, and (iii) cooperate with Meridian to change
the named beneficiary under such letters of credit to Meridian so long as
Prudential does not incur any additional liability or expense in connection
therewith.
(l) Keys and Original Documents. Keys to all locks at each Facility
(in Prudential's and/or Prudential's building managers' possession) and
originals or, if originals are not available, copies, of the Leases and
Contracts (unless canceled as set forth herein) encumbering any of the
Facilities on the Closing Date.
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(m) Transfer Taxes. If applicable, duly completed and signed real
estate transfer tax returns.
(n) Registration Rights Agreement. An amended and restated
registration rights agreement in the form of EXHIBIT Q attached hereto and
incorporated herein by this reference (the "REGISTRATION RIGHTS AGREEMENT") duly
executed by Prudential.
(o) Excepted Holder Agreement. An excepted holder agreement in the
form of EXHIBIT R attached hereto and incorporated herein by this reference (the
"EXCEPTED HOLDER AGREEMENT") duly executed by Prudential.
(p) Other Documents. Such other documents as may be reasonably
required by Title Company or as may be agreed upon by Prudential and Meridian to
consummate the Transaction.
6.5 Meridian Closing Deliveries. At the Closing, Meridian shall deliver or
cause to be delivered to Prudential the following:
(a) Acquisition Cash. The Acquisition Cash, as adjusted for
apportionments and other adjustments required under this Agreement, plus any
other amounts required to be paid by Meridian at Closing.
(b) Assignment of Leases. An Assignment of Leases for each Facility
executed and acknowledged by Meridian.
(c) Assignment of Equipment Leases, Commission Agreements and
Service Contracts. An Assignment of Contracts for each Facility executed and
acknowledged by Meridian.
(d) Meridian's Certificates. The certificate of Meridian with
respect to each Facility, as required under Article 4 hereof and a certificate
of Meridian certifying as to the matters set forth in Section 8.1.
(e) Evidence of Authority. Documentation to establish to
Prudential's reasonable satisfaction the due authorization of Meridian's
acquisition of the Facilities and Meridian's delivery of the documents required
to be delivered by Meridian pursuant to this Agreement (including, but not
limited to, the organizational documents of Meridian, as they may have been
amended from time to time, resolutions of Meridian and incumbency certificates
of Meridian.
(f) Transfer Taxes. If applicable, duly completed and signed real
estate transfer tax returns.
(g) Registration Rights Agreement. The Registration Rights Agreement
for the benefit of Prudential and duly executed by Meridian.
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(h) Excepted Holder Agreement. The Excepted Holder Agreement duly
executed by Meridian.
(i) Evidence of Acquisition Common Stock Delivery. In accordance
with Section 6.1(v), Meridian shall present evidence that the Escrow Agent has
received a share certificate representing the Acquisition Common Stock.
(j) Other Documents. Such other documents as may be reasonably
required by Title Company or may be agreed upon by Prudential and Meridian to
consummate the Transaction.
6.6 Delivery of Deeds. Effective upon delivery of the Deeds, actual and
exclusive possession of each Facility (subject only to the Permitted Exceptions)
and risk of loss to the Facilities shall pass from Prudential to Meridian.
ARTICLE 7 - CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of Prudential. Prudential's
obligation to close the Transaction is conditioned on all of the following, any
or all of which may be waived by Prudential by an express written waiver, at its
sole option:
(a) Representations True; Performance of Covenants. All
representations and warranties made by Meridian in this Agreement shall be true
and correct in all material respects on and as of the Closing Date, as if made
on and as of such date except to the extent they expressly relate to an earlier
date and Meridian shall have complied in all material respects with all
agreements required to be performed by it hereunder at or prior to the Closing
Date.
(b) Meridian's Deliveries Complete. Meridian shall have delivered
the Acquisition Cash and the Acquisition Common Stock required hereunder and all
of the documents to be executed by Meridian set forth in Section 6.5 and shall
have performed all other covenants, undertakings and obligations, and complied
with all conditions required by this Agreement, to be performed or complied with
by Meridian at or prior to the Closing.
(c) Opinion of Meridian's Counsel. On the Closing Date, Prudential
shall have received an opinion of Vinson & Elkins L.L.P., counsel for Meridian,
substantially in the form of EXHIBIT S attached hereto and incorporated herein
by this reference, and dated as of the Closing Date. In rendering the foregoing
opinion, such counsel may rely as to factual matters upon certificates or other
documents furnished by directors and officers of Meridian and by government
officials, and upon such other documents as such counsel deem appropriate as a
basis for such opinion. Such counsel may specify the jurisdictions in which they
are admitted to practice and that they are not admitted to practice in any other
jurisdiction and are not experts in the law of any other jurisdiction. To the
extent such opinion concerns the laws of any other such jurisdiction, such
counsel may either provide an opinion of counsel admitted to practice in such
jurisdiction (which counsel shall be reasonably acceptable to Prudential) in
lieu of its own opinion or rely upon the opinion of such counsel. Prudential
hereby agrees that the firm of Ballard
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Spahr Andrews & Ingersoll is acceptable to Prudential for purposes of providing
such opinions involving the laws of the State of Maryland. To the extent that
any opinion rendered by counsel admitted to practice in another jurisdiction or
relied upon by Vinson & Elkins L.L.P., including any exception or limitation
thereto, is materially different from the opinion to be delivered at Closing by
Vinson & Elkins L.L.P. such opinion shall be reasonably satisfactory to
Prudential and a copy of such opinion shall be delivered to Prudential at the
Closing.
(d) No Material Adverse Effect. There shall not have occurred any
event which has had, or could reasonably be expected to have, a Material Adverse
Effect subsequent to March 31, 1997.
(e) Meridian Closing Certificate. At the Closing Date, Prudential
shall have received a certificate, dated the Closing Date, signed by an
authorized officer of Meridian in such capacity and not individually to the
effect set forth in Subsections 7.1(a) and (d), and stating that the conditions
specified in this Section 7.1 have been satisfied at the Closing Date.
(f) Meridian Officers' Certificate/Incumbency. At the Closing Date,
Prudential shall have received a certificate, dated the Closing Date, signed by
the Secretary or an Assistant Secretary of Meridian in such capacity and not
individually and certifying (i) that attached thereto is a true, correct and
complete copy of (A) the Charter, (B) Bylaws and (C) resolutions duly adopted by
the Board of Directors of Meridian authorizing the execution and delivery of the
documents relating to the Transaction and the issuance and sale of the
Acquisition Common Stock, (ii) the incumbency of officers executing this
Agreement and the other documents relating to the Transaction, and (iii) that
attached thereto is a specimen of the share certificate for the Acquisition
Common Stock.
(g) Transaction Not Prohibited. 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.
(h) Meridian Shareholder Approval. The shareholders of Meridian
shall have granted any requisite approvals necessary in connection with the
issuance of the Acquisition Common Stock to Prudential.
(i) Other Approvals. All Approvals set forth in Schedule 8.1.5 and
Schedule 8.1.10 shall have been received or the applicable waiting periods shall
have expired.
(j) REOC Requirement. Prudential shall be reasonably satisfied that
Meridian is qualified as a REOC.
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(k) ERISA Compliance. Prudential shall be reasonably satisfied that
the Transaction complies in all respects with ERISA and would not be a
non-exempt prohibited transaction under ERISA or Section 4975 of the Code.
(l) Voting Rights. Meridian shall have taken all actions necessary
to ensure that Prudential shall have full voting rights with respect to the
Acquisition Common Stock (including, without limitation, obtaining approvals of
the Board of Directors of Meridian and amending the Charter or Bylaws of
Meridian, as applicable).
(m) Listing Approval. The Acquisition Common Stock shall have been
approved for listing on the NYSE.
7.2 Conditions Precedent to Obligations of Meridian. Meridian's obligation
to close the Transaction is conditioned on all of the following, any or all of
which may be waived by Meridian by an express written waiver, at its sole
option:
(a) Representations True; Performance of Covenants. Subject to the
provisions of Section 8.3, all representations and warranties made by Prudential
in this Agreement, as the same may be amended as provided in Section 8.3, shall
be true and correct in all material respects on and as of the Closing Date, as
if made on and as of such date except to the extent that they expressly relate
to an earlier date and Prudential shall have complied in all material respects
with all agreements required to be performed by it hereunder at or prior to the
Closing Date and Prudential shall have provided such evidence thereof as
Meridian may reasonably request.
(b) Title Conditions Satisfied. At the time of the Closing, title to
each Facility shall be as provided in Article 3 of this Agreement.
(c) Prudential's Deliveries Complete. Prudential shall have
delivered all of the documents and other items required pursuant to Section 6.4
and shall have performed all other covenants, undertakings and obligations, and
complied with all conditions required by this Agreement, to be performed or
complied with by Prudential at or prior to the Closing.
(d) Transaction Not Prohibited. 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.
(e) Stock Ownership Limitations. The Acquisition Common Stock owned
by Prudential will not cause Meridian to be treated as the owner of a 9.8% or
more interest in any tenant of Meridian listed on Annex 1 to the Excepted Holder
Agreement.
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(f) Prudential Authorization. At the Closing, Meridian shall have
received a certificate, dated the Closing Date, signed an officer of Prudential
in such capacity and not individually to the effect set forth in Subsection
8.2.1 and certifying that Prudential has received all necessary internal
approvals and authorizations necessary in connection with its purchase of the
Acquisition Common Stock.
7.3 Waiver of Failure of Conditions Precedent. At any time or times on or
before the date specified for the satisfaction of any condition, Meridian or
Prudential may elect in writing to waive the benefit of any such condition set
forth in Section 7.1 or Section 7.2, respectively. By closing the Transaction,
(i) Prudential shall be conclusively deemed to have waived the benefit of any
remaining unfulfilled conditions set forth in Section 7.1, and (ii) Meridian
shall be conclusively deemed to have waived the benefit of any remaining
unfulfilled conditions set forth in Section 7.2. Subject to Prudential's right
to extend the Closing as provided under this Agreement, in the event any of the
conditions set forth in Sections 7.1 or 7.2 are neither waived nor fulfilled by
September 30, 1997 or if such date is not a business day, the next business day
thereafter, Meridian or Prudential (as appropriate) may terminate their
obligations to perform at the Closing and otherwise under this Agreement in
accordance with the provisions of Article 10.
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES
.1 Meridian's Representations. Meridian represents and warrants to, and
covenants with, Prudential as of the date hereof as follows:
.1.1 Organization, Good Standing and Authority. (a) Meridian is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland and on or before the Closing Date shall be duly
qualified and in good standing in the States in which the Facilities are
located, except to the extent that Meridian's failure to obtain such
qualification or good standing would not individually or in the aggregate have a
Material Adverse Effect. Each Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control with
Meridian (each a "MERIDIAN AFFILIATE" and collectively, the "MERIDIAN
AFFILIATES") is a corporation or other entity duly organized, validly existing
and, with respect to each Meridian Affiliate that is a corporation, in good
standing under the laws of its state of incorporation or formation, as the case
may be. Meridian and each Meridian Affiliate is duly qualified or licensed and,
with respect to each Meridian Affiliate that is a corporation, in good standing
as a foreign corporation and authorized to do business, in each jurisdiction in
which the ownership or leasing of its properties or the character of its
operations makes such qualification, licensing or authorization necessary,
except where the failure to obtain such qualification, license, authorization or
good standing would not individually or in the aggregate have a Material Adverse
Effect. Meridian has all requisite corporate power and authority to execute and
deliver this Agreement and all documents contemplated hereunder to be executed
by Meridian, to perform its obligations hereunder and thereunder. Meridian and
each Meridian Affiliate has all requisite authority to own its assets and to
carry on its business as presently proposed to be conducted except where a lack
of such corporate power or authority could not reasonably be expected to have a
Material Adverse Effect.
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(a) Meridian has delivered to Prudential true, correct and complete
copies of its certificate of incorporation and Bylaws.
.1.2 Meridian's Authorization. This Agreement and all documents
contemplated hereunder to be executed by Meridian, have been duly authorized by
all requisite corporate action on the part of Meridian and are the valid and
legally binding obligation of Meridian, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity.
Neither the execution and delivery of this Agreement and all documents
contemplated hereunder to be executed by Meridian, nor the performance of the
obligations of Meridian hereunder or thereunder will result in the violation of
any provision of the Charter and Bylaws of Meridian or will conflict with any
order or decree of any court or governmental instrumentality of any nature by
which Meridian is bound.
.1.3 [Intentionally Omitted].
.1.4 Capitalization. As of the date hereof, the equity
capitalization of Meridian is as set forth in the balance sheet of Meridian
included in the 1997 Form 10-Q, except for any shares of Common Stock issued
under the Employee and Director Stock Plan since March 31, 1997. At the Closing
Date, all of the outstanding shares of stock of Meridian will be duly and
validly issued, fully paid and non-assessable and not subject to any preemptive
rights of other shareholders. Except as set forth in the Current SEC Reports and
in Schedule 8.1.4 or contemplated by the Employee and Director Stock Plan (i)
there are no outstanding securities or indebtedness convertible into,
exchangeable for, or carrying the right to acquire, Common Stock or other equity
securities of Meridian, or subscriptions, warrants, options, rights, or other
arrangements or commitments obligating Meridian to issue or dispose of any
Common Stock or other equity securities or any ownership therein, (ii) there is
no agreement or arrangement restricting the voting or transfer of any equity
securities of Meridian, and (iii) there are no outstanding contractual
obligations, commitments, understandings or arrangements of Meridian or any
Meridian Affiliates to repurchase, redeem or otherwise acquire, require or make
any payment in respect of any shares of equity securities of Meridian or such
Meridian Affiliate. Except with respect to statutory restrictions of general
application, as provided in Meridian's Third Amended and Restated Articles of
Incorporation (the "CHARTER") with respect to the Series B Preferred Stock and
the terms of Meridian's Second Amended and Restated Revolving Credit Agreement
with The First National Bank of Boston and certain other Banks named therein,
there are no legal, contractual or other restrictions on the payment of
dividends or other distributions or amounts on or in respect of Meridian's
Common Stock. As of the date hereof, except as contemplated by the Registration
Rights Agreement and the Investor Rights Agreement and except as set forth in
Schedule 8.1.4, there, there are no agreements or arrangements to which any of
Meridian or the Meridian Affiliates is a party pursuant to which Meridian is or
could be required to register shares of Common Stock or other securities under
the Securities Act.
.1.5 Conflicting Agreements and Other Matters. Neither Meridian nor
any Meridian Affiliate is a party to any contract or agreement or subject to any
articles of incorporation or other corporate restriction compliance with which
could reasonably be expected to have a Material Adverse Effect. Assuming the
filing of a Form D with the Commission, the listing of the Acquisition Common
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Stock on the NYSE and the accuracy of the representations and warranties of, and
the performance of the agreements of, Prudential set forth in Section 8.2 and
elsewhere herein, neither the execution and delivery of the documents relating
to the Transaction nor fulfillment of nor compliance with the terms and
provisions thereof, nor the issuance of the Acquisition Common Stock will (i)
violate any provision of any law presently in effect or in effect at the Closing
Date having applicability to Meridian or any Meridian Affiliate or any of their
properties including, without limitation, to, the Facilities, except such
violations as could not reasonably be expected to have a Material Adverse
Effect, (ii) conflict with or result in a breach of or constitute a default
under the Charter or Bylaws or any other organizational document of either
Meridian or any Meridian Affiliate, (iii) except as set forth in Schedule 8.1.5,
require any consent, approval or notice under, or conflict with or result in a
breach of, constitute a default or accelerate any right under, any note, bond,
mortgage, license, indenture or loan or credit agreement, or any other agreement
or instrument, to which Meridian or any Meridian Affiliate is a party or by
which any of their respective properties is bound, except such consents,
approvals, notices, conflicts, breaches or defaults as could not reasonably be
expected to have a Material Adverse Effect or (iv) result in, or require the
creation or imposition of, any mortgage, lien, pledge, encumbrance, charge or
security interest of any kind (each individually a "LIEN" and collectively
referred to as "LIENS") upon or with respect to any of the properties now owned
or hereafter acquired by Meridian or any Meridian Affiliate. Neither Meridian
nor any Meridian Affiliate is bound by any agreement which would impose upon
Prudential any personal obligation or personal liability which is greater than
the personal obligations and personal liabilities imposed upon Prudential under
this Agreement, the Registration Rights Agreement and the Excepted Holder
Agreement to be entered into by Meridian and Prudential. In addition, Meridian
is not aware of any facts or circumstances that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
.1.6 Due Execution, etc. This Agreement, constitutes, and when
executed and delivered by Meridian at the Closing each of the Registration
Rights Agreement and the Excepted Holder Agreement will constitute, a legal,
valid and binding obligation of Meridian, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
.1.7 Litigation, Proceeding, etc. There is no action, suit, notice
of violation, proceeding or investigation pending or, to the best knowledge of
Meridian, threatened against or affecting Meridian or any Meridian Affiliate or
any of their respective properties before or by any Governmental Entity which
(i) challenges the legality, validity or enforceability of any of the documents
relating to the Transaction or the Acquisition Common Stock or (ii) could
(individually or in the aggregate) reasonably be expected to have a Material
Adverse Effect or (iii) would (individually or in the aggregate) impair the
ability of Meridian to perform fully on a timely basis any obligations which it
has under any of the documents relating to the Transaction.
.1.8 No Default or Violation. Neither Meridian nor any Meridian
Affiliate is (i) in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, except such defaults or
violations as could not reasonably be expected to have a Material Adverse
Effect, (ii) in violation of any Order of any
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Governmental Entity, except for such violations as could not reasonably be
expected to have a Material Adverse Effect, or (iii) in violation of any law
which could reasonably be expected to (A) adversely affect the legality,
validity or enforceability of the documents relating to the Transaction, (B)
have a Material Adverse Effect or (C) adversely impair Meridian's ability or
obligation to perform fully on a timely basis any obligation which it has under
the documents relating to the Transaction.
.1.9 Status of Acquisition Common Stock. The issuance of the
Acquisition Common Stock has been duly authorized by all necessary corporate
action on the part of Meridian and such shares, when delivered to Prudential at
the Closing as part of the Purchase Price as provided herein, will be validly
issued, fully paid and non-assessable and the issuance and sale of the
Acquisition Common Stock is not and will not be subject to preemptive rights of
any other shareholder of Meridian.
.1.10 Governmental Consents, etc. Except as may be required under
any applicable securities law in connection with the performance by Meridian of
its obligations under the Registration Rights Agreement, and except for the
filing of a Form D with the Commission and the listing of the Acquisition Common
Stock on the NYSE and assuming the accuracy of the representations and
warranties of, and the performance of the agreements of, Prudential set forth
herein, no authorization, consent, approval, waiver, license, qualification or
formal exemption from, nor any filing, declaration, qualification or
registration with, any Governmental Entity or any securities exchange is
required in connection with the execution, delivery or performance by Meridian
of this Agreement and the issuance, sale or delivery of the Acquisition Common
Stock except for those that (i) have been made or obtained by Meridian as of the
date hereof or (ii) are set forth in Schedule 8.1.10 and by the Closing shall be
made or received by Meridian. At the Closing Date, Meridian will have made all
filings and given all notices to Governmental Entities and obtained all
necessary ordinances, registrations, declarations, approvals, orders, consents,
qualifications, franchises, certificates, permits and authorizations from any
Governmental Entity, to own or lease its properties and to conduct its
facilities and businesses as currently conducted, except where failure to do so
could not reasonably be expected to have a Material Adverse Effect. At the
Closing Date, all such registrations, declarations, approvals, orders, consents,
qualifications, franchises, certificates, permits and authorizations, the
failure of which to file, give notice of or obtain could reasonably be expected
to have a Material Adverse Effect, will be in full force and effect. The assets
of Meridian qualify as exempt assets for purposes of the Hart-Scott-Rodino Act
and no filing under the Hart-Scott-Rodino Act is required in connection with the
sale and issuance of the Acquisition Common Stock hereunder.
.1.11 Private Offering. Neither Meridian nor any person acting on
its behalf has taken or will take any action (including, without limitation, any
offering of any securities of Meridian under circumstances which would require
the integration of such offering with the offering of the Acquisition Common
Stock under the Securities Act) which might subject the offering, issuance or
sale of the Acquisition Common Stock to the registration requirements of Section
5 of the Securities Act.
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.1.12 ERISA.
(a) Meridian Status. Meridian currently qualifies as a "real
estate operating company" ("REOC") within the meaning of 29 C.F.R. Section
2510.3-101(e), and has qualified as a REOC during all valuation periods
within the meaning of 29 C.F.R. Section 2510.3-101(d)(5).
(b) Benefit Plans. To the extent applicable, the Benefit Plans
comply, in all material respects, with the requirements of ERISA and the
Code (including reporting requirements). Neither any Benefit Plan nor
Meridian nor any Subsidiary has incurred any liability or penalty under
Section 4975 of the Code or Section 502(i) of ERISA. Each 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. There are no pending, or to knowledge of Meridian threatened,
material claims (other than claims for benefits pursuant to the terms of
any such plan) against or otherwise involving any of the Benefit Plans and
no action has been brought against or with respect to any Benefit Plan,
and neither Meridian nor any Subsidiary of Meridian has incurred any
material liability to any party with respect to any Benefit Plan. All
contributions required to be made to the Benefit Plans have been made or
provided for as of the date hereof. No Benefit Plan is subject to Title IV
of ERISA and neither Meridian nor any Subsidiary 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 8.1.12, (i) the term Meridian includes any
entity required to be treated as a single employer with Meridian pursuant
to Code Section 414(b), (c), (m) or (o) and (ii) provisions of ERISA or
the Code include regulations prescribed under such provisions.
(c) Arms' Length Transaction. The terms of this Transaction
have been negotiated and determined at arms'-length, and are not less
favorable to Prudential than the terms that would be available generally
in an arms'-length transaction between unrelated parties.
(d) Meridian is not a party in interest, as defined in Section
3(14) of ERISA, with respect to any employee benefit plan set forth in
Schedule 8.2.9.
Meridian hereby agrees to execute such documents or provide such information as
Prudential may require in connection with the forgoing representations in this
Section 8.1.12. Prudential shall not be obligated to consummate the Transaction
unless and until Prudential is satisfied that the Transaction complies in all
respects with ERISA. The obligations of Meridian under this section shall
survive the Closing and shall not be merged therein.
.1.13 Insurance. At Closing, Meridian and the Meridian Affiliates
will have (i) with respect to each property owned by Meridian (including,
without limitation, the Facilities), "all risk" property insurance, including
fire, flood, earthquake, extended coverage and rental loss insurance and (ii)
with respect to Meridian, the Meridian Affiliates and each property owned by
Meridian (including, without limitation, the Facilities), general commercial
liability insurance, in each case under such terms and in such amounts and
covering such risks that are customary for properties and businesses similar to
those of Meridian and the Meridian Affiliates. There are currently no
outstanding material losses for which
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<PAGE> 29
Meridian or any of the Meridian Affiliates has failed to give or present notice
or claim under any policy. Policies for all the insurance are in full force and
effect and none of Meridian or Meridian Affiliates is in default in any material
respect under any of the policies.
.1.14 Information Provided. Neither this Agreement, the schedules
and exhibits hereto, the Current SEC Reports nor any other written document
delivered to Prudential in connection with the transactions contemplated hereby
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements herein or therein, as the case may be, in light
of the circumstances under which it was made, not misleading, and all material
information regarding Meridian and the Meridian Affiliates is provided therein.
.1.15 No Other Liabilities. Except as set forth in Schedule 8.1.15,
neither Meridian nor any Meridian Affiliate will have any material liability,
whether absolute, accrued, contingent or otherwise, except liabilities (i)
reflected on the consolidated balance sheet of Meridian and the Meridian
Affiliates as at March 31, 1997, or (ii) liabilities that (1) are incurred by
Meridian and the Meridian Affiliates after March 31, 1997 in the ordinary course
of business and (2) could not reasonably be expected to have a Material Adverse
Effect.
.1.16 Taxes; REIT Status. Each of Meridian and the Meridian
Affiliates has filed all tax returns that are required to be filed with any
Governmental Entity and has paid all taxes due pursuant to the tax returns or
any assessment received by it or otherwise required to be paid, except taxes
being contested in good faith by appropriate proceedings and for which adequate
reserves or other provisions are maintained, and except for the filing of Tax
Returns as to which the failure to file could not, individually or in the
aggregate, have a Material Adverse Effect. Meridian (i) elected to be taxed as a
"real estate investment trust" as defined in Section 856 of the Code ("REIT")
effective for each of the taxable years since Meridian has been incorporated,
other than the 1996 taxable year (as to which Meridian covenants that it will
timely make such election) (ii) has not revoked such election, (iii) qualifies
for taxation as a REIT for each such taxable year and for its current taxable
year and (iv) has not sold or otherwise disposed of any assets which could give
rise to a material amount of tax pursuant to any election made by Meridian under
Notice 88-19, 1988-1 CB486 and does not expect to effect any such sale or other
disposition.
.1.17 Compliance with Laws. Neither Meridian nor any Meridian
Affiliate has been in or is in, and none of them has received notice of,
violation of or default with respect to, any law or any decision, ruling, order
or award of any arbitrator applicable to it or its business, properties or
operations, except for violations or defaults that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
.1.18 Meridian Affiliates.
(i) The 1996 Form 10-K sets forth a correct and complete list
of all Meridian Affiliates as of the date hereof.
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(ii) As of the date hereof, except as set forth on Schedule
8.1.18, all outstanding shares of capital stock or other evidences of equity
ownership of each Meridian Affiliate are duly authorized, validly issued, fully
paid and nonassessable and are owned directly or indirectly, beneficially and of
record by Meridian, free and clear of all Liens.
.1.19 Material Contracts. (a) The 1997 Form 10-Q, the 1996 Form 10-K
and Schedule 8.1.4 includes a correct and complete list of the following with
respect to Meridian and any Meridian Affiliate: (1) agreements with any
shareholder having beneficial ownership of 5% or more of the shares of Common
Stock of Meridian or such Meridian Affiliate then issued and outstanding,
director or officer of Meridian or such Meridian Affiliate and all shareholders'
agreements and voting trusts; and (2) agreements not made in the ordinary course
of business and which could reasonably be expected to result in a Material
Adverse Effect.
(b) All property management agreements to which Meridian is a party
provide for a right (without payment of any penalty or termination fee) of
Meridian to terminate such agreement upon a 30-day prior written notice and
Meridian shall deliver each such agreement reasonably requested by Prudential
within ten (10) days after the date of such request.
.1.20 No Restrictions on Acquisition Common Stock. As of the Closing
Date, subject to satisfaction of Section 7.1(k), no provision of the Charter or
Bylaws of Meridian, any other agreement, indenture or other instrument to which
Meridian or its properties are subject, or any law applicable to Meridian, (i),
except as provided in the Excepted Holder Agreement, directly or indirectly
restricts or impairs the right or ability of Prudential to vote, or otherwise to
exercise the rights and receive the benefits of a shareholder with respect to
the Acquisition Common Stock, including without limitation, restrictions based
upon the size of the security holdings of Prudential, the business in which it
is engaged or other considerations applicable to it and not to security holders
generally, or (ii) provides any other security holder of Meridian with any
preemptive rights.
.1.21 SEC Documents. Meridian has filed with the Securities and
Exchange Commission (the "COMMISSION") all reports, schedules, forms, statements
and other documents required by the Exchange Act to be filed by Meridian
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "SEC DOCUMENTS"). Meridian has
delivered or made available to Prudential all SEC Documents. As of their
respective dates, except to the extent revised or superseded by a subsequent
filing with the Commission, the SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and none of the SEC Documents (including any and all financial statements
included therein) as of such dates contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The consolidated financial statements
of Meridian and Meridian Affiliates included in all SEC Documents, including any
amendments thereto (the "SEC FINANCIAL STATEMENTS"), comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto.
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.1.22 No Merger Agreements. As of the date hereof, except as set
forth in Schedule 8.1.22, none of Meridian or Meridian Affiliates has entered
into any agreement with any person or entity which has not been terminated as of
the date of this Agreement and under which there remains any liability or
obligation thereof with respect to a merger or consolidation with any of
Meridian or Meridian Affiliates, or any other acquisition of substantial amount
of the assets of Meridian or Meridian Affiliates.
.1.23 Certain Actions by Meridian. Meridian has not: (i) made a
general assignment for the benefit of creditors; (ii) filed any voluntary
petition in bankruptcy or suffered the filing of any involuntary petition by
Meridian's creditors; (iii) suffered the appointment of a receiver to take
possession of all or substantially all of Meridian's assets, (iv) suffered the
attachment or other judicial seizure of all, or substantially all, of Meridian's
assets, (v) admitted in writing Meridian's inability to pay its debts as they
come due; or (vi) made an offer of settlement, extension, or composition to its
creditors generally.
.1.24 Facilities Sold "AS-IS". Except as expressly set forth herein,
Meridian acknowledges and agrees that each Facility is to be sold on an "As-Is,
Where-Is" basis, and Meridian will rely entirely upon its own inspections and
analysis of the Facilities. Without in any way limiting the foregoing, Meridian
hereby specifically acknowledges and agrees that:
(A) THE FACILITIES SHALL BE SOLD, AND MERIDIAN SHALL ACCEPT POSSESSION
OF EACH FACILITY ON THE CLOSING DATE, "AS IS, WHERE IS, WITH ALL
FAULTS", WITH NO RIGHT OF SETOFF OR REDUCTION IN THE PURCHASE PRICE;
(B) EXCEPT FOR PRUDENTIAL'S REPRESENTATIONS AND WARRANTIES SET FORTH IN
SECTION 8.2 HEREOF, THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
ANY ESTOPPEL LETTER DELIVERED BY SELLER IN ACCORDANCE WITH THE TERMS
OF SECTION 6.4 HEREOF, AND THE LIMITED WARRANTIES OF TITLE TO BE
GIVEN IN THE DEEDS (HEREIN COLLECTIVELY CALLED THE "PRUDENTIAL'S
WARRANTIES"), NONE OF PRUDENTIAL, ITS COUNSEL, ITS SALES AGENTS, NOR
ANY PARTNER, OFFICER, DIRECTOR, EMPLOYEE, AGENT OR ATTORNEY OF
PRUDENTIAL, ITS COUNSEL, BROKER, OR ITS SALES AGENTS, NOR ANY OTHER
PARTY RELATED IN ANY WAY TO ANY OF THE FOREGOING (ALL OF WHICH
PARTIES ARE HEREIN COLLECTIVELY CALLED THE "PRUDENTIAL PARTIES")
HAVE OR SHALL BE DEEMED TO HAVE MADE ANY VERBAL OR WRITTEN
REPRESENTATIONS, WARRANTIES, PROMISES OR GUARANTEES (WHETHER
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) TO MERIDIAN WITH RESPECT
TO ANY FACILITY, ANY MATTER SET FORTH, CONTAINED OR ADDRESSED IN THE
DOCUMENTS (INCLUDING, BUT NOT LIMITED TO, THE ACCURACY AND
COMPLETENESS THEREOF) OR THE RESULTS OF THE INVESTIGATIONS; AND
MERIDIAN HAS CONFIRMED INDEPENDENTLY ALL INFORMATION THAT IT
CONSIDERS MATERIAL TO ITS PURCHASE OF THE FACILITIES OR THE
TRANSACTION.
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<PAGE> 32
(C) MERIDIAN SPECIFICALLY ACKNOWLEDGES THAT, EXCEPT FOR PRUDENTIAL'S
WARRANTIES (AS SUCH TERM IS HEREIN DEFINED), MERIDIAN IS NOT RELYING
ON (AND PRUDENTIAL AND EACH OF THE OTHER PRUDENTIAL PARTIES DOES
HEREBY DISCLAIM AND RENOUNCE) ANY REPRESENTATIONS OR WARRANTIES OF
ANY KIND OR NATURE WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, FROM PRUDENTIAL OR ANY OTHER
PRUDENTIAL PARTIES, AS TO: (I) THE OPERATION OF ANY FACILITY OR THE
INCOME POTENTIAL, USES, OR MERCHANTABILITY OR FITNESS OF ANY PORTION
OF ANY SUCH FACILITY FOR A PARTICULAR PURPOSE; (II) THE PHYSICAL
CONDITION OF ANY FACILITY OR THE CONDITION OR SAFETY OF ANY FACILITY
OR ANY IMPROVEMENTS THEREON, INCLUDING, BUT NOT LIMITED TO,
PLUMBING, SEWER, HEATING AND ELECTRICAL SYSTEMS, ROOFING, AIR
CONDITIONING, FOUNDATIONS, SOILS AND GEOLOGY, INCLUDING HAZARDOUS
MATERIALS, LOT SIZE, OR SUITABILITY OF SUCH FACILITY OR ANY
IMPROVEMENTS THEREON FOR A PARTICULAR PURPOSE; (III) THE PRESENCE OR
ABSENCE, LOCATION OR SCOPE OF ANY HAZARDOUS MATERIALS IN, AT, OR
UNDER ANY FACILITY; (IV) WHETHER THE APPLIANCES, IF ANY, PLUMBING OR
UTILITIES ARE IN WORKING ORDER; (V) THE HABITABILITY OR SUITABILITY
FOR OCCUPANCY OF ANY STRUCTURE AND THE QUALITY OF ITS CONSTRUCTION;
(VI) WHETHER THE IMPROVEMENTS ARE STRUCTURALLY SOUND, IN GOOD
CONDITION, OR IN COMPLIANCE WITH APPLICABLE MUNICIPAL, COUNTY, STATE
OR FEDERAL STATUTES, CODES OR ORDINANCES; (VII) THE ACCURACY OF ANY
STATEMENTS, CALCULATIONS OR CONDITIONS STATED OR SET FORTH IN
PRUDENTIAL'S BOOKS AND RECORDS CONCERNING ANY FACILITY OR SET FORTH
IN ANY OF PRUDENTIAL'S OFFERING MATERIALS WITH RESPECT TO THE
FACILITIES; (VIII) THE DIMENSIONS OF ANY FACILITY OR THE ACCURACY OF
ANY FLOOR PLANS, SQUARE FOOTAGE, LEASE ABSTRACTS, SKETCHES, REVENUE
OR EXPENSE PROJECTIONS RELATED TO ANY FACILITY; (IX) THE OPERATING
PERFORMANCE, THE INCOME AND EXPENSES OF ANY FACILITY OR THE ECONOMIC
STATUS OF ANY FACILITY; (X) THE ABILITY OF MERIDIAN TO OBTAIN ANY
AND ALL NECESSARY GOVERNMENTAL APPROVALS OR PERMITS FOR MERIDIAN'S
INTENDED USE AND DEVELOPMENT OF ANY FACILITY OR ANY OF THE
DOCUMENTS; (XI) THE LEASING STATUS OF ANY FACILITY OR THE INTENTIONS
OF ANY PARTIES WITH RESPECT TO THE NEGOTIATION AND/OR EXECUTION OF
ANY LEASE FOR ANY PORTION OF ANY FACILITY; AND (XII) PRUDENTIAL'S
OWNERSHIP OF ANY PORTION OF ANY FACILITY. MERIDIAN FURTHER
ACKNOWLEDGES AND AGREES THAT PRUDENTIAL IS UNDER NO DUTY TO MAKE ANY
AFFIRMATIVE DISCLOSURES OR INQUIRY REGARDING ANY MATTER WHICH MAY OR
MAY NOT BE KNOWN TO PRUDENTIAL, ITS OFFICERS, DIRECTORS,
CONTRACTORS, AGENTS OR EMPLOYEES.
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(D) ANY REPORTS, REPAIRS OR WORK REQUIRED BY MERIDIAN ARE THE SOLE
RESPONSIBILITY OF MERIDIAN, AND MERIDIAN AGREES THAT THERE IS NO
OBLIGATION ON THE PART OF PRUDENTIAL TO MAKE ANY CHANGES,
ALTERATIONS OR REPAIRS TO ANY FACILITY OR TO CURE ANY VIOLATIONS
OF LAW OR TO COMPLY WITH THE REQUIREMENTS OF ANY INSURER.
MERIDIAN IS SOLELY RESPONSIBLE FOR OBTAINING ANY CERTIFICATE OF
OCCUPANCY OR ANY OTHER APPROVAL OR PERMIT NECESSARY FOR
TRANSFER OR OCCUPANCY OF THE FACILITIES AND FOR ANY REPAIRS OR
ALTERATIONS NECESSARY TO OBTAIN THE SAME, ALL AT MERIDIAN'S SOLE
COST AND EXPENSE.
(E) MERIDIAN, FOR MERIDIAN AND MERIDIAN'S SUCCESSORS AND ASSIGNS,
HEREBY RELEASES PRUDENTIAL FROM, AND WAIVES ALL CLAIMS AND
LIABILITY AGAINST PRUDENTIAL FOR OR ATTRIBUTABLE TO THE
FOLLOWING:
(i) ANY AND ALL STATEMENTS OR OPINIONS HERETOFORE OR HEREAFTER
MADE, OR INFORMATION FURNISHED, BY PRUDENTIAL PARTIES TO
MERIDIAN OR ITS AGENTS OR REPRESENTATIVES, EXCEPT FOR
PRUDENTIAL'S WARRANTIES (AS SUCH TERM IS HEREIN DEFINED); AND
(ii) ANY STRUCTURAL, PHYSICAL OR ENVIRONMENTAL CONDITION AT ANY
FACILITY, INCLUDING WITHOUT LIMITATION, CLAIMS OR LIABILITIES
RELATING TO THE PRESENCE, DISCOVERY OR REMOVAL OF ANY
HAZARDOUS MATERIALS IN, AT, ABOUT OR UNDER ANY FACILITY, OR
FOR, CONNECTED WITH OR ARISING OUT OF ANY AND ALL CLAIMS OR
CAUSES OF ACTION BASED UPON CERCLA (COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF
1980, 42 U.S.C. "9601 ET SEQ., AS AMENDED BY SUPERFUND
AMENDMENT AND REAUTHORIZATION ACT OF 1986 AND AS MAY BE
FURTHER AMENDED FROM TIME TO TIME), THE RESOURCE CONSERVATION
AND RECOVERY ACT OF 1976, 42 U.S.C. "6901 ET SEQ., OR ANY
RELATED CLAIMS OR CAUSES OF ACTION OR ANY OTHER FEDERAL OR
STATE BASED STATUTORY OR REGULATORY CAUSES OF ACTION FOR
ENVIRONMENTAL CONTAMINATION AT, IN OR UNDER ANY FACILITY.
(F) EXCEPT AS EXPRESSLY PROVIDED TO THE CONTRARY IN THIS SUBSECTION
8.1.24(F), MERIDIAN HEREBY ASSUMES AND TAKES RESPONSIBILITY AND
LIABILITY FOR ALL LOSSES, COSTS, CLAIMS, LIABILITIES, EXPENSES,
DEMANDS AND OBLIGATIONS OF ANY KIND OR NATURE WHATSOEVER
ATTRIBUTABLE TO THE FACILITIES, WHETHER ARISING OR ACCRUING BEFORE
OR AFTER THE DATE HEREOF AND WHETHER ATTRIBUTABLE TO EVENTS OR
CIRCUMSTANCES WHICH HAVE HERETOFORE OR MAY HEREAFTER OCCUR,
INCLUDING, WITHOUT
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LIMITATION, ALL LOSSES, COSTS, CLAIMS, LIABILITIES, EXPENSES AND
DEMANDS WITH RESPECT TO THE STRUCTURAL, PHYSICAL OR, EXCEPT AS
PROVIDED IN CLAUSES (iii) AND (iv) BELOW, ENVIRONMENTAL CONDITION OF
ANY FACILITY (INCLUDING, WITHOUT LIMITATION, ANY HAZARDOUS
MATERIALS, IN AT, UNDER OR ABOUT ANY FACILITY) AND MERIDIAN AGREES
TO INDEMNIFY, DEFEND AND HOLD HARMLESS PRUDENTIAL FROM ANY LOSS,
COST, CLAIM, LIABILITY, EXPENSE OR DEMAND WITH RESPECT THERETO. BY
ITS EXECUTION OF THIS AGREEMENT, MERIDIAN HEREBY AGREES THAT IT
SHALL AT ALL TIMES COMPLY WITH ALL APPLICABLE FEDERAL, STATE AND
LOCAL LAWS, RULES AND REGULATIONS INVOLVING HAZARDOUS MATERIALS IN,
AT, UNDER OR ABOUT THE FACILITY OR THEIR REMOVAL FROM ANY FACILITY.
NOTWITHSTANDING THE FOREGOING, HOWEVER, MERIDIAN DOES NOT ASSUME
(AND SHALL NOT BE REQUIRED TO INDEMNIFY PRUDENTIAL FOR) ANY
RESPONSIBILITY OR LIABILITY ARISING OUT OF OR IN CONNECTION WITH:
(i) ANY CLAIMS MADE OR CAUSES OF ACTION BROUGHT BY ANY THIRD PARTY
UNRELATED TO MERIDIAN ALLEGING A DEFAULT OR BREACH BY
PRUDENTIAL WHICH IS ALLEGED TO HAVE OCCURRED PRIOR TO THE
CLOSING DATE UNDER ANY CONTRACT OR AGREEMENT (OTHER THAN ANY
LEASE) ENTERED INTO BETWEEN PRUDENTIAL AND ANY SUCH CLAIMANT;
PROVIDED, HOWEVER, THAT MERIDIAN SHALL BE DEEMED TO ASSUME AND
SHALL INDEMNIFY PRUDENTIAL IN ACCORDANCE WITH THE TERMS OF
THIS SUBSECTION 8.1.24(F) WITH RESPECT TO ANY SUCH CLAIMS OR
CAUSES OF ACTION TO THE EXTENT THAT THE SAME RELATE TO ANY
ALLEGED DEFAULTS OR THE BREACH OF ANY OF THE LEASES, IT BEING
UNDERSTOOD AND AGREED BY MERIDIAN AND PRUDENTIAL THAT MERIDIAN
SHALL RELY SOLELY UPON ITS DUE DILIGENCE WITH RESPECT TO THE
FACILITIES, PRUDENTIAL'S WARRANTIES AND SUCH TENANT ESTOPPEL
CERTIFICATES AS MERIDIAN MAY RECEIVE ON OR BEFORE THE CLOSING
DATE WITH RESPECT TO PROTECTION AGAINST ANY ALLEGED BREACH OR
DEFAULT BY PRUDENTIAL UNDER ANY OF THE LEASES THAT MAY HAVE
OCCURRED PRIOR TO THE CLOSING DATE; OR
(ii) ANY TORT CLAIMS MADE OR BROUGHT BY A THIRD PARTY UNRELATED TO
MERIDIAN WHICH ARISE FROM ANY ACTS OR OMISSIONS OF PRUDENTIAL
WHICH OCCURRED DURING THE TIME THAT PRUDENTIAL OWNED FEE TITLE
TO THE FACILITY;
(iii) ANY CLAIMS MADE OR CAUSES OF ACTION BROUGHT BY ANY
GOVERNMENTAL ENTITY WITH RESPECT TO HAZARDOUS MATERIALS
DEPOSITED OR PLACED IN, AT ABOUT OR UNDER THE FACILITIES
DURING THE TIME THAT PRUDENTIAL OWNED FEE TITLE TO THE
FACILITIES UNLESS:
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(a) MERIDIAN KNOWS OR IS DEEMED TO KNOW (AS DEFINED IN
SUBSECTION 8.3.3 HEREOF) OF SUCH CLAIM OR CAUSE OF
ACTION ON OR BEFORE THE CLOSING DATE; OR
(b) THE GOVERNMENTAL ENTITY THAT BRINGS ANY SUCH CLAIMS OR
CAUSES OF ACTION IS AN OWNER OR TENANT OF THE FACILITY
THAT SUCH CLAIM OR CAUSE OF ACTION RELATES TO AT THE
TIME SUCH CLAIM OR CAUSE OF ACTION IS BROUGHT OR MADE.
(iv) ANY CLAIMS MADE OR CAUSES OF ACTION BROUGHT BY ANY THIRD PARTY
UNRELATED TO MERIDIAN (EXCLUDING GOVERNMENTAL ENTITIES) WITH
RESPECT TO HAZARDOUS MATERIALS DEPOSITED OR PLACED IN, AT,
ABOUT OR UNDER THE FACILITY PRIOR TO THE CLOSING DATE.
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Meridian is familiar with California Civil Code Section 1542 the text of
which is set forth as follows:
Section 1542 of the California Civil Code provides as follows: "A
general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor."
For a valuable consideration, Meridian hereby waives its rights, if any, under
Section 1541.
MERIDIAN'S INITIALS ________________
The representations and warranties of Meridian in this Agreement shall survive
the Closing and be true and correct in all material respects on and as of the
Closing as if such representations and warranties were made on and as such date
(subject to revisions to reflect changed circumstances or knowledge obtained
between execution of the Agreement and the Closing.
.2 Prudential's Representations. Prudential represents and warrants to
Meridian as of the date hereof as follows:
.2.1 Prudential's Authorization. Prudential is (a) duly organized
(or formed), validly existing and in good standing under the laws of its State
of organization and the States in which the Facilities are located, (b) is
authorized to consummate the Transaction and fulfill all of its obligations
hereunder and under all documents contemplated hereunder to be executed by
Prudential, and (c) has all necessary power to execute and deliver this
Agreement and all documents contemplated hereunder to be executed by Prudential
and to perform its obligations hereunder and thereunder. This Agreement and all
documents contemplated hereunder to be executed by Prudential have been duly
authorized by all requisite corporate action on the part of Prudential and are
the valid and legally binding obligation of Prudential enforceable in accordance
with their respective terms. Neither the execution and delivery of this
Agreement and all documents contemplated hereunder to be executed by Prudential
nor the performance of the obligations of Prudential hereunder or thereunder
will result in the violation of any provision of the articles of incorporation
and by-laws of Prudential or will conflict with any order or decree of any court
or governmental instrumentality of any nature by which Prudential is bound.
.2.2 Investment Intent. Prudential represents and warrants to
Meridian that the Acquisition Common Stock to be acquired by it hereunder is
being acquired for its own account for investment and with no intention of
distributing or reselling such Acquisition Common Stock or any part thereof or
interest therein in any transaction which would be in violation of the
securities laws of the United States of America or any State or any foreign
country or jurisdiction.
.2.3 Transfer Restrictions. If Prudential should decide to dispose
of any of the Acquisition Common Stock, Prudential understands and agrees that
it may do so only pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from registration under the
Securities Act. In
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connection with any offer, resale, pledge or other transfer (individually and
collectively, a "TRANSFER") of any Acquisition Common Stock other than pursuant
to an effective registration statement, Meridian may require that the transferor
of such Acquisition Common Stock provide to Meridian an opinion of counsel which
opinion shall be reasonably satisfactory in form and substance to Meridian, to
the effect that such Transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act and any State or foreign securities laws. Prudential agrees to the
imprinting, so long as appropriate, of substantially the following legend on
certificates representing the Acquisition Common Stock:
THE SHARES OF COMMON STOCK (THE "SHARES") EVIDENCED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER
AGREES THAT IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER
(INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER") THE SHARES EVIDENCED HEREBY,
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT SUCH AS THE EXEMPTION SET FORTH IN RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE). IF THE PROPOSED TRANSFER IS TO BE MADE
OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO MERIDIAN AND THE TRANSFER AGENT SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAW.
The legend set forth above may be removed if and when the Acquisition
Common Stock represented by such certificate are disposed of pursuant to an
effective registration statement under the Securities Act or the opinion of
counsel referred to above has been provided to Meridian. The share certificates
shall also bear legends regarding permitted ownership levels of Acquisition
Common Stock and any additional legends required by applicable Federal, State or
foreign securities Laws or necessary under applicable tax Laws, which legends
may be removed when, in the opinion of counsel to Meridian, the same are no
longer required under the Charter or the applicable requirements of such
securities or tax Laws. Prudential agrees that, in connection with any Transfer
of Acquisition Common Stock by it pursuant to an effective registration
statement under the Securities Act, Prudential will comply with all prospectus
delivery requirements of the Securities Act. Meridian makes no representation,
warranty or agreement as to the availability of any exemption from registration
under the Securities Act with respect to any resale of Acquisition Common Stock.
.2.4 Stop Transfer Instruction. Prudential agrees that Meridian
shall be entitled to make a notation on its records and give instructions to any
transfer agent for the Acquisition Common Stock in order to implement the
restrictions on transfer set forth in this Agreement.
.2.5 Prudential Status. Prudential represents and warrants to, and
covenants and agrees with, Meridian that (i) at the time Prudential was offered
the Acquisition Common Stock, Prudential was, (ii) at the date hereof,
Prudential is, and (iii) at the Closing Date, Prudential will be, a "qualified
institutional buyer" as
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defined in Rule 144A under the Securities Act or an "accredited investor" as
defined in Rule 501 under the Securities Act, and has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating Meridian and an investment in the Acquisition Common
Stock, and is able to bear the economic risk of such investment.
.2.6 Authority. Prudential represents and warrants to Meridian that,
assuming the accuracy of the representation of Meridian in Section 8.1.10
hereof, (i) as of the Closing Date, the purchase of the Acquisition Common Stock
to be purchased by it has been duly and properly authorized and this Agreement
has been duly executed and delivered by it or on its behalf and constitutes the
valid and legally binding obligation of Prudential, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity; (ii) the purchase of the Acquisition Common Stock to be purchased by
it does not conflict with or violate (A) its articles of incorporation or bylaws
or (B) any Law applicable to it in a manner that could materially hinder or
impair the completion of the transactions contemplated hereby; and (iii) the
purchase of Acquisition Common Stock to be purchased by it does not impose any
penalty or other onerous condition on Prudential that could materially hinder or
impact the completion of the transactions contemplated hereby.
.2.7 Access to Information. Prudential acknowledges as of the date
hereof that it has been afforded: (i) the opportunity to ask such questions as
it has deemed necessary of, and to receive answers from, representatives of
Meridian concerning the terms and conditions of the offering of the Acquisition
Common Stock and the merits and risks of investing in the Acquisition Common
Stock; (ii) access to information about Meridian, Meridian's financial
condition, pro forma results of operations, business properties, management and
prospects sufficient to enable it to evaluate its investment in the Acquisition
Common Stock; and (iii) the opportunity to obtain such additional information
which Meridian possesses or can acquire without unreasonable effort or expense
that is necessary to verify the accuracy and completeness of the information
contained in the SEC Documents.
.2.8 Reliance. Prudential also understands and acknowledges that (i)
the Acquisition Common Stock is being offered and sold without registration
under the Securities Act in a transaction that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption
depends in part on, and that Meridian and, for purposes of the opinion to be
delivered to Prudential pursuant to Section 7.1(c) hereof, Vinson & Elkins
L.L.P. will rely upon, the accuracy and truthfulness of the foregoing
representations and Prudential hereby consents to such reliance.
.2.9 Separate Account Investors. Prudential represents that each
employee benefit plan, as defined in Section 3(3) of ERISA, that has an interest
in a separate account on behalf of which Prudential is acting in this
Transaction is set forth in Schedule 8.2.9.
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.2.10 Other Prudential's Representations. To Prudential's knowledge
(as such term is hereinafter defined):
(a) Except as listed in EXHIBIT O attached hereto and
incorporated herein by this reference, Prudential has not received (i) any
written notice of pending litigation against Prudential which would, if
determined adversely to Prudential, adversely affect the Facilities, or (ii) any
written notice of pending or threatened condemnation with respect to any of the
Facilities.
(b) Prudential has not entered into any service, supply,
maintenance or utility contracts affecting any Facility which will be binding
upon Meridian after the Closing other than the Contracts listed in EXHIBIT B
attached hereto.
(c) Set forth in EXHIBIT C attached hereto is a list of (i)
all certificates of occupancy, licenses and permits in Prudential's possession
that are necessary and material to the operation of the Facilities and (ii) all
personal property owned by Prudential that is necessary and material to the
operation of the Facilities.
(d) As of the date of this Agreement, the only tenants of each
Facility are the tenants listed with respect to each such Facility in EXHIBIT I
attached hereto and incorporated herein by this reference.
(e) Except as listed in EXHIBIT O attached hereto, Prudential
has not received any written notice from any governmental authority of any
violation of any zoning, building, fire, or health code, statute, ordinance,
rule or regulation applicable to any of the Facilities. Notwithstanding the
foregoing, however, Prudential shall not be required to disclose to Meridian
(and shall not be deemed to make any representation or warranty with respect to)
any notices relating to the environmental condition of any of the Facilities or
Hazardous Materials in, at, under or about any of the Facilities, it being
acknowledged and agreed to by both Meridian and Prudential that Meridian will
investigate and satisfy itself with regard to the environmental condition of
each Facility and the presence or absence of Hazardous Materials during the Due
Diligence Period, provided, however, that pursuant to and in accordance with the
terms and limitations of Article 4 of this Agreement, in order to assist
Meridian in its investigation of the environmental condition of the Facilities,
Prudential has agreed (during the Due Diligence Period) to make available to
Meridian and otherwise allow Meridian access to, certain non-confidential
information regarding the Facilities, including, but not limited to,
environmental reports of the Facilities.
.2.11 No Other Agreements. Prudential has not entered into any
currently effective agreement to sell or dispose of all of its interest in and
to any of the Facilities (except for this Agreement and any options to purchase
any Facility or a portion thereof that may be contained in any of the Leases).
.3 General Provisions.
.3.1 No Representation As to Leases. Prudential does not represent
or warrant that any particular Lease or Leases will be in force or effect on the
Closing Date or that the tenants will have performed their obligations
thereunder.
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.3.2 Definition of "Prudential's Knowledge". All references in this
Agreement to "PRUDENTIAL'S KNOWLEDGE" or words of similar import shall refer
only to the actual knowledge of the Designated Employee with respect to each
Facility and shall not be construed to refer to the knowledge of the Designated
Employee of any other Facility, or any other officer, agent or employee of
Prudential or any affiliate thereof, or to impose or have imposed upon the
Designated Employee any duty to investigate the matters to which such knowledge,
or the absence thereof, pertains, including, but not limited to, the contents of
the files, documents and materials made available to or disclosed to Meridian or
the contents of files maintained by the Designated Employee. The "DESIGNATED
EMPLOYEE" with respect to each Facility is the person designated as such next to
the name of such Facility on EXHIBIT P attached hereto and incorporated herein
by this reference. There shall be no personal liability on the part of any
Designated Employee arising out of any representations or warranties made
herein.
.3.3 Prudential's Representations Deemed Modified. To the extent
that Meridian knows or is deemed to know prior to the expiration of the Due
Diligence Period that Prudential's representations and warranties are
inaccurate, untrue or incorrect in any way, such representations and warranties
shall be deemed modified to reflect Meridian's knowledge or deemed knowledge, as
the case may be. For purposes of this Agreement, Meridian shall be "deemed to
know" that a representation or warranty was untrue, inaccurate or incorrect to
the extent that this Agreement, the Documents, any estoppel certificate executed
by any tenant of any Facility and delivered to Meridian, or any studies, tests,
reports, or analyses prepared by or for Meridian or any of its employees,
agents, representatives or attorneys (all of the foregoing being herein
collectively called the "MERIDIAN'S REPRESENTATIVES") or otherwise obtained by
Meridian or Meridian's Representatives contains information which is
inconsistent with such representation or warranty.
.3.4 Notice of Breach; Prudential's Right to Cure. If after the date
hereof but prior to the Closing, Meridian or any Meridian's Representative
obtains actual knowledge that any of the representations or warranties made
herein by Prudential are untrue, inaccurate or incorrect in any material
respect, Meridian shall give Prudential written notice thereof within five (5)
business days of obtaining such knowledge (but, in any event, prior to the
Closing). If at or prior to the Closing, Prudential obtains knowledge that any
of the representations or warranties made herein by Prudential are untrue,
inaccurate or incorrect in any material respect, Prudential shall give Meridian
written notice thereof within five (5) business days of obtaining such knowledge
(but, in any event, prior to the Closing). In either such event, Prudential
shall have the right to cure such misrepresentation or breach and shall be
entitled to a reasonable adjournment of the Closing (not to exceed ninety (90)
days) for the purpose of such cure. If Prudential is unable to so cure any
misrepresentation or breach, then Meridian, as its sole remedy for any and all
such materially untrue, inaccurate or incorrect material representations or
warranties, shall elect either (a) to waive such misrepresentations or breaches
of warranties and consummate the Transaction without any reduction of or credit
against the Purchase Price, or (b) to terminate this Agreement by written notice
given to Prudential on the Closing Date, in which event this Agreement shall be
terminated, and, thereafter, neither party shall have any further rights or
obligations hereunder except as provided in any section hereof that by its terms
expressly provides that it survives any termination of this Agreement. If any
such representation or warranty is untrue, inaccurate or incorrect but is not
untrue, inaccurate or incorrect in any material respect, Meridian shall be
deemed to waive such misrepresentation or breach of warranty, and Meridian shall
be required to consummate the Transaction without any reduction of or credit
against the Purchase Price. The untruth, inaccuracy or incorrectness of a
representation or warranty shall be deemed material only if Meridian's aggregate
damages resulting from the
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untruth, inaccuracy or incorrectness of any of the representations or warranties
are reasonably estimated by Meridian to exceed One Hundred Thousand Dollars
($100,000.00).
.3.5 Survival. The representations and warranties made by Prudential
in this Agreement shall survive the Closing and not be merged therein for a
period of ninety (90) days and Prudential shall only be liable to Meridian
hereunder for a breach of a representation and warranty made herein or in any of
the documents executed by Prudential at the Closing with respect to which a
claim is made by Meridian against Prudential on or before the ninetieth (90th)
day after the date of the Closing.
.3.6 Limitation on Prudential's Liability. Anything in this
Agreement to the contrary notwithstanding, the maximum aggregate liability of
Prudential for Prudential's breaches of representations and warranties herein or
in any documents executed by Prudential at Closing (including, but not limited
to, any Prudential estoppel letters delivered pursuant to Section 6.4(e)) shall
be limited as set forth in Section 14.16 hereof. Notwithstanding the foregoing,
however, if the Closing occurs, Meridian hereby expressly waives, relinquishes
and releases any right or remedy available to it at law, in equity or under this
Agreement to make a claim against Prudential for damages that Meridian may
incur, or to rescind this Agreement and the Transaction, as the result of any of
Prudential's representations or warranties being untrue, inaccurate or incorrect
if (a) Meridian knew or is deemed to know that such representation or warranty
was untrue, inaccurate or incorrect at the time of the Closing, or (b)
Meridian's damages as a result of such representations or warranties being
untrue, inaccurate or incorrect are reasonably estimated to aggregate less than
$500,000.00.
ARTICLE 8 - COVENANTS
.1 Meridian's Covenants. Meridian hereby covenants as follows:
.1.1 Confidentiality. Meridian acknowledges that any information
furnished to Meridian with respect to the Facilities is and has been so
furnished on the condition that Meridian maintain the confidentiality thereof.
Accordingly, Meridian shall hold, and shall cause its directors, officers and
other personnel and representatives to hold, in strict confidence, and not
disclose to any other person without the prior written consent of Prudential
until the Closing shall have been consummated, any of the information in respect
of each Facility delivered to or for the benefit of Meridian whether by agents,
consultants, employees or representatives of Meridian or by Prudential or any of
its agents, representatives or employees, including, but not limited to, any
information obtained by Meridian or any of Meridian's Representatives in
connection with any studies, inspections, testings or analyses conducted by
Meridian as part of its Due Diligence. In the event the Closing does not occur
and this Agreement is terminated, Meridian shall promptly return to Prudential
all copies of documents containing any of such information without retaining any
copy thereof or extract therefrom. Notwithstanding anything to the contrary
hereinabove set forth, Meridian may disclose such information (i) on a
need-to-know basis to its employees or members of professional firms serving it,
and (ii) as any governmental agency may require in order to comply with
applicable laws or regulations. The provisions of this Subsection 9.1.1 shall
survive the Closing (and not be merged therein) or earlier termination of this
Agreement.
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.1.2 Approvals not a Condition to Meridian's Performance. Meridian
acknowledges and agrees that its obligation to perform under this Agreement is
not contingent upon Meridian's ability to obtain any (a) governmental or
quasi-governmental approval of changes or modifications in use or zoning, or (b)
modification of any existing land use restriction, or (c) consents to
assignments of any service contracts, management agreements or other agreements
which Meridian requests, or (d) endorsements to any of the Title Policies.
.1.3 Meridian's Indemnity; Delivery of Reports. Meridian hereby
agrees to indemnify, defend, and hold Prudential and the other Prudential
Parties free and harmless from and against any and all costs, loss, damages and
expenses, of any kind or nature whatsoever (including attorneys fees and costs),
arising out of or resulting from the entry and/or the conduct of activities upon
any of the Facilities by Meridian, its agents, contractors and/or subcontractors
in connection with the inspections, examinations, testings and investigations of
any of the Facilities conducted at any time prior to the Closing, which
indemnity shall survive the Closing (and not be merged therein) or any earlier
termination of this Agreement. Meridian shall use all reasonable efforts to
deliver promptly to Prudential copies of all third party reports commissioned by
Meridian evidencing the results of tests, studies or inspections of the
Facilities.
.1.4 Limit on Government Contacts. Notwithstanding any provision in
this Agreement to the contrary, except in connection with the preparation of
so-called "Phase I" environmental reports with respect to the Facilities,
Meridian shall not contact any governmental official or representative regarding
Hazardous Materials on or the environmental condition of any of the Facilities
without Prudential's prior written consent thereto, which consent shall not be
unreasonably withheld. In addition, if Prudential's consent is obtained by
Meridian, Prudential shall be entitled to receive at least five (5) days prior
written notice of the intended contact and to have a representative present when
Meridian has any such contact with any governmental official or representative.
.1.5 Real Estate Investment Trust. Meridian shall use its best
efforts to continue to qualify as a REIT and for so long as Prudential holds the
Acquisition Common Stock representing, in the aggregate, at least the Minimum
Ownership Level, Meridian shall not, without Prudential's written consent, take
any action that could reasonably be expected to disqualify Meridian as a REIT.
.1.6 Conduct of Business. Meridian covenants and agrees that until
the earlier of the Closing Date or the termination of this Agreement, Meridian
shall, and shall cause the Meridian Affiliates to, continue to engage in an
efficient and economical manner solely in a business of the same general type as
conducted by it on the date of this Agreement in the ordinary course, consistent
with past practices; and use its reasonable best efforts to preserve the
business of Meridian and the Meridian Affiliates and to preserve the goodwill of
customers and others having business relations with Meridian and the Meridian
Affiliates.
.1.7 Negative Covenants of Meridian. Meridian covenants and agrees
as follows, and shall not enter into any agreement or take any other action
inconsistent with the following, in each case until the earlier of the Closing
Date or the termination of this Agreement, except as specifically contemplated
by this Agreement or to the extent such action shall not reasonably be expect to
result in a Material Adverse Effect.
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(a) Organizational Documents. Meridian shall not amend its
Charter or Bylaws and shall not permit any of the Meridian Affiliates to amend
its organizational documents.
(b) Mergers, Etc. Except as shall have been previously agreed
in writing by the parties, Meridian shall not, and shall not permit any of the
Meridian Affiliates to, merge or consolidate with any entity, sell, lease,
license or otherwise dispose of all or substantially all of its assets (whether
now owned or hereafter acquired) to any entity or acquire all or substantially
all of the assets or business of any entity in each case whether in one
transaction or in a series of transactions pursuant to which Meridian or such
Meridian Affiliate shall not be the surviving entity.
.1.8 Maintenance of Books and Records. Meridian shall keep proper
books of record and account, in which full and correct entries shall be made of
all financial transactions and the assets and business of Meridian in accordance
with generally accepted accounting principles, and Meridian shall cause the
Meridian Affiliates to do the same.
.1.9 Party in Interest. Meridian shall not enter into any agreement
or take any action that would cause Meridian to be a party in interest, as
defined in Section 3(14) of ERISA, with respect to any employee benefit plan set
forth in Schedule 8.2.9 for so long as Prudential holds any Shares.
.1.10 Real Estate Operating Company. Meridian shall continue to
operate as a REOC for so long as Prudential holds the Acquisition Common Stock
in an amount representing in the aggregate at least the Minimum Ownership Level.
.1.11 Amendment to Investor Rights Agreement. Meridian shall use its
best efforts in order to obtain all necessary consents in order (i) to provide
Prudential rights that are pari passu with those of each of Meridian's
shareholders party to the Investor Rights Agreement under the penultimate
paragraph of Section 2(b) and Section 2(c)(i) and (ii) of the Investor Rights
Agreement and (ii) to provide that such shareholders shall not have any right to
be included in the shelf registration to be filed by Meridian for the benefit of
Prudential.
.1.12 Book Entry Shares. Meridian hereby covenants that if the
Acquisition Common Stock is issued in certificate form at Closing then Meridian
will, if requested in writing by Prudential, accept delivery of the certificate
or certificates representing the Acquisition Common Stock and cause the
appropriate book entry to be made indicating Prudential's ownership of such
Acquisition Common Stock.
.1.13 Survival. The covenants of Meridian in this Section 9.1 shall
survive the Closing and shall not be merged therein.
.2 Prudential's Covenants. Prudential hereby covenants as follows:
.2.1 Service Contracts. Without Meridian's prior consent, which
consent shall not be unreasonably withheld, between the date hereof and the
Closing Date, Prudential shall not extend, renew, replace or modify any Contract
unless such contract (as so extended, renewed, replaced or modified) can be
terminated by the owner of the applicable Facility without penalty on not more
than thirty (30) days' notice.
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.2.2 Maintenance of Facilities. Except to the extent Prudential is
relieved of such obligations by Article 11 hereof, between the date hereof and
the Closing Date, Prudential shall maintain and keep each of the Facilities in a
manner consistent with Prudential's past practices with respect to such
Facility. Between the date hereof and the Closing Date, Prudential will advise
Meridian in writing of any written notice Prudential receives after the date
hereof from any governmental authority relating to the violation of any law or
ordinance regulating the condition or use of the Facilities (such notice to
Meridian, a "VIOLATION NOTICE"). Within five (5) days of receipt of a Violation
Notice from Prudential, Meridian may deliver to Prudential a written notice of
Meridian's objection to the existence of the violation specified in the
Violation Notice (such notice to Prudential, a "VIOLATION OBJECTION"). Upon
Prudential's receipt of a Violation Objection Prudential shall notify Meridian
in writing whether Prudential elects to cure the same. If Prudential is unable
to cure any such violation prior to the Closing, or if Prudential elects not to
cure one or more such violations, Meridian may elect to either (a) terminate
this Agreement, in which event the parties shall have no further rights or
obligations hereunder except for obligations which expressly survive the
termination of this Agreement, or (b) waive such violation, in which event the
Closing shall occur as herein provided without any reduction of or credit
against the Purchase Price. Notwithstanding anything herein to the contrary,
Meridian hereby agrees that it shall accept each of the Facilities subject to,
and Prudential shall have no obligation to cure, (i) all violations of law or
municipal ordinances, orders or requirements and (ii) all physical conditions
which would give rise to violations existing, which, with respect to both
clauses (i) and (ii), exist on the date hereof.
.2.3 Access to Facilities. From and after the date hereof, Meridian
shall not be permitted to perform any further testing or other physical
evaluation of the Facilities prior to Closing.
.2.4 Sale of Acquisition Common Stock by Prudential. Prudential
hereby agrees that during the ninety (90) day period commencing on the Closing
Date it will not sell, assign, transfer or otherwise in any manner dispose of
any of the Acquisition Common Stock, other than sales, assignments, transfers or
dispositions: (i) in connection with any merger or consolidation of Meridian;
(ii) pursuant to a tender or exchange offer for shares of Common Stock; (iii) to
an affiliate of Prudential provided that such person or entity agrees to be
bound by the terms and conditions of this Agreement and the Registration Rights
Agreement, including, without limitation, Section 6 of the Registration Rights
Agreement; (iv) as a result of any pledge by Prudential of the Acquisition
Common Stock as security for any indebtedness or guaranty of Prudential,
provided that such pledgee agrees to be bound by the terms and conditions of
this Agreement and the Registration Rights Agreement including, without
limitation, Section 6 of the Registration Rights Agreement upon the exercise of
its rights under such pledge; or (v) in private transactions pursuant to one or
more exemptions from registration under the Securities Act.
.2.5 Meridian Audit Rights. Prudential acknowledges that Meridian is
required to have audits performed of the records of the real properties acquired
by Meridian. Accordingly, for the period from the Closing Date through December
31, 1998, upon fifteen (15) days advance written notice from Meridian,
Prudential agrees to make available to Meridian's independent accountants those
items respecting the Facilities described in Exhibit T attached hereto.
.2.6 Survival. The covenant of Prudential set forth in Sections
9.2.4 and 9.2.5 of this Agreement shall survive the Closing and shall not be
merged therein.
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.3 Mutual Covenants.
.3.1 Publicity. Prudential and Meridian each hereby covenant that
(a) prior to the Closing neither Prudential nor Meridian shall issue any press
release or public statement (a "RELEASE") with respect to the Transaction
without the prior consent of the other, except to the extent required by law,
and (b) after the Closing, any Release issued by either Prudential or Meridian
shall be subject to the review and approval of both parties (which approval
shall not be unreasonably withheld). If either Prudential or Meridian is
required by law to issue a Release, such party shall, at least two (2) business
days prior to the issuance of the same, deliver a copy of the proposed Release
to the other party for its review.
.3.2 Broker. Prudential and Meridian each represents and warrants to
the other that it has not dealt with any broker in the Transaction and each
agrees to hold harmless the other and indemnify the other from and against any
and all damages, costs or expenses (including, but not limited to, reasonable
attorneys' fees and disbursements) suffered by the indemnified party as a result
of acts of the indemnifying party that would constitute a breach of its
representation and warranty in this section (which obligation of Meridian shall
survive the Closing and not be merged therein).
.3.3 Tax Refunds and Credits. All real estate and personal property
tax refunds and credits with respect to any Facility shall be apportioned
between Meridian and Prudential as follows:
(a) with respect to any refunds or credits attributable to
real estate and personal property taxes due and payable in the calendar year in
which the Closing occurs (regardless of the year for which such taxes are
assessed), such refunds and credits shall be apportioned between Meridian and
Prudential in proportion to the number of days in such calendar year that each
party owned such Facility (with title to such Facility being deemed to have
passed as of 12:01 a.m. on the Closing Date);
(b) with respect to any refunds or credits attributable to
real estate and personal property taxes due and payable during any period prior
to the calendar year in which the Closing occurs (regardless of the year for
which such taxes are assessed), Prudential shall be entitled to the entire
refunds and credits; and
(c) with respect to any refunds or credits attributable to
real estate and personal property taxes due and payable during any period after
the calendar year in which the Closing occurs (regardless of the year for which
such taxes are assessed), Meridian shall be entitled to the entire refunds and
credits.
.3.4 Survival. The provisions of this Section 9.3 shall survive the
Closing (and not be merged therein) or earlier termination of this Agreement.
.3.5 Approvals. Meridian and Prudential each agree to cooperate and
use their reasonable best efforts to obtain (and will immediately prepare all
registrations, filings, applications, requests and notices preliminary to) all
approvals that may be necessary or which may be reasonably requested by Meridian
or Prudential to consummate the transactions contemplated by this Agreement.
Meridian shall, prior to the Closing Date, take all actions necessary to ensure
that Prudential shall have full voting rights with respect to
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each Share of the Acquisition Common Stock (including, without limitation,
obtaining approvals of the Board of Directors of Meridian and amending the
Charter or Bylaws of Meridian, as applicable).
.3.6 Notification of Certain Matters. Meridian shall give prompt
notice to Prudential, and Prudential shall give prompt notice to Meridian, of
(a) the occurrence, or failure to occur, of any event that causes any
representation or warranty contained in any document relating to the Transaction
to be untrue or inaccurate in any material respect at any time from the date of
this Agreement to the Closing Date and b) any failure of Meridian, on the one
hand, or Prudential, on the other hand, to comply with or satisfy, in any
material respect, any covenant, condition or agreement to be complied with or
satisfied by it under any document relating to the Transaction.
.3.7 Further Assurances. Promptly upon request by the other party,
each party shall, and shall cause its affiliates to, take, execute, acknowledge,
deliver, file, re-file, register and re-register, any and all such further acts,
certificates, assurances and other instruments as the requesting party may
require from time to time in order to carry out more effectively the purposes of
the Transaction and to better transfer, preserve, protect and confirm to the
requesting party the rights granted or now or hereafter intended to be granted
to the requesting party under the Transaction.
ARTICLE 8 - FAILURE OF CONDITIONS
.1 To Prudential's Obligations. If, on or before the Closing Date, (i)
Meridian is in default of any of its obligations hereunder, or (ii) any of
Meridian's material representations or warranties are untrue in any material
respect, or (iii) the Closing otherwise fails to occur by reason of Meridian's
failure or refusal to perform its obligations hereunder in a prompt and timely
manner, then Prudential may elect to (a) terminate this Agreement by written
notice to Meridian; or (b) proceed to close the Transaction. If this Agreement
is so terminated, then Prudential shall be entitled to seek and recover
compensatory and consequential damages to the full extent available at law and
in equity, and thereafter neither party to this Agreement shall have any further
rights or obligations hereunder other than any arising under any section herein
which expressly provides that it survives the termination of this Agreement.
.2 To Meridian's Obligations. If, at the Closing, (i) Prudential is in
default of any of its obligations hereunder, or (ii) any of Prudential's
material representations or warranties are untrue in any material respect, or
(iii) the Closing otherwise fails to occur by reason of Prudential's failure or
refusal to perform its obligations hereunder in a prompt and timely manner,
Meridian shall have the right, to elect, as its sole and exclusive remedy, to
(a) terminate this Agreement by written notice to Prudential, or (b) waive the
condition and proceed to close the Transaction, or (c) seek specific performance
of this Agreement by Prudential. If this Agreement is terminated pursuant to
provision (a) of the preceding sentence, neither party to this Agreement shall
have any further rights or obligations hereunder other than any arising under
any Section herein which expressly provides that it survives the termination of
this Agreement.
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ARTICLE 8 - CONDEMNATION/CASUALTY
.1 Condemnation.
.1.1 Right to Adjust. If, prior to the Closing Date, all or any
significant portion (as hereinafter defined) of any Facility is taken by eminent
domain (or is the subject of a pending taking which has not yet been
consummated), Prudential shall notify Meridian in writing of such fact promptly
after obtaining knowledge thereof, and Meridian shall have the right to
terminate this Agreement by giving written notice to Prudential no later than
ten (10) days after the giving of Prudential's notice, and the Closing Date
shall be extended, if necessary, to provide sufficient time for Meridian to make
such election. The failure by Meridian to so elect in writing to terminate this
Agreement within such ten (10) day period shall be deemed an election not to
terminate this Agreement. For purposes hereof, a "SIGNIFICANT PORTION" of a
Facility shall mean (i) such portion as shall have a value, as reasonably
determined by Prudential, in excess of One Hundred Thousand Dollars
($100,000.00) with respect to such Facility or (ii) such portion, the taking of
which shall have a Material Adverse Effect on the operation of such Facility. If
Meridian elects to terminate this Agreement as aforesaid, the provisions of
Section 11.4 shall apply.
.1.2 Assignment of Proceeds. If (a) Meridian does not elect to
adjust this Agreement as aforesaid if all or any significant portion of a
Facility is taken, or if (b) a portion of a Facility not constituting a
significant portion of such Facility is taken or becomes subject to a pending
taking, by eminent domain, there shall be no abatement of the Purchase Price;
provided, however, that, at the Closing, Prudential shall pay to Meridian the
amount of any award for or other proceeds on account of such taking which have
been actually paid to Prudential prior to the Closing Date as a result of such
taking (less all costs and expenses, including attorneys' fees and costs,
incurred by Prudential as of the Closing Date in obtaining payment of such award
or proceeds) and, to the extent such award or proceeds have not been paid,
Prudential shall assign to Meridian at the Closing (without recourse to
Prudential) the rights of Prudential to, and Meridian shall be entitled to
receive and retain, all awards for the taking of such Facility or such portion
thereof.
.2 Destruction or Damage. In the event any Facility is damaged or
destroyed prior to the Closing Date, Prudential shall notify Meridian in writing
of such fact promptly after obtaining knowledge thereof. If any such damage or
destruction (a) would cost less than or equal to One Hundred Thousand Dollars
($100,000.00) to repair or restore, and (b) would not give any tenant thereof
the right to terminate or materially alter its Lease, then this Agreement shall
remain in full force and effect and Meridian shall acquire the affected Facility
together with the remaining Facilities upon the terms and conditions set forth
herein. In such event, Meridian shall receive a credit against the Acquisition
Cash portion of the Purchase Price equal to the deductible amount applicable
under Prudential's casualty policy (less all costs and expenses, including
attorneys' fees and costs, incurred by Prudential as of the Closing Date in
connection with the negotiation and/or settlement of the casualty claim with the
insurer (the "REALIZATION COSTS")), and Prudential shall assign to Meridian all
of Prudential's right, title and interest in and to all proceeds of insurance on
account of such damage or destruction. In the event a Facility is damaged or
destroyed prior to the Closing Date and as a result either (a) the cost of
repair would cost more than One Hundred Thousand Dollars ($100,000.00) or (b)
any tenant with respect to such Facility would have the right to terminate or
materially alter its Lease, then, notwithstanding anything to the contrary set
forth above in this section, Meridian shall have the right, at its election, to
terminate this Agreement. Meridian shall have thirty (30) days after Prudential
notifies Meridian
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that a casualty has occurred to make such election by delivery to the other of a
written election notice (the "ELECTION NOTICE") and the Closing Date shall be
extended, if necessary, to provide sufficient time for Meridian to make such
election. The failure by Meridian to deliver the Election Notice within such
thirty (30) day period shall be deemed an election not to terminate this
Agreement. If Meridian does not elect to terminate this Agreement as set forth
above, this Agreement shall remain in full force and effect, Prudential shall
assign to Meridian all of Prudential's right, title and interest in and to any
and all proceeds of insurance on account of such damage or destruction, if any,
and, if the casualty was an insured casualty, Meridian shall receive a credit
against the Purchase Price equal to the deductible amount (less the Realization
Costs) under Prudential's casualty insurance policy.
.3 Insurance. Prudential shall maintain the property insurance coverage
currently in effect for each of the Facilities through the Closing Date.
.4 Effect of Termination. If this Agreement is terminated pursuant to
Section 11.1 or Section 11.2, neither party to this Agreement shall have any
further rights or obligations hereunder other than any arising under any section
herein which expressly provides that it shall survive the termination of this
Agreement.
.5 Waiver. The provisions of this Article 11 supersede the provisions of
any applicable statutory or decisional law with respect to the subject matter of
this Article 11.
ARTICLE 8 - [INTENTIONALLY OMITTED]
ARTICLE 8 - LEASING MATTERS
.1 New Leases. After the date of that certain letter from Meridian dated
June 16, 1997 and executed by Prudential as of June 16, 1997 (the "LETTER OF
INTEREST"), Prudential shall not, without Meridian's prior written consent in
each instance, which consent shall not be unreasonably withheld and shall be
given or denied, with the reasons for such denial specified in reasonable
detail, within three (3) business days after receipt by Meridian of the
information referred to in the next sentence, enter into a new lease for space
in any Facility or renew or extend any Lease (except pursuant to the exercise by
a tenant of a renewal, extension or expansion option contained in such tenant's
Lease). Prudential shall furnish Meridian with all information regarding any
proposed new leases, renewals and extensions reasonably necessary to enable
Meridian to make informed decisions with respect to the advisability of the
proposed action. If Meridian fails to object in writing to any such proposed new
lease, renewal or extension, as the case may be, within three (3) business days
after receipt of the aforementioned information, Meridian shall be deemed to
have approved the proposed new lease, renewal or extension, as the case may be.
If Meridian rejects the proposed action, Prudential nevertheless retains full
right, power and authority to execute such documents as are necessary to effect
such action, and Prudential shall promptly advise Meridian of the same. The
foregoing notwithstanding, in the event Meridian has rejected the proposed
action but Prudential nonetheless proceeds to effect it, Meridian shall have the
right, within three (3) business days after receipt of Prudential's notice that
Prudential has taken such action, to elect to terminate this Agreement by the
delivery to Prudential of a written notice of termination, in which case the
parties shall have no further rights or obligations hereunder other than any
arising under any section herein
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<PAGE> 49
which expressly provides that it shall survive the termination of this
Agreement. If Meridian fails to notify Prudential within such time period,
Meridian shall be deemed to have fully waived any rights to terminate this
Agreement pursuant to this Section 13.1. Prudential shall deliver to Meridian a
true and complete copy of each such new lease, renewal and extension agreement,
if any, promptly after the execution and delivery thereof.
.2 Lease Expenses. At Closing, Meridian shall reimburse Prudential for any
and all fees paid by Prudential prior to Closing or costs and expenses incurred
by Prudential prior to Closing (such fees, costs and expenses being herein
collectively called the "LEASE EXPENSES"), arising out of or in connection with:
(a) any extensions, renewals or expansions under the Leases
exercisable and exercised by any tenant between the date of the full execution
of the Letter of Interest and the Closing Date; and
(b) any lease for space at any Facility entered into between the
date of the full execution of the Letter of Interest and the Closing Date, or
any extension, renewal or expansion of a Lease where such Lease does not provide
for its extension, renewal or expansion, entered into on or after the date of
the full execution of the Letter of Interest (a "NEW LEASE").
Lease Expenses shall include, without limitation, (i) brokerage commissions and
fees to effect any such leasing transaction, (ii) expenses incurred for repairs,
improvements, equipment, painting, decorating, partitioning and other items to
satisfy the tenant's requirements with regard to such leasing transaction, (iii)
legal fees for services in connection with the preparation of documents and
other services rendered in connection with the effectuation of the leasing
transaction, (iv) if there are any rent concessions covering any period that the
tenant has the right to be in possession of the demised space, the rents that
would have accrued during the period of such concession prior to the Closing
Date as if such concession were amortized over (A) with respect to any extension
or renewal, the term of such extension or renewal, (B) with respect to any
expansion, that portion of the term remaining under the subject Lease after the
date of any expansion, or (C) with respect to any New Lease, the entire initial
term of any New Lease, and (v) expenses incurred for the purpose of satisfying
or terminating the obligations of a tenant under a New Lease to the landlord
under another lease (whether or not such other lease covers space in a
Facility). At the Closing, Meridian shall assume Prudential's obligations to
pay, when due (whether on a stated due date or accelerated) any Lease Expenses
unpaid as of the Closing, and Meridian hereby agrees to indemnify and hold
Prudential harmless from and against any and all claims for such Lease Expenses
which remain unpaid for any reason at the time of Closing, which obligations of
Meridian shall survive the Closing and shall not be merged therein. Each party
shall make available to the other all records, bills, vouchers and other data in
such party's control verifying Lease Expenses and the payment thereof.
.3 Other Lease Activity. Except as provided in this Section 13.3, without
the prior consent of Meridian, which shall not be unreasonably withheld (a) no
Lease shall be modified or amended except as provided in Section 13.1 with
respect to extensions, renewals or expansions of Leases and the execution of New
Leases, (b) Prudential shall not consent to any assignment or sublease in
connection with any Lease or New Lease and (c) Prudential shall not remove any
tenant under any Lease or New Lease, whether by summary proceedings or
otherwise, except by reason of a default of the tenant under the Lease or New
Lease. In furtherance of the foregoing, Prudential shall deliver to Meridian a
written notice of each proposed action of the type described in clauses (a)
through (c) above which Prudential has been asked or proposes to take, stating,
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<PAGE> 50
if applicable, whether Prudential is willing to consent to such action and
setting forth the relevant information therefor. Meridian shall notify
Prudential in writing whether or not it approves such action within three (3)
business days after delivery to Meridian of Prudential's notice containing the
aforementioned information. If Meridian notifies Prudential that it disapproves
such action, Meridian's notice shall state with specificity the reasons for such
disapproval. If Meridian shall not give written notice of its disapproval of
such action within such three (3) business day period, Meridian shall be deemed
to have approved such action. If any Lease requires that the landlord's consent
be given under the applicable circumstances (or not be unreasonably withheld),
then Meridian shall be deemed ipso facto to have approved such action. Subject
to its reimbursement rights pursuant to Section 13.2, Prudential shall perform
all of the obligations of the landlord under the Leases and New Leases which
under the terms of such Leases and New Leases are required to be performed by
the landlord prior to the Closing Date.
.4 Lease Enforcement. Subject to the provisions of Section 13.3 above,
prior to the Closing Date, Prudential shall have the right, but not the
obligation (except to the extent that Prudential's failure to act shall
constitute a waiver of such rights or remedies), to enforce the rights and
remedies of the landlord under any Lease or New Lease, by summary proceedings or
otherwise, and to apply all or any portion of any security deposits then held by
Prudential toward any loss or damage incurred by Prudential by reason of any
defaults by tenants.
.5 Lease Termination Prior to Closing. The termination of any Lease or New
Lease or the removal of any tenant by reason of a default by such tenant (by
summary proceedings or otherwise) prior to the Closing shall not affect the
obligations of Meridian under this Agreement in any manner or entitle Meridian
to a reduction in, or credit or allowance against, the Purchase Price or give
rise to any other claim on the part of Meridian.
ARTICLE 8 - MISCELLANEOUS
.1 Assignment.
(a) Meridian's Assignment. Meridian shall not assign this Agreement
or its rights hereunder to any individual or entity without the prior written
consent of Prudential, which consent Prudential may grant or withhold in its
sole discretion, and any such assignment shall be null and void. Notwithstanding
the foregoing, Meridian shall be permitted to assign this Agreement to an entity
in which Meridian owns or controls one hundred percent (100%) of the beneficial
interests provided (a) Meridian effectuates such assignment in writing prior to
the Closing, (b) the assignee assumes the obligations of Meridian under the
terms of this Agreement, and (c) Meridian remains liable to Prudential under the
terms of this Agreement. In the event Meridian assigns this Agreement or its
rights hereunder to a Meridian Affiliate, Meridian shall provide written notice
of such assignment to Prudential within five (5) business days of the execution
of such an assignment.
(b) Prudential's Assignment. Prudential may assign this Agreement
and/or its rights and obligations hereunder, without the prior consent of
Meridian, as Prudential deems necessary to complete the
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<PAGE> 51
Transaction; provided, however, that in the event of such an assignment,
Prudential shall provide written notice thereof to Meridian within five (5)
business days of the execution of any such assignment.
.2 Designation Agreement. Section 6045(e) of the United States Internal
Revenue Code and the regulations promulgated thereunder (herein collectively
called the "REPORTING REQUIREMENTS") require an information return to be made to
the United States Internal Revenue Service, and a statement to be furnished to
Prudential, in connection with the Transaction. Escrow Agent is either (i) the
person responsible for closing the Transaction (as described in the Reporting
Requirements) or (ii) the disbursing title or escrow company that is most
significant in terms of gross proceeds disbursed in connection with the
Transaction (as described in the Reporting Requirements). Accordingly:
(a) Escrow Agent is hereby designated as the "REPORTING PERSON" (as
defined in the Reporting Requirements) for the Transaction. Escrow Agent shall
perform all duties that are required by the Reporting Requirements to be
performed by the Reporting Person for the Transaction.
(b) Prudential and Meridian shall furnish to Escrow Agent, in a
timely manner, any information requested by Escrow Agent and necessary for
Escrow Agent to perform its duties as Reporting Person for the Transaction.
(c) Escrow Agent hereby requests Prudential to furnish to Escrow
Agent Prudential's correct taxpayer identification number. Prudential
acknowledges that any failure by Prudential to provide Escrow Agent with
Prudential's correct taxpayer identification number may subject Prudential to
civil or criminal penalties imposed by law. Accordingly, Prudential hereby
certifies to Escrow Agent, under penalties of perjury, that Prudential's correct
taxpayer identification number is 22-1211670.
(d) Each of the parties hereto shall retain this Agreement for a
period of four (4) years following the calendar year during which Closing
occurs.
.3 Survival/Merger. Except for the provisions of this Agreement which are
explicitly stated to survive the Closing, (a) none of the terms of this
Agreement shall survive the Closing, and (b) the delivery of the Deeds and any
other documents and instruments by Prudential and the acceptance thereof by
Meridian shall effect a merger, and be deemed the full performance and discharge
of every obligation on the part of Meridian and Prudential to be performed
hereunder.
.4 Integration; Waiver. This Agreement, together with the Schedules and
Exhibits hereto, embodies and constitutes the entire understanding between the
parties with respect to the Transaction and all prior agreements,
understandings, representations and statements, oral or written, are merged into
this Agreement. Neither this Agreement nor any provision hereof may be waived,
modified, amended, discharged or terminated except by an instrument signed by
the party against whom the enforcement of such waiver, modification, amendment,
discharge or termination is sought, and then only to the extent set forth in
such instrument. No waiver by either party hereto of any failure or refusal by
the other party to comply with its obligations hereunder shall be deemed a
waiver of any other or subsequent failure or refusal to so comply.
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<PAGE> 52
.5 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New Jersey except to the extent its
conflict of law principles would direct the application of the law of a
different state of forum.
.6 Captions Not Binding; Schedules and Exhibits. The captions in this
Agreement are inserted for reference only and in no way define, describe or
limit the scope or intent of this Agreement or of any of the provisions hereof.
All Schedules and Exhibits attached hereto shall be incorporated by reference as
if set out herein in full.
.7 Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
.8 Severability. If any term or provision of this Agreement or the
application thereof to any persons or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
.9 Notices. Any notice, request, demand, consent, approval and other
communications under this Agreement shall be in writing, and shall be deemed
duly given or made at the time and on the date when personally delivered as
shown on a receipt therefor (which shall include delivery by a nationally
recognized overnight delivery service) or three (3) business days after being
mailed by prepaid registered or certified mail, return receipt requested, to the
address for each party set forth below, or by telecopy on the date shown on the
receiving party's confirmation thereof, unless such telecopy is received after
2:00 p.m., in which case the date of delivery shall be the next succeeding
business day. Any party, by written notice to the other in the manner herein
provided, may designate an address different from that set forth below.
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<PAGE> 53
IF TO MERIDIAN:
MERIDIAN INDUSTRIAL TRUST, INC.
455 Market Street, 17th Floor
San Francisco, California 94105
Attention: Dennis D. Higgs, Executive Vice President
Telephone: (415) 281-3900
Telecopy: (415) 284-2840
WITH COPIES TO:
MERIDIAN INDUSTRIAL TRUST, INC.
455 Market Street, 17th Floor
San Francisco, California 94105
Attention: Robert A. Dobbin, General Counsel
Telephone: (415) 281-3900
Telecopy: (415) 284-2840
AND TO:
VINSON & ELKINS L.L.P.
3700 Trammel Crow Center
Dallas, Texas 75201
Attention: Phillip Weller, Esq.
Telephone: (214) 220-7738
Telecopy: (214) 220-7716
IF TO PRUDENTIAL:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
Eight Campus Drive, 4th Floor
Parsippany, New Jersey 07054
Attention: Mr. Joel W. Stoesser
Telephone: (210) 683-1718
Telecopy: (210) 683-1795
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<PAGE> 54
WITH A COPY TO:
GOODWIN, PROCTER & HOAR LLP
300 Park Avenue, 17th Floor
New York, New York 10022
Attention: Robert S. Insolia, Esq.
Telephone: (212) 572-6321
Telecopy: (212) 572-6482
.10 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original and all of which counterparts taken together shall
constitute one and the same agreement.
.11 No Recordation. Prudential and Meridian each agrees that neither this
Agreement nor any memorandum or notice hereof shall be recorded and Meridian
agrees (a) not to file any notice of pendency or other instrument (other than a
judgment or lis pendens filed by Meridian in connection with Meridian's
enforcement of its rights hereunder) against any of the Facilities or any
portion thereof in connection herewith and (b) to indemnify Prudential against
all costs, expenses and damages, including, without limitation, reasonable
attorneys' fees and disbursements, incurred by Prudential by reason of the
filing by Meridian of such notice of pendency or other instrument.
.12 Additional Agreements; Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto shall execute and deliver
such documents as the other party shall reasonably request in order to
consummate and make effective the Transaction; provided, however, that the
execution and delivery of such documents by such party shall not result in any
additional liability or cost to such party.
.13 Construction. The parties acknowledge that each party and its counsel
have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendment, Schedule or Exhibit hereto.
.14 Intentionally Omitted.
.15 Business Day. As used herein, the term "BUSINESS DAY" shall mean any
day other than a Saturday, Sunday, or any Federal or State of New Jersey
holiday.
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.16 Prudential's Maximum Aggregate Liability. Notwithstanding any
provision to the contrary contained in this Agreement or any documents executed
by Prudential pursuant hereto or in connection herewith, the maximum aggregate
liability of Prudential, and the maximum aggregate amount which may be awarded
to and collected by Meridian, under this Agreement (including, without
limitation, the breach of any representations and warranties contained herein)
and any and all documents executed pursuant hereto or in connection herewith
(including, without limitation, any Prudential's estoppel letter provided in
accordance with the terms of Section 6.4(e) hereof), for which one or more
claims (in the aggregate) are timely made by Meridian shall not exceed Three
Million Dollars ($3,000,000.00). The provisions of this section shall survive
the Closing and shall not be merged therein.
.17 WAIVER OF TRIAL BY JURY. MERIDIAN AND PRUDENTIAL HEREBY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM FILED BY MERIDIAN OF PRUDENTIAL, WHETHER IN CONTRACT,
TORT OR OTHERWISE, WHICH RIGHT OR CLAIM RELATES DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, ANY DOCUMENTATION RELATED THERETO, OR ANY ACTS OR OMISSIONS IN
CONNECTION WITH THIS AGREEMENT. THIS WAIVER HAS BEEN AGREED TO AFTER
CONSULTATION WITH LEGAL COUNSEL SELECTED BY MERIDIAN AND PRUDENTIAL.
This Waiver is agreed to: Meridian's Initials ( )
Prudential's Initials ( )
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
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<PAGE> 56
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly
executed on its behalf on the day and year first above written.
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation
By: /s/ John Maurer
____________________________
John Maurer
Vice President
MERIDIAN INDUSTRIAL TRUST, INC.,
a Maryland corporation
By: /s/ Robert A. Dobbin
____________________________
Name: Robert A. Dobbin
Its: Secretary
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<PAGE> 57
The undersigned has executed this
Agreement solely to confirm its
agreement to (i) hold the Escrow
Deposits in escrow in accordance
with the provisions hereto, (ii) comply
with the provisions of Section 14.2 and (iii) to provide the
Release to Meridian and Prudential under the
conditions described in Article 3.
FIRST AMERICAN TITLE INSURANCE COMPANY
By: /s/ Mary Lou Kennedy
__________________________
Name: Mary Lou Kennedy
Its: Vice President
Date: September 24, 1997
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<PAGE> 1
EXHIBIT II
<PAGE> 2
CONTRIBUTION AGREEMENT
(Chevron Separate Account)
by and between
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
corporation, on behalf of the Chevron Separate Account
and
MERIDIAN INDUSTRIAL TRUST, INC.,
a Maryland corporation
Date: August 27, 1997
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<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 - SALE OF PROPERTY.............................................................1
1.1 Real Property................................................................1
1.2 Personal Property............................................................1
1.3 Other Property Rights........................................................2
ARTICLE 2 - PURCHASE PRICE...............................................................2
2.1 Payment at Closing...........................................................2
2.2 Allocation of Purchase Price.................................................3
ARTICLE 3 - TITLE MATTERS................................................................3
3.1 Title to Real Property.......................................................3
3.2 Title Defects................................................................3
3.2.1 Certain Exceptions to Title............................................3
3.2.2 Discharge of Title Objections..........................................4
3.3 Title Insurance..............................................................4
ARTICLE 4 - MERIDIAN'S DUE DILIGENCE/CONDITION OF THE FACILITIES.........................5
4.1 Meridian's Inspection of the Facilities......................................5
4.2 Meridian's Inspection of Documents...........................................6
ARTICLE 5 - ADJUSTMENTS AND PRORATIONS...................................................7
5.1 Lease Rentals and Expenses...................................................7
5.1.1 Rents..................................................................8
5.1.2 Lease Expenses.........................................................8
5.2 Real Estate and Personal Property Taxes......................................8
5.3 Other Property Operating Expenses............................................9
5.4 Closing Costs...............................................................10
5.5 Cash Security Deposits......................................................10
5.6 Dividend Adjustment.........................................................10
5.7 Apportionment Credit........................................................10
5.8 Delayed Adjustment..........................................................10
ARTICLE 6 - CLOSING.....................................................................11
6.1 Closing.....................................................................11
6.2 Closing Date................................................................12
6.3 Title Transfer and Payment of Purchase Price................................12
6.4 Prudential's Closing Deliveries.............................................12
6.5 Meridian Closing Deliveries.................................................15
6.6 Delivery of Deeds...........................................................16
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 7 - CONDITIONS TO CLOSING.......................................................16
7.1 Conditions Precedent to Obligations of Prudential...........................16
7.2 Conditions Precedent to Obligations of Meridian.............................18
7.3 Waiver of Failure of Conditions Precedent...................................19
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES..............................................20
8.1 Meridian's Representations..................................................20
8.1.1 Organization, Good Standing and Authority............................20
8.1.2 Meridian's Authorization..............................................20
8.1.3 [Intentionally Omitted]...............................................21
8.1.4 Capitalization........................................................21
8.1.5 Conflicting Agreements and Other Matters..............................21
8.1.6 Due Execution, etc....................................................22
8.1.7 Litigation, Proceeding, etc...........................................22
8.1.8 No Default or Violation...............................................22
8.1.9 Status of Acquisition Common Stock....................................23
8.1.10 Governmental Consents, etc......................................23
8.1.11 Private Offering................................................23
8.1.12 ERISA...........................................................24
8.1.13 Insurance.......................................................25
8.1.14 Information Provided............................................25
8.1.15 No Other Liabilities............................................25
8.1.16 Taxes; REIT Status..............................................25
8.1.17 Compliance with Laws............................................26
8.1.18 Meridian Affiliates.............................................26
8.1.19 Material Contracts..............................................26
8.1.20 No Restrictions on Acquisition Common Stock.....................26
8.1.21 SEC Documents...................................................26
8.1.22 No Merger Agreements............................................27
8.1.23 Certain Actions by Meridian.....................................27
8.1.24 Facilities Sold "AS-IS".........................................27
8.2 Prudential's Representations................................................33
8.2.1 Prudential's Authorization............................................33
8.2.2 Investment Intent.....................................................33
8.2.3 Transfer Restrictions.................................................33
8.2.4 Stop Transfer Instruction.............................................34
8.2.5 Prudential Status.....................................................34
8.2.6 Authority.............................................................35
8.2.7 Access to Information.................................................35
8.2.8 Reliance..............................................................35
8.2.9 Separate Account Investors............................................35
8.2.10 Other Prudential's Representations..............................36
8.2.11 No Other Agreements.............................................36
8.3 General Provisions..........................................................37
</TABLE>
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<TABLE>
<S> <C>
8.3.1 No Representation As to Leases........................................37
8.3.2 Definition of "Prudential's Knowledge"................................37
8.3.3 Prudential's Representations Deemed Modified..........................37
8.3.4 Notice of Breach; Prudential's Right to Cure..........................37
8.3.5 Survival..............................................................38
8.3.6 Limitation on Prudential's Liability..................................38
ARTICLE 9 - COVENANTS...................................................................39
9.1 Meridian's Covenants........................................................39
9.1.1 Confidentiality.......................................................39
9.1.2 Approvals not a Condition to Meridian's Performance...................39
9.1.3 Meridian's Indemnity; Delivery of Reports.............................39
9.1.4 Limit on Government Contacts..........................................40
9.1.5 Real Estate Investment Trust..........................................40
9.1.6 Conduct of Business...................................................40
9.1.7 Negative Covenants of Meridian........................................40
9.1.8 Maintenance of Books and Records......................................41
9.1.9 Party in Interest.....................................................41
9.1.10 Real Estate Operating Company........................................41
9.1.11 Amendment to Investor Rights Agreement...............................41
9.1.12 Book Entry Shares....................................................41
9.1.13 Listing Approval.....................................................41
9.1.14 Survival.............................................................41
9.2 Prudential's Covenants......................................................42
9.2.1 Service Contracts.....................................................42
9.2.2 Maintenance of Facilities.............................................42
9.2.3 Access to Facilities..................................................42
9.2.4 Sale of Acquisition Common Stock by Prudential........................42
9.2.5 Meridian Audit Rights.................................................43
9.2.6 Survival..............................................................43
9.3 Mutual Covenants............................................................43
9.3.1 Publicity.............................................................43
9.3.2 Broker................................................................43
9.3.3 Tax Refunds and Credits...............................................43
9.3.4 Survival..............................................................44
9.3.5 Approvals.............................................................44
9.3.6 Notification of Certain Matters.......................................44
9.3.7 Further Assurances....................................................44
ARTICLE 101 - FAILURE OF CONDITIONS.....................................................45
101.1 To Prudential's Obligations.................................................45
101.2 To Meridian's Obligations...................................................45
ARTICLE 11 - CONDEMNATION/CASUALTY......................................................45
</TABLE>
II-4
<PAGE> 6
<TABLE>
<S> <C>
11.1 Condemnation................................................................45
11.1.1 Right to Adjust.................................................45
11.1.2 Assignment of Proceeds..........................................46
11.2 Destruction or Damage.......................................................46
11.3 Insurance...................................................................47
11.4 Effect of Termination.......................................................47
11.5 Waiver......................................................................47
ARTICLE 12 - ESCROW.....................................................................47
ARTICLE 13 - LEASING MATTERS............................................................49
13.1 New Leases..................................................................49
13.2 Lease Expenses..............................................................49
13.3 Other Lease Activity........................................................50
13.4 Lease Enforcement...........................................................51
13.5 Lease Termination Prior to Closing..........................................51
ARTICLE 14 - MISCELLANEOUS..............................................................51
14.1 Assignment..................................................................51
14.2 Designation Agreement.......................................................52
14.3 Survival/Merger.............................................................52
14.4 Integration; Waiver.........................................................52
14.5 Governing Law...............................................................53
14.6 Captions Not Binding; Schedules and Exhibits................................53
14.7 Binding Effect..............................................................53
14.8 Severability................................................................53
14.9 Notices.....................................................................53
14.10 Counterparts................................................................55
14.11 No Recordation..............................................................55
14.12 Additional Agreements; Further Assurances...................................55
14.13 Construction................................................................55
14.14 Intentionally Omitted.......................................................55
14.15 Business Day................................................................55
14.16 Prudential's Maximum Aggregate Liability....................................55
14.17 WAIVER OF TRIAL BY JURY.....................................................56
ARTICLE 1 - SALE OF PROPERTY........................................................... 1
1.1 Real Property.............................................................. 1
1.2 Personal Property.......................................................... 1
1.3 Other Property Rights...................................................... 2
ARTICLE 2 - PURCHASE PRICE............................................................. 2
2.1 Payment at Closing......................................................... 2
2.2 Allocation of Purchase Price............................................... 3
</TABLE>
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<PAGE> 7
<TABLE>
<S> <C>
ARTICLE 3 - TITLE MATTERS.............................................................. 3
3.1 Title to Real Property..................................................... 3
3.2 Title Defects.............................................................. 4
3.2.1 Certain Exceptions to Title.......................................... 4
3.2.2 Discharge of Title Objections........................................ 4
3.3 Title Insurance............................................................ 4
ARTICLE 4 - MERIDIAN'S DUE DILIGENCE/CONDITION OF THE FACILITIES....................... 5
4.1 Meridian's Inspection of the Facilities.................................... 5
4.2 Meridian's Inspection of Documents......................................... 6
ARTICLE 5 - ADJUSTMENTS AND PRORATIONS................................................. 8
5.1 Lease Rentals and Expenses................................................. 8
5.1.1 Rents................................................................ 8
5.1.2 Lease Expenses....................................................... 8
5.2 Real Estate and Personal Property Taxes.................................... 9
5.3 Other Property Operating Expenses.......................................... 9
5.4 Closing Costs.............................................................. 10
5.5 Cash Security Deposits..................................................... 10
5.6 Dividend Adjustment........................................................ 10
5.7 Apportionment Credit....................................................... 10
5.8 Delayed Adjustment......................................................... 11
ARTICLE 6 - CLOSING.................................................................... 11
6.1 Closing.................................................................... 11
6.2 Closing Date............................................................... 12
6.3 Title Transfer and Payment of Purchase Price............................... 13
6.4 Prudential's Closing Deliveries............................................ 13
6.5 Meridian Closing Deliveries................................................ 15
6.6 Delivery of Deeds.......................................................... 16
ARTICLE 7 - CONDITIONS TO CLOSING...................................................... 17
7.1 Conditions Precedent to Obligations of Prudential.......................... 17
7.2 Conditions Precedent to Obligations of Meridian............................ 19
7.3 Waiver of Failure of Conditions Precedent.................................. 20
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES............................................. 20
8.1 Meridian's Representations................................................. 20
8.1.1 Organization, Good Standing and Authority........................... 20
8.1.2 Meridian's Authorization............................................. 21
8.1.3 [Intentionally Omitted].............................................. 21
8.1.4 Capitalization....................................................... 21
8.1.5 Conflicting Agreements and Other Matters............................. 22
8.1.6 Due Execution, etc................................................... 22
</TABLE>
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<PAGE> 8
<TABLE>
<S> <C>
8.1.7 Litigation, Proceeding, etc.......................................... 23
8.1.8 No Default or Violation.............................................. 23
8.1.9 Status of Acquisition Common Stock................................... 23
8.1.10 Governmental Consents, etc..................................... 23
8.1.11 Private Offering............................................... 24
8.1.12 ERISA.......................................................... 24
8.1.13 Insurance...................................................... 25
8.1.14 Information Provided........................................... 25
8.1.15 No Other Liabilities........................................... 25
8.1.16 Taxes; REIT Status............................................. 26
8.1.17 Compliance with Laws........................................... 26
8.1.18 Meridian Affiliates............................................ 26
8.1.19 Material Contracts............................................. 26
8.1.20 No Restrictions on Acquisition Common Stock.................... 27
8.1.21 SEC Documents.................................................. 27
8.1.22 No Merger Agreements........................................... 27
8.1.23 Certain Actions by Meridian.................................... 28
8.1.24 Facilities Sold "AS-IS"........................................ 28
8.2 Prudential's Representations............................................... 33
8.2.1 Prudential's Authorization........................................... 33
8.2.2 Investment Intent.................................................... 34
8.2.3 Transfer Restrictions................................................ 34
8.2.4 Stop Transfer Instruction............................................ 35
8.2.5 Prudential Status.................................................... 35
8.2.6 Authority............................................................ 35
8.2.7 Access to Information................................................ 36
8.2.8 Reliance............................................................. 36
8.2.9 Separate Account Investors........................................... 36
8.2.10 Other Prudential's Representations............................. 37
8.2.11 No Other Agreements............................................ 37
8.3 General Provisions......................................................... 38
8.3.1 No Representation As to Leases....................................... 38
8.3.2 Definition of "Prudential's Knowledge"............................... 38
8.3.3 Prudential's Representations Deemed Modified......................... 38
8.3.4 Notice of Breach; Prudential's Right to Cure......................... 38
8.3.5 Survival............................................................. 39
8.3.6 Limitation on Prudential's Liability................................. 39
ARTICLE 9 - COVENANTS.................................................................. 40
9.1 Meridian's Covenants....................................................... 40
9.1.1 Confidentiality...................................................... 40
9.1.2 Approvals not a Condition to Meridian's Performance.................. 40
9.1.3 Meridian's Indemnity; Delivery of Reports............................ 40
</TABLE>
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<TABLE>
<S> <C>
9.1.4 Limit on Government Contacts......................................... 41
9.1.5 Real Estate Investment Trust......................................... 41
9.1.6 Conduct of Business.................................................. 41
9.1.7 Negative Covenants of Meridian....................................... 41
9.1.8 Maintenance of Books and Records..................................... 42
9.1.9 Party in Interest.................................................... 42
9.1.10 Real Estate Operating Company....................................... 42
9.1.11 Amendment to Investor Rights Agreement.............................. 42
9.1.12 Book Entry Shares................................................... 42
9.1.13 Listing Approval.................................................... 42
9.1.14 Survival....................................................... 42
9.2 Prudential's Covenants..................................................... 43
9.2.1 Service Contracts.................................................... 43
9.2.2 Maintenance of Facilities............................................ 43
9.2.3 Access to Facilities................................................. 43
9.2.4 Sale of Acquisition Common Stock by Prudential....................... 43
9.2.5 Survival............................................................. 44
9.3 Mutual Covenants........................................................... 44
9.3.1 Publicity............................................................ 44
9.3.2 Broker............................................................... 44
9.3.3 Tax Refunds and Credits.............................................. 44
9.3.4 Survival............................................................. 45
9.3.5 Approvals............................................................ 45
9.3.6 Notification of Certain Matters...................................... 45
9.3.7 Further Assurances................................................... 45
ARTICLE 10 - FAILURE OF CONDITIONS..................................................... 46
10.1 To Prudential's Obligations................................................ 46
10.2 To Meridian's Obligations.................................................. 46
ARTICLE 11 - CONDEMNATION/CASUALTY..................................................... 46
11.1 Condemnation............................................................... 46
11.1.1 Right to Adjust................................................ 46
11.1.2 Assignment of Proceeds......................................... 47
11.2 Destruction or Damage...................................................... 47
11.3 Insurance.................................................................. 48
11.4 Effect of Termination...................................................... 48
11.5 Waiver..................................................................... 48
ARTICLE 12 - ESCROW.................................................................... 48
ARTICLE 13 - LEASING MATTERS........................................................... 50
13.1 New Leases................................................................. 50
13.2 Lease Expenses............................................................. 50
</TABLE>
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<TABLE>
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13.3 Other Lease Activity....................................................... 51
13.4 Lease Enforcement.......................................................... 52
13.5 Lease Termination Prior to Closing......................................... 52
ARTICLE 14 - MISCELLANEOUS............................................................. 52
14.1 Assignment................................................................. 52
14.2 Designation Agreement...................................................... 53
14.3 Survival/Merger............................................................ 53
14.4 Integration; Waiver........................................................ 54
14.5 Governing Law.............................................................. 54
14.6 Captions Not Binding; Schedules and Exhibits............................... 54
14.7 Binding Effect............................................................. 54
14.8 Severability............................................................... 54
14.9 Notices.................................................................... 54
14.10 Counterparts............................................................... 56
14.11 No Recordation............................................................. 56
14.12 Additional Agreements; Further Assurances.................................. 56
14.13 Construction............................................................... 56
14.14 Intentionally Omitted...................................................... 56
14.15 Business Day............................................................... 56
14.16 Prudential's Maximum Aggregate Liability................................... 56
14.17 WAIVER OF TRIAL BY JURY.................................................... 57
</TABLE>
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EXHIBITS
Exhibit A List of Facilities and Legal Descriptions
Exhibit B List of Contracts
Exhibit C Certain Certificates of Occupancy, Licenses, Permits and
Personal Property
Exhibit D Allocated Purchase Prices
Exhibit E Form of Meridian's As-Is Certificate And Agreement
Exhibit F Form of Deed
Exhibit G Form of Bill of Sale
Exhibit H Form of Assignment of Leases
Exhibit I List of Tenants
Exhibit J Form of Assignment of Contracts
Exhibit K-1 Form of Tenant Estoppel Letter
Exhibit K-2 Form of Prudential's Estoppel Certificate
Exhibit L Form of Notice to Tenants
Exhibit M Form of Prudential's FIRPTA Affidavit
Exhibit N Title Reports
Exhibit O Litigation Notices, Condemnation Notices and
Governmental Violations
Exhibit P Designated Employees
Exhibit Q Form of Registration Rights Agreement
Exhibit R Meridian's Audit Rights
Exhibit S Form of Opinion of Meridian's Counsel
SCHEDULES
Schedule 1 Certain Defined Terms
Schedule 8.1.4 Convertible Securities and Indebtedness; Stock
Voting, Transfer and Redemption Agreements
Schedule 8.1.5 Conflicting Agreements
Schedule 8.1.10 Required Government Consents
Schedule 8.1.15 Other Liabilities
Schedule 8.1.18 Assessable Shares
Schedule 8.1.22 Merger Agreements
Schedule 8.2.9 Separate Account Investors
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<PAGE> 12
CONTRIBUTION AGREEMENT
(Chevron Separate Account)
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made this 27th day of
August, 1997, by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New
Jersey corporation, on behalf of the Chevron Separate Account (in such capacity
"Prudential"), and MERIDIAN INDUSTRIAL TRUST, INC., a Maryland corporation
("Meridian"). Capitalized terms used herein and not otherwise defined shall have
the meanings given to such terms in SCHEDULE 1 annexed hereto and by this
reference incorporated herein.
W I T N E S S E T H:
In consideration of the mutual covenants and agreements set forth herein the
parties hereto do hereby agree as follows:
ARTICLE 5 - SALE OF PROPERTY
Prudential agrees to sell, transfer and assign and Meridian agrees to purchase,
accept and assume, subject to the terms and conditions stated herein, all of
Prudential's right, title and interest in and to each of the Facilities, as
defined below. As used in this Agreement, the term "FACILITY" means any one of
the seven (7) industrial/warehouse facilities located on the parcels of Real
Property described in EXHIBIT A-1 through EXHIBIT A-7, attached hereto and
incorporated herein by this reference, together with such Real Property's
accompanying Personal Property and Other Property Rights, as described below,
and "FACILITIES" means every such Facility, collectively. The Facilities are
more particularly described as follows:
5.1 Real Property. Those certain parcels of real estate legally described
in EXHIBIT A-1 through EXHIBIT A-7 attached hereto and incorporated herein by
this reference, together with all buildings, improvements and fixtures located
thereon and all rights, privileges and appurtenances pertaining thereto
including all of Prudential's right, title and interest in and to all
rights-of-way, open or proposed streets, alleys, easements, strips or gores of
land adjacent to each such parcel (herein collectively called the "REAL
PROPERTY"); and
5.2 Personal Property. All tangible personal property owned by Prudential
(excluding any computer or computer equipment and software owned by Prudential
or Prudential's property manager), located on the Real Property, and used in the
ownership, operation and maintenance of the Real Property and all
nonconfidential books, records and files (excluding appraisals, budgets,
Prudential's strategic plans for the Facilities, internal analyses, marketing
information, submissions relating to Prudential's obtaining of corporate
authorization, attorney and accountant work product, or other information in the
possession or control of Prudential or Prudential's property manager(s) which
Prudential deems proprietary) relating to the Real Property (herein collectively
called the "PERSONAL PROPERTY"); and
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5.3 Other Property Rights. (a) Prudential's interest as landlord in all
leases encumbering the Real Property on the Closing Date (as defined in Section
6.2); (b) if and to the extent assignable by Prudential, (i) all service,
supply, maintenance, utility and commission agreements, all equipment leases,
and all contracts, subcontracts and agreements, if any, relating to the
construction of any unfinished tenant improvements and described in EXHIBIT B
attached hereto and incorporated herein by this reference, and (ii) all
licenses, permits and other written authorizations necessary for the use,
operation or ownership of the Real Property or Personal Property and in
Prudential's possession or control (the rights and interests of Prudential
described in clauses (a) through (b) hereinabove being herein collectively
called the "OTHER PROPERTY RIGHTS").
ARTICLE 6 - PURCHASE PRICE
The total purchase price to be paid by Meridian for the purchase of the
Facilities is the sum of THIRTY TWO MILLION, FIVE HUNDRED EIGHTY TWO THOUSAND
DOLLARS ($32,582,000.00) (the "PURCHASE PRICE"). Payment of the Purchase Price
shall be rendered in the form of: (a) cash in the sum of SIXTEEN MILLION, TWO
HUNDRED NINETY-ONE THOUSAND DOLLARS ($16,291,000.00) in immediately available
funds (the "ACQUISITION CASH"); and (b) validly issued shares of Meridian's
Common Stock, par value $0.001 per share (the "ACQUISITION COMMON STOCK") with
an aggregate value of SIXTEEN MILLION, TWO HUNDRED NINETY-ONE THOUSAND DOLLARS
($16,291,000.00), which Acquisition Common Stock shall be comprised of
808,887.79 shares of Meridian's Common Stock priced at $20.14 per share. The
Purchase Price shall be paid in the following manner:
6.1 Payment at Closing. On the Closing Date, Meridian shall (a) deposit,
or cause to be deposited with First American Title Insurance Company whose
mailing address is 30 North LaSalle Street, Suite 310, Chicago, Illinois 60602,
Attention: John C. ("Jack") Murray, Vice President & Special Counsel (the "TITLE
COMPANY") acting in its additional capacity as escrow agent ("ESCROW AGENT"),
the Acquisition Common Stock pursuant to Section 6.1(v), (b) deposit $750,000.00
of the Acquisition Cash into an escrow account with the Escrow Agent pursuant to
Section 6.1(vi) (the "ESCROW AMOUNT") and (c) pay to Prudential through Escrow
Agent an amount equal to the Acquisition Cash less the Escrow Amount, in
immediately available funds by wire transfer as more particularly set forth in
Section 6.3. The Acquisition Cash shall also be subject to the prorations and
adjustments set forth in Article 5 or as otherwise provided under this
Agreement, plus any other amounts required to be paid by Meridian at Closing.
6.2 Allocation of Purchase Price. The Purchase Price has been allocated to
each Facility by Prudential and Meridian as set forth in EXHIBIT D attached
hereto and by this reference incorporated herein (such portion being such
Facility's "ALLOCATED PURCHASE PRICE", subject in each instance to Closing
adjustments provided hereunder.
ARTICLE 7 - TITLE MATTERS
7.1 Title to Real Property. Meridian acknowledges that, prior to the
execution of this Agreement, Meridian has conducted an examination of the status
of title to the Facilities. Meridian has previously obtained (a) a commitment to
issue an Owner's Policy of Title Insurance with respect to each Facility, copies
of which
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are attached hereto in Exhibit N and incorporated herein by this reference,
(each a "TITLE REPORT" and collectively, the "TITLE REPORTS") from the Title
Company, (b) copies of all recorded documents referred to on Schedule B of each
Title Report as exceptions to coverage (the "TITLE DOCUMENTS"), and (c) a
certified boundary survey of each Facility (each a "SURVEY" and collectively,
the "SURVEYS"). Meridian hereby confirms its approval of the Title Reports and
Surveys. Except as provided in Section 3.2, Prudential shall convey and Meridian
shall accept title to the Facilities, subject to (i) exceptions to title
appearing on Schedule B of the Title Reports, including the Title Company's
standard printed exceptions, (ii) any and all applicable zoning and building
ordinances and land use regulations, (iii) such state of facts as are disclosed
in the Survey with respect to each Facility, (iv) such state of facts as would
be disclosed by a physical inspection of each Facility, (v) the liens of taxes
not yet due and payable, (vi) any exceptions caused by Meridian, its agents,
representatives or employees, (vii) such other exceptions with respect to each
Facility as Title Company shall commit to insure over, without any additional
cost to Meridian, whether such insurance is made available in consideration of
payment, bonding, indemnity of Prudential or otherwise, and (viii) the Leases
(as defined in Subsection 6.4(c)) (the foregoing exceptions described in clauses
(i) through (viii) being herein collectively called the "PERMITTED EXCEPTIONS").
Notwithstanding the foregoing, Prudential shall, at Prudential's expense, cause
to be removed from the Title Reports all mortgages, deeds of trust, mechanic's
liens, and other monetary liens and judgments described thereon. Meridian shall
pay any additional premiums required for the deletion of the "survey exception"
on Meridian's fee policy of title insurance and for the issuance of any desired
or applicable endorsements requested by Meridian which are available in the
state where each Facility is located. Meridian is aware that ALTA policies and
ALTA endorsements may not be available in all states in which the Facilities are
located.
7.2 Title Defects.
7.2.1 Certain Exceptions to Title. Meridian shall have the right to
object in writing to any title matters that are not Permitted Exceptions and
that, in Meridian's reasonable discretion, materially adversely affect title to,
or the value of, the Real Property with respect to any Facility which may appear
on supplemental title reports or updates to the Title Reports issued at the
request of Meridian after the end of the Due Diligence Period (herein
collectively called the "OTHER LIENS") within five (5) days after the receipt
thereof by Meridian. Unless Meridian shall timely object to such Other Liens,
all such Other Liens and any matters which do not, in Meridian's reasonable
discretion, materially adversely affect title to, or the value of, the Real
Property with respect to any Facility which are set forth in any such
supplemental reports or updates shall be deemed to constitute additional
Permitted Exceptions. Any exceptions which are timely objected to by Meridian
shall be herein collectively called the "TITLE OBJECTIONS." Prudential may elect
(but shall not be obligated) to remove, or cause to be removed at its expense,
any Title Objections, and shall be entitled to a reasonable adjournment of the
Closing (not to exceed thirty (30) days) for the purpose of such removal, which
removal will be deemed effected by the issuance of title insurance eliminating
or insuring against the effect of the Title Objections. Prudential shall notify
Meridian in writing within five (5) days after receipt of Meridian's notice of
Title Objections whether Prudential elects to remove the same. If Prudential is
unable to remove or endorse over any Title Objections prior to the Closing, or
if Prudential elects not to remove one or more Title Objections, Meridian may
elect to either (a) terminate this Agreement, in which event the parties shall
have no further rights or obligations hereunder except for obligations which
expressly survive the termination of this Agreement, or (b) waive such Title
Objections, in which event such Title Objections shall be deemed
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<PAGE> 15
"Permitted Exceptions" and the Closing shall occur as herein provided without
any reduction of or credit against the Purchase Price.
7.2.2 Discharge of Title Objections. If on the Closing Date there
are any Title Objections which Prudential has elected to pay and discharge,
Prudential may use any portion of the Acquisition Cash to satisfy the same,
provided Prudential shall deliver to Meridian at the Closing instruments in
recordable form and sufficient to satisfy such Title Objections of record,
together with the cost of recording or filing such instruments, or provided that
Prudential shall cause Title Company to insure over the same, without any
additional cost to Meridian, whether such insurance is made available in
consideration of payment, bonding, indemnity of Prudential or otherwise.
7.3 Title Insurance. At Closing, Title Company shall issue to Meridian, at
Meridian's sole cost and expense, an ALTA Owner's Form (or such other form of
Owner's Policy as may be promulgated in the state in which a particular Facility
is located) of title insurance policy in the form of the applicable Title Report
(each an "OWNER'S TITLE POLICY" and collectively, the "OWNER'S TITLE POLICIES"),
in the amount of the Allocated Purchase Price with respect to such Facility
insuring that fee simple title to such Facility or Facilities is vested in
Meridian subject only to the Permitted Exceptions with respect to such Facility;
provided,however, that at Meridian's option, Meridian may instruct the Title
Company to issue one or more Owner's Title Policies insuring the state of title
to multiple Facilities. Meridian shall be entitled to request that the Title
Company provide, at Meridian's sole cost and expense, such endorsements (or
amendments) to the Owner's Title Policies as Meridian may reasonably require,
provided that (a) such endorsements (or amendments) shall be at no cost or
additional liability to Prudential, (b) Meridian's obligations under this
Agreement shall not be conditioned upon Meridian's ability to obtain such
endorsements and, if Meridian is unable to obtain such endorsements, Meridian
shall nevertheless be obligated to proceed to close the transaction contemplated
by this Agreement (the "TRANSACTION") without reduction of or set off against
the Purchase Price, and (c) the Closing shall not be delayed as a result of
Meridian's request. Notwithstanding anything herein to the contrary, Meridian
covenants and agrees that upon Meridian's acquisition of the Facilities,
Meridian shall purchase the Owner's Title Policies from the Title Company.
ARTICLE 8 - MERIDIAN'S DUE DILIGENCE/CONDITION OF THE FACILITIES
8.1 Meridian's Inspection of the Facilities. Meridian acknowledges that
during the time period concluding prior to the execution of this Agreement (the
"DUE DILIGENCE PERIOD"), that Meridian has conducted its examinations,
inspections, testing, studies and/or investigations (herein collectively called
the "DUE DILIGENCE") of the Facilities (including for Hazardous Materials) and
information regarding the Facilities. Meridian and Prudential each acknowledge
and agree that Meridian shall have no additional period after the date hereof to
conduct further physical Due Diligence of the Facilities. At Closing and as a
material inducement for Prudential to consummate the Transaction, Meridian will
deliver, with respect to each Facility, a certification in the form of EXHIBIT E
attached hereto and incorporated herein by this reference, certifying that no
representations or warranties concerning the Facilities have been made except as
expressly set forth herein. Notwithstanding the completion of Meridian's Due
Diligence of the Facilities, Prudential and Meridian hereby acknowledge and
agree that Meridian has raised certain objections with respect to that certain
Facility located at 4401 Cambridge Road, Forth Worth, Texas and identified on
Exhibit A hereto as Centreport 7, Fort
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<PAGE> 16
Worth, Texas ("CENTREPORT"). Prudential and Meridian hereby further acknowledge
and agree that the scope of such objections and the agreed upon remedy with
respect to each such objection is set forth in clauses (a) and (b) below.
(a) The failure of the Centreport Facility to comply in certain respects
with the American's with Disabilities Act. Prudential hereby
covenants and agrees that Prudential shall reimburse Meridian in the
amount up to $18,000.00 for repairs and alterations completed by
Meridian and which are necessary, pursuant to a report issued by a
licensed structural engineering firm, to cause the Centreport
Facility to comply with the American's with Disabilities Act. Such
reimbursement shall be paid by Prudential to Meridian within twenty
(20) days of Prudential's receipt of a certificate from Meridian
certifying that such required repairs and alterations have been
completed and attaching structural engineering reports, receipts,
invoices and other evidence that such repairs and alterations has
been completed and paid for by Meridian.
(b) Meridian's Phase I Environmental Report with respect to the
Centreport Facility indicates that there are chemical stains and
cracked concrete on a portion of the facility which may require
certain environmental remediation. Prudential hereby covenants and
agrees that Prudential shall reimburse Meridian in the amount up to
$100,000.00 for any such remediation completed by Meridian and which
is necessary, pursuant to a report issued by a licensed
environmental engineering firm, to cause the Centreport Facility to
comply with applicable Laws with respect to Hazardous Materials.
Such reimbursement shall be paid by Prudential to Meridian within
twenty (20) days of Prudential's receipt of a certificate from
Meridian certifying that such required remediation has been
completed and attaching environmental engineering reports, receipts,
invoices and other evidence that such remediation has been completed
and paid for by Meridian.
8.2 Meridian's Inspection of Documents. Meridian acknowledges that prior
to Meridian's execution of this Agreement, Prudential made available to Meridian
and otherwise allowed Meridian access to copies of certain documents in
Prudential's possession applicable to the Facilities, including, but not limited
to, the Title Reports, the Title Documents, the Surveys, the Leases, other
reports and any available documents and other pertinent books and records which
pertain to the Facilities (collectively, the "DOCUMENTS") as Meridian has deemed
necessary or appropriate. Meridian has determined to its satisfaction the
assignability of any Documents to be assigned hereunder. Prudential shall
cooperate with Meridian (but shall not be obligated) to obtain any consents
required in connection with the assignment to Meridian of any of the Documents.
All of the Documents are confidential and, prior to such time, if any, that
Meridian takes title to the Facilities, shall not be distributed or disclosed by
Meridian to any person or entity not associated with Meridian (which obligation
of Meridian shall survive any termination of this Agreement). If the Transaction
fails to close for any reason whatsoever, Meridian shall return to Prudential
all of the Documents (together with all copies thereof made by or on behalf of
Meridian) which Prudential, its sales agents or brokers may have previously
delivered or made available or may hereafter deliver or make available to
Meridian in accordance with this Section 4.2 (which obligation of Meridian shall
survive any termination of this Agreement). BY FURNISHING TO MERIDIAN THE
DOCUMENTS, EXCEPT AS EXPRESSLY SET FORTH HEREIN, WHETHER HERETOFORE OR
HEREAFTER, NONE OF PRUDENTIAL, ITS SALES AGENTS OR BROKERS, NOR ANY PARTNER,
OFFICER, DIRECTOR, EMPLOYEE, AGENT OR ATTORNEY OF PRUDENTIAL, NOR
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<PAGE> 17
ANY OTHER PARTY RELATED IN ANYWAY TO ANY OF THE FOREGOING (ALL OF WHICH PARTIES
ARE COLLECTIVELY REFERRED TO AS THE "PRUDENTIAL PARTIES") SHALL BE DEEMED TO
HAVE MADE ANY REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE WHATSOEVER WITH
RESPECT TO ANY MATTER SET FORTH, CONTAINED OR ADDRESSED IN THE DOCUMENTS,
INCLUDING, BUT NOT LIMITED TO, THE ACCURACY AND COMPLETENESS THEREOF, AND
MERIDIAN SHALL CONFIRM INDEPENDENTLY ALL INFORMATION THAT IT CONSIDERS MATERIAL
TO ITS PURCHASE OF THE FACILITIES.
Meridian acknowledges that prior to Meridian's execution of this Agreement
Prudential has made available to Meridian, and Prudential hereby agrees to
continue to make available to Meridian and otherwise allow Meridian access to,
other non-confidential information regarding the Facilities, including, but not
limited to, information which may have related to their construction, history,
current economic and leasing status, physical condition and prospects for future
use or development, as Meridian has deemed appropriate. Meridian acknowledges
that Meridian has reviewed the Documents and the other information regarding the
Facilities with the assistance of such experts as Meridian deemed appropriate.
While Prudential has provided, and will continue to provide, the Documents and
such other information to Meridian and to cooperate with Meridian, PRUDENTIAL
HAS MADE IT CLEAR THAT IT IS UNWILLING TO SELL THE FACILITIES TO MERIDIAN UNLESS
PRUDENTIAL AND THE OTHER PRUDENTIAL PARTIES ARE EXPRESSLY RELEASED FROM
LIABILITY BY MERIDIAN FOR ANY AND ALL REPRESENTATIONS MADE IN ANY STATEMENTS
HERETOFORE OR HEREAFTER MADE, OR INFORMATION HERETOFORE OR HEREAFTER FURNISHED
TO MERIDIAN OR ITS AGENTS OR REPRESENTATIVES BY THE PRUDENTIAL PARTIES UNLESS
SUCH REPRESENTATIONS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY EXHIBIT
HERETO. Consequently, Meridian, for Meridian and Meridian's successors in
interest, hereby releases the Prudential Parties from, and waives all claims and
liability against the Prudential Parties for, any and all representations now or
hereafter made, or information now or hereafter furnished, by the Prudential
Parties to Meridian or its agents or representatives (including, but not limited
to, representations regarding the ownership, operation, economic and leasing
status and physical and soil condition of the Facilities), unless the
representations are expressly set forth in this Agreement or any exhibit hereto.
The release of Prudential Parties set forth in this Section 4.2 shall be deemed
to be reaffirmed as of the Closing and shall survive the Closing and shall not
be merged therein. Meridian acknowledges and agrees that it (i) is familiar with
the physical condition of the Facilities, (ii) has completed its due diligence
with respect to the Facilities and the Documents to its satisfaction, (iii) is
acquiring the Facilities based exclusively upon its own investigations and
inspections of the Facilities and the Documents, and (iv) shall have not
additional period after the date hereof to conduct further physical due
diligence regarding the Facilities.
ARTICLE 9 - ADJUSTMENTS AND PRORATIONS
The following adjustments and prorations shall be made at Closing:
9.1 Lease Rentals and Expenses.
9.1.1 Rents. All collected rents and other payments from tenants
under the leases of the Facilities shall be prorated between Prudential and
Meridian as of the day prior to the Closing Date. Prudential shall be entitled
to all rents (including any percentage rent, additional rent and any accrued tax
and operating
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expense reimbursements and escalations), charges, and other revenue of any kind
attributable to any period under the Leases to but not including the Closing
Date. Meridian shall be entitled to all rents (including any percentage rent,
additional rent and any accrued tax and operating expense reimbursements and
escalations), charges and other revenue of any kind attributable to any period
under the Leases on and after the Closing Date. Rents and expense escalations or
other reimbursements due landlord under the Leases not collected as of the
Closing Date shall not be prorated at the time of Closing, but Meridian shall
make a good faith effort to collect the same on Prudential's behalf and to
tender the same to Prudential upon receipt (which obligation of Meridian shall
survive the Closing and not be merged therein); provided, however, that all
rents, escalations and other reimbursements due landlord under the Leases
collected by Meridian on or after the Closing Date shall first be applied to all
amounts due under the Leases at the time of collection (i.e., current rents and
sums due Meridian as the current owner and landlord) with the balance (if any)
payable to Prudential, but only to the extent of amounts delinquent and actually
due Prudential. Meridian shall not have an exclusive right to collect the sums
due Prudential under the Leases and Prudential hereby retains its rights to
pursue any tenant under the Leases for sums due Prudential for periods
attributable to Prudential's ownership of the Facilities; provided, however,
that Prudential shall not be permitted to commence or pursue any legal
proceedings against any tenant seeking eviction of such tenant or the
termination of the underlying lease. Prudential's rights under the immediately
preceding sentence shall survive the Closing and not be merged therein. Meridian
shall receive a credit against the Acquisition Cash portion of the Purchase
Price for pre-paid rentals held by Prudential covering the period post-Closing.
9.1.2 Lease Expenses. At Closing, Meridian shall reimburse
Prudential for the Lease Expenses (as defined in Section 13.2) to the extent
required by the terms of Section 13.2.
9.2 Real Estate and Personal Property Taxes. Real estate taxes, as opposed
to personal property taxes, shall be prorated only on the basis of real estate
taxes which become due and payable in the calendar year during which Closing
occurs, based upon the latest available tax bill and the number of days elapsed
in the calendar year of Closing, as of midnight of the day immediately preceding
the Closing Date. Personal property taxes shall be prorated as of the Closing
Date based upon the date they become due. Prudential shall be entitled to all
tax refunds and credits attributable to the Facilities prior to the Closing
Date. Meridian shall pay all real estate and personal property taxes and shall
be entitled to all tax refunds and credits attributable to the Facilities after
the Closing Date. If the real estate and/or personal property tax rate and
assessments have not been set for the calendar year in which the Closing occurs,
then the proration of such taxes shall be based upon the rate and assessments
for the preceding calendar year, and such proration shall be adjusted between
Prudential and Meridian upon presentation of written evidence that the actual
taxes paid for the calendar year in which the Closing occurs differ from the
amounts used at Closing and in accordance with the provisions of Section 5.7.
Prudential shall pay all installments of special assessments due and payable
prior to the Closing Date and Meridian shall pay all installments of special
assessments due and payable on and after the Closing Date; provided, however,
that Prudential shall not be responsible for any installments of special
assessments which have not been confirmed or which relate to projects that have
not been completed on the date hereof. Notwithstanding the foregoing terms of
this Section, Prudential shall have no obligation to pay (and Meridian shall not
receive a credit at Closing for) any real estate or personal property taxes or
special assessments to the extent that Meridian is entitled after Closing to
reimbursement of taxes and assessments, or the recovery of any increase in taxes
and assessments, from the tenants under the Leases, regardless of whether
Meridian actually collects such reimbursement or increased taxes and assessments
from such tenants, it being
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understood and agreed by Meridian and Prudential that the burden of collecting
such reimbursements shall be solely on Meridian. In the event any Facility has
been assessed for property tax purposes at such rates as would result in
reassessment (i.e., "escape assessment" or "roll-back taxes") based upon the
change in land usage or ownership of such Facility, Meridian hereby agrees to
pay all such taxes and to indemnify and save Prudential harmless from and
against all claims and liability for such taxes. Such indemnity shall survive
the Closing and not be merged therein.
9.3 Other Property Operating Expenses. Operating expenses for the
Facilities shall be prorated as of midnight of the day prior to the Closing
Date. Prudential shall pay all utility charges and other operating expenses
attributable to the Facilities to, but not including the Closing Date (except
for those utility charges and operating expenses payable by tenants in
accordance with the Leases) and Meridian shall pay all utility charges and other
operating expenses attributable to the Facilities on or after the Closing Date.
To the extent that the amount of actual consumption of any utility services is
not determined prior to the Closing Date, a proration shall be made at Closing
based on the last available reading and post-closing adjustments between
Meridian and Prudential shall be made within twenty (20) days of the date that
actual consumption for such pre-closing period is determined, which obligation
shall survive the Closing and not be merged therein. Prudential shall not assign
to Meridian any deposits which Prudential has with any of the utility services
or companies servicing the Facilities. Meridian shall arrange with such services
and companies to have accounts opened in Meridian's name beginning at 12:01 a.m.
on the Closing Date. Notwithstanding the foregoing terms of this Section,
Prudential shall have no obligation to pay (and Meridian shall not receive a
credit at Closing for) any operating expenses to the extent that Meridian is
entitled after Closing to reimbursement of operating expenses, or the recovery
of any increase in operating expenses, from the tenants under the Leases,
regardless of whether Meridian actually collects such reimbursement or increased
operating expenses from such tenants, it being understood and agreed by Meridian
and Prudential that the burden of collecting such reimbursements shall be solely
on Meridian.
9.4 Closing Costs. Except as expressly provided herein, Meridian shall pay
all costs associated with Closing other than Prudential's attorney's fees and
costs. Without limiting the foregoing, Meridian shall pay all premiums and
charges of the Title Company for the Owner's Title Policies (including
endorsements requested by Meridian) to be issued pursuant to the Title Reports,
the cost of the Surveys, the cost of any Phase I environmental reports ordered
by Meridian, all recording and filing charges in connection with the instruments
by which Prudential conveys the Facilities and all escrow charges, all transfer
taxes, all costs of Meridian's Due Diligence and any other costs customarily
paid by the purchaser of real property pursuant to the customs of the state in
which each Facility is located. Each party shall pay its own attorneys. The
obligations of Meridian to pay applicable escrow charges shall survive the
termination of this Agreement.
9.5 Cash Security Deposits. At Closing, Prudential shall give Meridian a
credit against the Acquisition Cash in the aggregate amount of the unapplied
cash security deposits then held by Prudential under the Leases and any interest
thereon less, any administrative or similar charges to which Prudential may be
entitled under applicable law.
9.6 Dividend Adjustment. Prudential shall pay to Meridian, promptly after
receipt of dividends for the quarter ended September 30, 1997, an amount equal
to the product of (x) Accrued Dividends Per Share
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multiplied by (y) 808,887.79 shares (the "Dividend Adjustment"). Payment of such
Dividend Adjustment shall be made in the manner as set forth in Section 5.8 or
as otherwise agreed to by Prudential and Meridian.
9.7 Apportionment Credit. In the event the apportionments to be made at
the Closing result in a credit balance (i) to Meridian, such sum shall be paid
(at Prudential's option) at the Closing by giving Meridian a credit against the
Acquisition Cash in the amount of such credit balance or without reduction of
the Acquisition Cash by giving Meridian a certified or bank check payable to the
order of Meridian, or (ii) to Prudential, Meridian shall pay the amount thereof
to Prudential at the Closing by wire transfer of immediately available funds to
the account or accounts to be designated by Prudential for the payment of the
Acquisition Cash. Notwithstanding anything herein to the contrary, if the
aggregate adjustments and prorations payable by Prudential to Meridian at
Closing equal or exceed $100,000.00, then Prudential may, in its sole
discretion, elect to give Meridian a credit (a) solely against the Acquisition
Cash or (b) on a pro rata basis against each of the Acquisition Cash and the
number of share of Acquisition Common Stock to be delivered at Closing.
9.8 Delayed Adjustment. If at any time following the Closing Date, the
amount of an item listed in any section of this Article 5 shall prove to be
incorrect (whether as a result in an error in calculation or a lack of complete
and accurate information as of the Closing), the party in whose favor the error
was made shall promptly pay to the other party the sum necessary to correct such
error upon receipt of proof of such error, provided that such proof is delivered
to the party from whom payment is requested on or before one (1) year after
Closing. The provisions of this Section 5.8 shall survive the Closing and not be
merged therein.
ARTICLE 10 - CLOSING
Meridian and Prudential hereby agree that the Transaction shall be consummated
as follows:
10.1 Closing. Meridian and Prudential hereby agree that the Transaction
shall be consummated via a Closing in escrow with the Escrow Agent. The Escrow
Agent shall be paid a closing escrow fee in the total sum of Seven Hundred Fifty
Dollars ($750.00) for services as Escrow Agent. Meridian and Prudential shall
each pay one-half of such closing escrow fee. On the Closing Date, Escrow Agent
shall close escrow by:
(i) Recording all documents as may be necessary to clear title to each
Facility in accordance with the requirements of this Agreement;
(ii) Recording the Deeds (as hereinafter defined);
(iii) Paying all closing costs and making all prorations in accordance
with the terms of this Agreement and a statement of adjustments and
prorations prepared by Escrow Agent and approved by Meridian and
Prudential, copies of which statement shall be signed in multiple
originals by Meridian and Prudential and delivered to Escrow Agent
prior to the Closing Date;
(iv) Delivering to Meridian the Owner's Title Policies, closing
statement(s) duly executed by Meridian, Prudential and Escrow Agent,
and an original of each of the documents described in
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Sections 6.4(b) through (p) (the Deeds referred to in Section 6.4(a)
to be delivered by Escrow Agent to Meridian after return from the
recorder's office);
(v) Delivering to Prudential the following: (a) by wire transfer to be
received by Prudential's bank not later than 12:00 p.m. Eastern
Time, on the Closing Date, or as otherwise may be directed by
written instructions from Prudential the Acquisition Cash less the
Escrow Amount, plus or minus closing adjustments and prorations; (b)
by delivering to Prudential a share certificate representing the
total number of shares of Acquisition Common Stock; and (c)
delivering to Prudential, on or promptly after the Closing Date, a
closing statement fully executed by Prudential, Meridian and Escrow
Agent, a copy of the Title Policies, conformed copies of the
recorded Deeds, and an original of each of the documents described
in Sections 6.5(b) through (i), and copies of the documents
described in Section 6.5(j); and
(vi) Depositing the Escrow Amount into a segregated interest bearing
escrow account created by Escrow Agent for the benefit of the
parties hereto pending application of such Escrow Amount in
accordance with Article 12 hereof.
In the event that Meridian or Prudential execute separate escrow
instructions, such separate escrow instructions shall constitute separate
agreements between Escrow Agent on the one hand, and Meridian or Prudential, as
the case may be, on the other hand, and shall not constitute agreements between
Meridian and Prudential. Such separate escrow instructions shall be enforceable
only to the extent not inconsistent with this Agreement.
10.2 Closing Date. Subject to Prudential's right to extend the Closing as
provided in this Agreement, the Transaction shall close ("CLOSING") on a date
(the "CLOSING DATE") that is on or before August 31, 1997 unless such date is
not a business day, in which event the Closing shall occur on the next business
day thereafter. Closing may, at Prudential's election, be either by a so-called
"New York style" closing or through escrow. The Closing shall take place at
10:00 a.m. Eastern Time in the offices of Prudential's attorneys. Meridian and
Prudential shall conduct a "pre-closing" no later than three (3) business days
prior to the Closing Date. Meridian and Prudential, separately or collectively,
as appropriate for each item, shall escrow with the Title Company no later than
two (2) business days prior to the Closing Date fully executed, notarized and
recordable Deeds (as hereinafter defined) for the Real Property, bills of sale
for the Personal Property, and each of the additional items listed in Sections
6.4 and 6.5, such documents to be held by the Title Company pursuant to an
escrow letter to be provided by Prudential on or before the Closing Date. Title
transfer and payment of the Purchase Price is to be completed on the Closing
Date as set forth in Section 6.3. Time is of the essence with respect to the
Closing Date.
10.3 Title Transfer and Payment of Purchase Price. Provided all conditions
precedent to Prudential's obligations hereunder have been satisfied, Prudential
agrees to convey title to each Facility to Meridian by the Deeds upon
confirmation of receipt of the Purchase Price as set forth below. Provided all
conditions precedent to Meridian's obligations hereunder have been satisfied,
Meridian agrees to deliver the Purchase Price, as specified in Article 2, by
timely delivering the same to the Escrow Agent no later than 9:00 a.m. Eastern
Time on the Closing Date.
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10.4 Prudential's Closing Deliveries. At the Closing, Prudential shall
deliver or cause to be delivered to Meridian the following:
(a) Deeds. A Deed with respect to each Facility in the form of
EXHIBIT F attached hereto and incorporated herein by this reference, conveying
to Meridian the Real Property with respect to each such Facility, subject only
to the Permitted Exceptions (each individually a "DEED" and collectively, the
"DEEDS").
(b) Bill of Sale. A bill of sale with respect to each Facility in
the form of EXHIBIT G attached hereto and incorporated herein by this reference
conveying all of Prudential's right, title and interest in and to the Personal
Property with respect to each such Facility.
(c) Assignment of Tenant Leases. An assignment and assumption of
tenant leases with respect to each Facility, in the form of EXHIBIT H attached
hereto and incorporated herein by this reference (each individually an
"ASSIGNMENT OF LEASES" and collectively, the "ASSIGNMENTS OF LEASES")
transferring all of the landlord's interest in the tenant space leases for the
tenants for each such Facility as identified on EXHIBIT I (the "TENANTS")
attached hereto and incorporated herein by this reference (as updated at
Closing) and any amendments, guarantees and other documents relating thereto
(herein collectively called the "LEASES"), together with all assignable non-cash
security deposits deposited by the Tenants thereunder and not applied by
Prudential in accordance with the terms of the Leases.
(d) Assignment of Equipment Leases, Commission Agreements and
Service Contracts. An assignment and assumption of equipment leases, commission
agreements, service contracts, warranties and guaranties and the Other Property
Rights with respect to each Facility (to the extent the same are not transferred
by the applicable Deed, Bill of Sale or Assignment of Leases with respect to
such Facility) in the form of EXHIBIT J attached hereto and incorporated herein
by this reference (each individually an "ASSIGNMENT OF CONTRACTS" and
collectively, the "ASSIGNMENTS OF CONTRACTS"), transferring, to the extent
assignable, without liability or expense to Prudential, all of Prudential's
interest in the equipment leases and any lease commission agreements in effect
at each such Facility on the Closing Date, all uncanceled service contracts
encumbering such Facility on the Closing Date, all warranties and guaranties
which remain in effect with respect to such Facility on the Closing Date and any
Other Property Rights with respect to such Facility not otherwise transferred to
Meridian (all of the foregoing being herein collectively called the
"CONTRACTS"). Prudential shall not assign any existing management agreement or
any contracts or policies of insurance for the Facilities.
(e) Estoppel Letters. Executed estoppel letters, with respect to
each of the Facilities, from each of the Tenants. All of such estoppel letters
shall be dated no earlier than thirty (30) days prior to the initially scheduled
Closing Date and shall be substantially in the form which such Tenant is
required to provide pursuant to the terms of such Tenant's Lease or, if no form
is specified in any of the Leases, in the form of EXHIBIT K-1 attached hereto
and incorporated herein by this reference. In the event Prudential cannot for
any reason obtain a tenant estoppel letter from a Tenant from whom an estoppel
letter is required, Prudential, at its option, may deliver to Meridian a
seller's (landlord) estoppel letter in the form of EXHIBIT K-2 attached hereto
and incorporated herein by this reference. Prudential's liability under
Prudential's estoppel letters shall expire and be of no further force or effect
on the one-hundred and eightieth (180th) day following the Closing Date;
provided, however, that if Prudential shall obtain an estoppel certificate from
any such Tenant after
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delivery of such Prudential's estoppel letter with respect to such Tenant,
Prudential's (landlord) estoppel letter shall, as of the date of such Tenant's
estoppel letter, be without further force or effect.
(f) Notice to Tenants. A single form letter in the form of EXHIBIT L
attached hereto and incorporated herein by this reference to each Tenant under
the Leases, duplicate copies of which would be sent notifying it of the sale of
its respective Facility to Meridian and advising it that all future payments of
rent and other payments due under its respective Lease are to be made to
Meridian at an address designated by Meridian.
(g) Non-Foreign Status Affidavit. A non-foreign status affidavit in
the form of EXHIBIT M attached hereto and incorporated herein by this reference,
as required by Section 1445 of the Internal Revenue Code.
(h) Evidence of Authority. Documentation sufficient to establish the
due authorization of Prudential's sale of the Facilities and Prudential's
delivery of the documents required to be delivered by Prudential pursuant to
this Agreement which documentation shall consist of the certificate described in
Section 7.2(f) and a certificate of an Assistant Secretary of Prudential with
respect to the authority to act on behalf of Prudential of the individual
executing on behalf of Prudential all documents contemplated by this Agreement.
Prudential shall deliver to Title Company such documents as may be reasonably
required by Title Company to evidence the capacity of Prudential and the
authority of the person executing any documents on behalf of Prudential.
(i) Prudential's Certificate. The certificate of Prudential
certifying to the matters set forth in Section 8.2.
(j) Facility Documents. (i) To the extent in the possession of
Prudential or any of the current managers of the Facilities, (A) the original
(or, if unavailable, a copy) of the existing certificate of occupancy for each
Facility, and (B) all original (or, if unavailable, copies of) certificates,
licenses, permits, authorizations and approvals issued for or with respect to
each Facility by governmental and quasi-governmental authorities having
jurisdiction; and (ii) all non-proprietary books and records located at each
Facility and/or at the office of Prudential's building manager relating to such
Facility and the ownership and operation thereof (the items described in clauses
(i) and (ii) being herein collectively called the "PROPERTY DOCUMENTS").
(k) Letters of Credit as Tenant Security Deposits. With respect to
any security deposits which are letters of credit, Prudential shall, if the same
are assignable, (i) deliver to Meridian at the Closing such letters of credit,
(ii) execute and deliver such other instruments as the issuers of such letters
of credit shall reasonably require, and (iii) cooperate with Meridian to change
the named beneficiary under such letters of credit to Meridian so long as
Prudential does not incur any additional liability or expense in connection
therewith.
(l) Keys and Original Documents. Keys to all locks at each Facility
(in Prudential's and/or Prudential's building managers' possession) and
originals or, if originals are not available, copies, of the Leases and
Contracts (unless canceled as set forth herein) encumbering any of the
Facilities on the Closing Date.
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<PAGE> 24
(m) Transfer Taxes. If applicable, duly completed and signed real
estate transfer tax returns.
(n) Registration Rights Agreement. A registration rights agreement
in the form of EXHIBIT Q attached hereto and incorporated herein by this
reference (the "REGISTRATION RIGHTS AGREEMENT") duly executed by Prudential.
(p) Other Documents. Such other documents as may be reasonably
required by Title Company or as may be agreed upon by Prudential and Meridian to
consummate the Transaction.
10.5 Meridian Closing Deliveries. At the Closing, Meridian shall deliver
or cause to be delivered to Prudential the following:
(a) Acquisition Cash. The Acquisition Cash, as adjusted for
apportionments and other adjustments required under this Agreement, plus any
other amounts required to be paid by Meridian at Closing.
(b) Assignment of Leases. An Assignment of Leases for each Facility
executed and acknowledged by Meridian.
(c) Assignment of Equipment Leases, Commission Agreements and
Service Contracts. An Assignment of Contracts for each Facility executed and
acknowledged by Meridian.
(d) Meridian's Certificates. The certificate of Meridian with
respect to each Facility, as required under Article 4 hereof and a certificate
of Meridian certifying as to the matters set forth in Section 8.1.
(e) Evidence of Authority. Documentation to establish to
Prudential's reasonable satisfaction the due authorization of Meridian's
acquisition of the Facilities and Meridian's delivery of the documents required
to be delivered by Meridian pursuant to this Agreement (including, but not
limited to, the organizational documents of Meridian, as they may have been
amended from time to time, resolutions of Meridian and incumbency certificates
of Meridian.
(f) Transfer Taxes. If applicable, duly completed and signed real
estate transfer tax returns.
(g) Registration Rights Agreement. The Registration Rights Agreement
for the benefit of Prudential and duly executed by Meridian.
(i) Evidence of Acquisition Common Stock Delivery. In accordance
with Section 6.1(v), Meridian shall present evidence that the Escrow Agent has
received a share certificate representing the Acquisition Common Stock.
(j) Other Documents. Such other documents as may be reasonably
required by Title Company or may be agreed upon by Prudential and Meridian to
consummate the Transaction.
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10.6 Delivery of Deeds. Effective upon delivery of the Deeds, actual and
exclusive possession of each Facility (subject only to the Permitted Exceptions)
and risk of loss to the Facilities shall pass from Prudential to Meridian.
ARTICLE 11 - CONDITIONS TO CLOSING
11.1 Conditions Precedent to Obligations of Prudential. Prudential's
obligation to close the Transaction is conditioned on all of the following, any
or all of which may be waived by Prudential by an express written waiver, at its
sole option:
(a) Representations True; Performance of Covenants. All
representations and warranties made by Meridian in this Agreement shall be true
and correct in all material respects on and as of the Closing Date, as if made
on and as of such date except to the extent they expressly relate to an earlier
date and Meridian shall have complied in all material respects with all
agreements required to be performed by it hereunder at or prior to the Closing
Date.
(b) Meridian's Deliveries Complete. Meridian shall have delivered
the Acquisition Cash and the Acquisition Common Stock required hereunder and all
of the documents to be executed by Meridian set forth in Section 6.5 and shall
have performed all other covenants, undertakings and obligations, and complied
with all conditions required by this Agreement, to be performed or complied with
by Meridian at or prior to the Closing.
(c) Opinion of Meridian's Counsel. On the Closing Date, Prudential
shall have received an opinion of Vinson & Elkins L.L.P., counsel for Meridian,
substantially in the form of EXHIBIT S attached hereto and incorporated herein
by this reference, and dated as of the Closing Date. In rendering the foregoing
opinion, such counsel may rely as to factual matters upon certificates or other
documents furnished by directors and officers of Meridian and by government
officials, and upon such other documents as such counsel deem appropriate as a
basis for such opinion. Such counsel may specify the jurisdictions in which they
are admitted to practice and that they are not admitted to practice in any other
jurisdiction and are not experts in the law of any other jurisdiction. To the
extent such opinion concerns the laws of any other such jurisdiction, such
counsel may either provide an opinion of counsel admitted to practice in such
jurisdiction (which counsel shall be reasonably acceptable to Prudential) in
lieu of its own opinion or rely upon the opinion of such counsel. Prudential
hereby agrees that the firm of Ballard Spahr Andrews & Ingersoll is acceptable
to Prudential for purposes of providing such opinions involving the laws of the
State of Maryland. To the extent that any opinion rendered by counsel admitted
to practice in another jurisdiction or relied upon by Vinson & Elkins L.L.P.,
including any exception or limitation thereto, is materially different from the
opinion to be delivered at Closing by Vinson & Elkins L.L.P. such opinion shall
be reasonably satisfactory to Prudential and a copy of such opinion shall be
delivered to Prudential at the Closing.
(d) No Material Adverse Effect. There shall not have occurred any
event which has had, or could reasonably be expected to have, a Material Adverse
Effect subsequent to March 31, 1997.
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<PAGE> 26
(e) Meridian Closing Certificate. At the Closing Date, Prudential
shall have received a certificate, dated the Closing Date, signed by an
authorized officer of Meridian in such capacity and not individually to the
effect set forth in Subsections 7.1(a) and (d), and stating that the conditions
specified in this Section 7.1 have been satisfied at the Closing Date.
(f) Meridian Officers' Certificate/Incumbency. At the Closing Date,
Prudential shall have received a certificate, dated the Closing Date, signed by
the Secretary or an Assistant Secretary of Meridian in such capacity and not
individually and certifying (i) that attached thereto is a true, correct and
complete copy of (A) the Charter, (B) Bylaws and (C) resolutions duly adopted by
the Board of Directors of Meridian authorizing the execution and delivery of the
documents relating to the Transaction and the issuance and sale of the
Acquisition Common Stock, (ii) the incumbency of officers executing this
Agreement and the other documents relating to the Transaction, and (iii) that
attached thereto is a specimen of the share certificate for the Acquisition
Common Stock.
(g) Transaction Not Prohibited. 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.
(h) Meridian Shareholder Approval. The shareholders of Meridian
shall have granted any requisite approvals necessary in connection with the
issuance of the Acquisition Common Stock to Prudential.
(i) Other Approvals. All Approvals set forth in Schedule 8.1.5 and
Schedule 8.1.10 shall have been received or the applicable waiting periods shall
have expired.
(j) REOC Requirement. Prudential shall be reasonably satisfied that
Meridian is qualified as a REOC.
(k) ERISA Compliance. Prudential shall be reasonably satisfied that
the Transaction complies in all respects with ERISA and would not be a
non-exempt prohibited transaction under ERISA or Section 4975 of the Code.
(l) Voting Rights. Meridian shall have taken all actions necessary
to ensure that Prudential shall have full voting rights with respect to the
Acquisition Common Stock (including, without limitation, obtaining approvals of
the Board of Directors of Meridian and amending the Charter or Bylaws of
Meridian, as applicable).
11.2 Conditions Precedent to Obligations of Meridian. Meridian's
obligation to close the Transaction is conditioned on all of the following, any
or all of which may be waived by Meridian by an express written waiver, at its
sole option:
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(a) Representations True; Performance of Covenants. Subject to the
provisions of Section 8.3, all representations and warranties made by Prudential
in this Agreement, as the same may be amended as provided in Section 8.3, shall
be true and correct in all material respects on and as of the Closing Date, as
if made on and as of such date except to the extent that they expressly relate
to an earlier date and Prudential shall have complied in all material respects
with all agreements required to be performed by it hereunder at or prior to the
Closing Date and Prudential shall have provided such evidence thereof as
Meridian may reasonably request.
(b) Title Conditions Satisfied. At the time of the Closing, title to
each Facility shall be as provided in Article 3 of this Agreement.
(c) Prudential's Deliveries Complete. Prudential shall have
delivered all of the documents and other items required pursuant to Section 6.4
and shall have performed all other covenants, undertakings and obligations, and
complied with all conditions required by this Agreement, to be performed or
complied with by Prudential at or prior to the Closing.
(d) Transaction Not Prohibited. 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.
(f) Prudential Authorization. At the Closing, Meridian shall have
received a certificate, dated the Closing Date, signed an officer of Prudential
in such capacity and not individually to the effect set forth in Subsection
8.2.1 and certifying that Prudential has received all necessary internal
approvals and authorizations necessary in connection with its purchase of the
Acquisition Common Stock.
11.3 Waiver of Failure of Conditions Precedent. At any time or times on or
before the date specified for the satisfaction of any condition, Meridian or
Prudential may elect in writing to waive the benefit of any such condition set
forth in Section 7.1 or Section 7.2, respectively. By closing the Transaction,
(i) Prudential shall be conclusively deemed to have waived the benefit of any
remaining unfulfilled conditions set forth in Section 7.1, and (ii) Meridian
shall be conclusively deemed to have waived the benefit of any remaining
unfulfilled conditions set forth in Section 7.2. Subject to Prudential's right
to extend the Closing as provided under this Agreement, in the event any of the
conditions set forth in Sections 7.1 or 7.2 are neither waived nor fulfilled by
August 31, 1997 or if such date is not a business day, the next business day
thereafter, Meridian or Prudential (as appropriate) may terminate their
obligations to perform at the Closing and otherwise under this Agreement in
accordance with the provisions of Article 10.
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ARTICLE 12 - REPRESENTATIONS AND WARRANTIES
.1 Meridian's Representations. Meridian represents and warrants to, and
covenants with, Prudential as of the date hereof as follows:
.1.1 Organization, Good Standing and Authority. (a) Meridian is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland and on or before the Closing Date shall be duly
qualified and in good standing in the States in which the Facilities are
located, except to the extent that Meridian's failure to obtain such
qualification or good standing would not individually or in the aggregate have a
Material Adverse Effect. Each Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control with
Meridian (each a "MERIDIAN AFFILIATE" and collectively, the "MERIDIAN
AFFILIATES") is a corporation or other entity duly organized, validly existing
and, with respect to each Meridian Affiliate that is a corporation, in good
standing under the laws of its state of incorporation or formation, as the case
may be. Meridian and each Meridian Affiliate is duly qualified or licensed and,
with respect to each Meridian Affiliate that is a corporation, in good standing
as a foreign corporation and authorized to do business, in each jurisdiction in
which the ownership or leasing of its properties or the character of its
operations makes such qualification, licensing or authorization necessary,
except where the failure to obtain such qualification, license, authorization or
good standing would not individually or in the aggregate have a Material Adverse
Effect. Meridian has all requisite corporate power and authority to execute and
deliver this Agreement and all documents contemplated hereunder to be executed
by Meridian, to perform its obligations hereunder and thereunder. Meridian and
each Meridian Affiliate has all requisite authority to own its assets and to
carry on its business as presently proposed to be conducted except where a lack
of such corporate power or authority could not reasonably be expected to have a
Material Adverse Effect.
(b) Meridian has delivered to Prudential true, correct and complete
copies of its certificate of incorporation and Bylaws.
.1.2 Meridian's Authorization. This Agreement and all documents
contemplated hereunder to be executed by Meridian, have been duly authorized by
all requisite corporate action on the part of Meridian and are the valid and
legally binding obligation of Meridian, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity.
Neither the execution and delivery of this Agreement and all documents
contemplated hereunder to be executed by Meridian, nor the performance of the
obligations of Meridian hereunder or thereunder will result in the violation of
any provision of the Charter and Bylaws of Meridian or will conflict with any
order or decree of any court or governmental instrumentality of any nature by
which Meridian is bound.
.1.3 [Intentionally Omitted].
.1.4 Capitalization. As of the date hereof, the equity
capitalization of Meridian is as set forth in the balance sheet of Meridian
included in the 1997 Form 10-Q, except for any shares of Common Stock issued
under the Employee and Director Stock Plan since March 31, 1997. At the Closing
Date, all of the outstanding shares of stock of Meridian will be duly and
validly issued, fully paid and non-assessable and not
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subject to any preemptive rights of other shareholders. Except as set forth in
the Current SEC Reports and in Schedule 8.1.4 or contemplated by the Employee
and Director Stock Plan (i) there are no outstanding securities or indebtedness
convertible into, exchangeable for, or carrying the right to acquire, Common
Stock or other equity securities of Meridian, or subscriptions, warrants,
options, rights, or other arrangements or commitments obligating Meridian to
issue or dispose of any Common Stock or other equity securities or any ownership
therein, (ii) there is no agreement or arrangement restricting the voting or
transfer of any equity securities of Meridian, and (iii) there are no
outstanding contractual obligations, commitments, understandings or arrangements
of Meridian or any Meridian Affiliates to repurchase, redeem or otherwise
acquire, require or make any payment in respect of any shares of equity
securities of Meridian or such Meridian Affiliate. Except with respect to
statutory restrictions of general application, as provided in Meridian's Third
Amended and Restated Articles of Incorporation (the "CHARTER") with respect to
the Series B Preferred Stock and the terms of Meridian's Second Amended and
Restated Revolving Credit Agreement with The First National Bank of Boston and
certain other Banks named therein, there are no legal, contractual or other
restrictions on the payment of dividends or other distributions or amounts on or
in respect of Meridian's Common Stock. As of the date hereof, except as
contemplated by the Registration Rights Agreement and the Investor Rights
Agreement and except as set forth in Schedule 8.1.4, there, there are no
agreements or arrangements to which any of Meridian or the Meridian Affiliates
is a party pursuant to which Meridian is or could be required to register shares
of Common Stock or other securities under the Securities Act.
.1.5 Conflicting Agreements and Other Matters. Neither Meridian nor
any Meridian Affiliate is a party to any contract or agreement or subject to any
articles of incorporation or other corporate restriction compliance with which
could reasonably be expected to have a Material Adverse Effect. Assuming the
filing of a Form D with the Commission, the listing of the Acquisition Common
Stock on the NYSE and the accuracy of the representations and warranties of, and
the performance of the agreements of, Prudential set forth in Section 8.2 and
elsewhere herein, neither the execution and delivery of the documents relating
to the Transaction nor fulfillment of nor compliance with the terms and
provisions thereof, nor the issuance of the Acquisition Common Stock will (i)
violate any provision of any law presently in effect or in effect at the Closing
Date having applicability to Meridian or any Meridian Affiliate or any of their
properties including, without limitation, to, the Facilities, except such
violations as could not reasonably be expected to have a Material Adverse
Effect, (ii) conflict with or result in a breach of or constitute a default
under the Charter or Bylaws or any other organizational document of either
Meridian or any Meridian Affiliate, (iii) except as set forth in Schedule 8.1.5,
require any consent, approval or notice under, or conflict with or result in a
breach of, constitute a default or accelerate any right under, any note, bond,
mortgage, license, indenture or loan or credit agreement, or any other agreement
or instrument, to which Meridian or any Meridian Affiliate is a party or by
which any of their respective properties is bound, except such consents,
approvals, notices, conflicts, breaches or defaults as could not reasonably be
expected to have a Material Adverse Effect or (iv) result in, or require the
creation or imposition of, any mortgage, lien, pledge, encumbrance, charge or
security interest of any kind (each individually a "LIEN" and collectively
referred to as "LIENS") upon or with respect to any of the properties now owned
or hereafter acquired by Meridian or any Meridian Affiliate. Neither Meridian
nor any Meridian Affiliate is bound by any agreement which would impose upon
Prudential any personal obligation or personal liability which is greater than
the personal obligations and personal liabilities imposed upon Prudential under
this Agreement and the Registration Rights Agreement to be entered into by
Meridian and Prudential. In addition, Meridian is not aware of any facts or
circumstances that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
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.1.6 Due Execution, etc. This Agreement, constitutes, and when
executed and delivered by Meridian at the Closing the Registration Rights
Agreement will constitute, a legal, valid and binding obligation of Meridian,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity.
.1.7 Litigation, Proceeding, etc. There is no action, suit, notice
of violation, proceeding or investigation pending or, to the best knowledge of
Meridian, threatened against or affecting Meridian or any Meridian Affiliate or
any of their respective properties before or by any Governmental Entity which
(i) challenges the legality, validity or enforceability of any of the documents
relating to the Transaction or the Acquisition Common Stock or (ii) could
(individually or in the aggregate) reasonably be expected to have a Material
Adverse Effect or (iii) would (individually or in the aggregate) impair the
ability of Meridian to perform fully on a timely basis any obligations which it
has under any of the documents relating to the Transaction.
.1.8 No Default or Violation. Neither Meridian nor any Meridian
Affiliate is (i) in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, except such defaults or
violations as could not reasonably be expected to have a Material Adverse
Effect, (ii) in violation of any Order of any Governmental Entity, except for
such violations as could not reasonably be expected to have a Material Adverse
Effect, or (iii) in violation of any law which could reasonably be expected to
(A) adversely affect the legality, validity or enforceability of the documents
relating to the Transaction, (B) have a Material Adverse Effect or (C) adversely
impair Meridian's ability or obligation to perform fully on a timely basis any
obligation which it has under the documents relating to the Transaction.
.1.9 Status of Acquisition Common Stock. The issuance of the
Acquisition Common Stock has been duly authorized by all necessary corporate
action on the part of Meridian and such shares, when delivered to Prudential at
the Closing as part of the Purchase Price as provided herein, will be validly
issued, fully paid and non-assessable and the issuance and sale of the
Acquisition Common Stock is not and will not be subject to preemptive rights of
any other shareholder of Meridian.
.1.10 Governmental Consents, etc. Except as may be required under
any applicable securities law in connection with the performance by Meridian of
its obligations under the Registration Rights Agreement, and except for the
filing of a Form D with the Commission and the listing of the Acquisition Common
Stock on the NYSE and assuming the accuracy of the representations and
warranties of, and the performance of the agreements of, Prudential set forth
herein, no authorization, consent, approval, waiver, license, qualification or
formal exemption from, nor any filing, declaration, qualification or
registration with, any Governmental Entity or any securities exchange is
required in connection with the execution, delivery or performance by Meridian
of this Agreement and the issuance, sale or delivery of the Acquisition Common
Stock except for those that (i) have been made or obtained by Meridian as of the
date hereof or (ii) are set forth in Schedule 8.1.10 and by the Closing shall be
made or received by Meridian. At the Closing Date, Meridian will have made all
filings and given all notices to Governmental Entities and obtained all
necessary ordinances, registrations, declarations, approvals, orders, consents,
qualifications, franchises, certificates, permits and authorizations from any
Governmental Entity, to own or lease its properties and to conduct its
facilities and
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businesses as currently conducted, except where failure to do so could not
reasonably be expected to have a Material Adverse Effect. At the Closing Date,
all such registrations, declarations, approvals, orders, consents,
qualifications, franchises, certificates, permits and authorizations, the
failure of which to file, give notice of or obtain could reasonably be expected
to have a Material Adverse Effect, will be in full force and effect. The assets
of Meridian qualify as exempt assets for purposes of the Hart-Scott-Rodino Act
and no filing under the Hart-Scott-Rodino Act is required in connection with the
sale and issuance of the Acquisition Common Stock hereunder.
.1.11 Private Offering. Neither Meridian nor any person acting on
its behalf has taken or will take any action (including, without limitation, any
offering of any securities of Meridian under circumstances which would require
the integration of such offering with the offering of the Acquisition Common
Stock under the Securities Act) which might subject the offering, issuance or
sale of the Acquisition Common Stock to the registration requirements of Section
5 of the Securities Act.
.1.12 ERISA.
(a) Meridian Status. Meridian currently qualifies as a "real
estate operating company" ("REOC") within the meaning of 29 C.F.R. Section
2510.3-101(e), and has qualified as a REOC during all valuation periods
within the meaning of 29 C.F.R. Section 2510.3-101(d)(5).
(b) Benefit Plans. To the extent applicable, the Benefit Plans
comply, in all material respects, with the requirements of ERISA and the
Code (including reporting requirements). Neither any Benefit Plan nor
Meridian nor any Subsidiary has incurred any liability or penalty under
Section 4975 of the Code or Section 502(i) of ERISA. Each 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. There are no pending, or to knowledge of Meridian threatened,
material claims (other than claims for benefits pursuant to the terms of
any such plan) against or otherwise involving any of the Benefit Plans and
no action has been brought against or with respect to any Benefit Plan,
and neither Meridian nor any Subsidiary of Meridian has incurred any
material liability to any party with respect to any Benefit Plan. All
contributions required to be made to the Benefit Plans have been made or
provided for as of the date hereof. No Benefit Plan is subject to Title IV
of ERISA and neither Meridian nor any Subsidiary 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 8.1.12, (i) the term Meridian includes any
entity required to be treated as a single employer with Meridian pursuant
to Code Section 414(b), (c), (m) or (o) and (ii) provisions of ERISA or
the Code include regulations prescribed under such provisions.
(c) Arms' Length Transaction. The terms of this Transaction
have been negotiated and determined at arms'-length, and are not less
favorable to Prudential than the terms that would be available generally
in an arms'-length transaction between unrelated parties.
(d) Meridian is not a party in interest, as defined in Section
3(14) of ERISA, with respect to any employee benefit plan set forth in
Schedule 8.2.9.
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Meridian hereby agrees to execute such documents or provide such information as
Prudential may require in connection with the forgoing representations in this
Section 8.1.12. Prudential shall not be obligated to consummate the Transaction
unless and until Prudential is satisfied that the Transaction complies in all
respects with ERISA. The obligations of Meridian under this section shall
survive the Closing and shall not be merged therein.
.1.13 Insurance. At Closing, Meridian and the Meridian Affiliates
will have (i) with respect to each property owned by Meridian (including,
without limitation, the Facilities), "all risk" property insurance, including
fire, flood, earthquake, extended coverage and rental loss insurance and (ii)
with respect to Meridian, the Meridian Affiliates and each property owned by
Meridian (including, without limitation, the Facilities), general commercial
liability insurance, in each case under such terms and in such amounts and
covering such risks that are customary for properties and businesses similar to
those of Meridian and the Meridian Affiliates. There are currently no
outstanding material losses for which Meridian or any of the Meridian Affiliates
has failed to give or present notice or claim under any policy. Policies for all
the insurance are in full force and effect and none of Meridian or Meridian
Affiliates is in default in any material respect under any of the policies.
.1.14 Information Provided. Neither this Agreement, the schedules
and exhibits hereto, the Current SEC Reports nor any other written document
delivered to Prudential in connection with the transactions contemplated hereby
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements herein or therein, as the case may be, in light
of the circumstances under which it was made, not misleading, and all material
information regarding Meridian and the Meridian Affiliates is provided therein.
.1.15 No Other Liabilities. Except as set forth in Schedule 8.1.15,
neither Meridian nor any Meridian Affiliate will have any material liability,
whether absolute, accrued, contingent or otherwise, except liabilities (i)
reflected on the consolidated balance sheet of Meridian and the Meridian
Affiliates as at March 31, 1997, or (ii) liabilities that (1) are incurred by
Meridian and the Meridian Affiliates after March 31, 1997 in the ordinary course
of business and (2) could not reasonably be expected to have a Material Adverse
Effect.
.1.16 Taxes; REIT Status. Each of Meridian and the Meridian
Affiliates has filed all tax returns that are required to be filed with any
Governmental Entity and has paid all taxes due pursuant to the tax returns or
any assessment received by it or otherwise required to be paid, except taxes
being contested in good faith by appropriate proceedings and for which adequate
reserves or other provisions are maintained, and except for the filing of Tax
Returns as to which the failure to file could not, individually or in the
aggregate, have a Material Adverse Effect. Meridian (i) elected to be taxed as a
"real estate investment trust" as defined in Section 856 of the Code ("REIT")
effective for each of the taxable years since Meridian has been incorporated,
other than the 1996 taxable year (as to which Meridian covenants that it will
timely make such election) (ii) has not revoked such election, (iii) qualifies
for taxation as a REIT for each such taxable year and for its current taxable
year and (iv) has not sold or otherwise disposed of any assets which could give
rise to a material amount of tax pursuant to any election made by Meridian under
Notice 88-19, 1988-1 CB486 and does not expect to effect any such sale or other
disposition.
.1.17 Compliance with Laws. Neither Meridian nor any Meridian
Affiliate has been in or is in, and none of them has received notice of,
violation of or default with respect to, any law or any decision,
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ruling, order or award of any arbitrator applicable to it or its business,
properties or operations, except for violations or defaults that, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
.1.18 Meridian Affiliates.
(i) The 1996 Form 10-K sets forth a correct and complete list
of all Meridian Affiliates as of the date hereof.
(ii) As of the date hereof, except as set forth on Schedule
8.1.18, all outstanding shares of capital stock or other evidences of equity
ownership of each Meridian Affiliate are duly authorized, validly issued, fully
paid and nonassessable and are owned directly or indirectly, beneficially and of
record by Meridian, free and clear of all Liens.
.1.19 Material Contracts. (a) The 1997 Form 10-Q,the 1996 Form 10-K
and Schedule 8.1.4 includes a correct and complete list of the following with
respect to Meridian and any Meridian Affiliate: (1) agreements with any
shareholder having beneficial ownership of 5% or more of the shares of Common
Stock of Meridian or such Meridian Affiliate then issued and outstanding,
director or officer of Meridian or such Meridian Affiliate and all shareholders'
agreements and voting trusts; and (2) agreements not made in the ordinary course
of business and which could reasonably be expected to result in a Material
Adverse Effect.
(b) All property management agreements to which Meridian is a party
provide for a right (without payment of any penalty or termination fee) of
Meridian to terminate such agreement upon a 30-day prior written notice and
Meridian shall deliver each such agreement reasonably requested by Prudential
within ten (10) days after the date of such request.
.1.20 No Restrictions on Acquisition Common Stock. As of the Closing
Date, subject to satisfaction of Section 7.1(k), no provision of the Charter or
Bylaws of Meridian, any other agreement, indenture or other instrument to which
Meridian or its properties are subject, or any law applicable to Meridian, (i)
directly or indirectly restricts or impairs the right or ability of Prudential
to vote, or otherwise to exercise the rights and receive the benefits of a
shareholder with respect to the Acquisition Common Stock, including without
limitation, restrictions based upon the size of the security holdings of
Prudential, the business in which it is engaged or other considerations
applicable to it and not to security holders generally, or (ii) provides any
other security holder of Meridian with any preemptive rights.
.1.21 SEC Documents. Meridian has filed with the Securities and
Exchange Commission (the "COMMISSION") all reports, schedules, forms, statements
and other documents required by the Exchange Act to be filed by Meridian
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "SEC DOCUMENTS"). Meridian has
delivered or made available to Prudential all SEC Documents. As of their
respective dates, except to the extent revised or superseded by a subsequent
filing with the Commission, the SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and none of the SEC Documents (including any and all financial statements
included therein) as of such dates contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order
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to make the statements therein, in light of the circumstances under which they
are made, not misleading. The consolidated financial statements of Meridian and
Meridian Affiliates included in all SEC Documents, including any amendments
thereto (the "SEC FINANCIAL STATEMENTS"), comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto.
.1.22 No Merger Agreements. As of the date hereof, except as set
forth in Schedule 8.1.22, none of Meridian or Meridian Affiliates has entered
into any agreement with any person or entity which has not been terminated as of
the date of this Agreement and under which there remains any liability or
obligation thereof with respect to a merger or consolidation with any of
Meridian or Meridian Affiliates, or any other acquisition of substantial amount
of the assets of Meridian or Meridian Affiliates.
.1.23 Certain Actions by Meridian. Meridian has not: (i) made a
general assignment for the benefit of creditors; (ii) filed any voluntary
petition in bankruptcy or suffered the filing of any involuntary petition by
Meridian's creditors; (iii) suffered the appointment of a receiver to take
possession of all or substantially all of Meridian's assets, (iv) suffered the
attachment or other judicial seizure of all, or substantially all, of Meridian's
assets, (v) admitted in writing Meridian's inability to pay its debts as they
come due; or (vi) made an offer of settlement, extension, or composition to its
creditors generally.
.1.24 Facilities Sold "AS-IS". Except as expressly set forth herein,
Meridian acknowledges and agrees that each Facility is to be sold on an "As-Is,
Where-Is" basis, and Meridian will rely entirely upon its own inspections and
analysis of the Facilities. Without in any way limiting the foregoing, Meridian
hereby specifically acknowledges and agrees that:
(A) THE FACILITIES SHALL BE SOLD, AND MERIDIAN SHALL ACCEPT POSSESSION
OF EACH FACILITY ON THE CLOSING DATE, "AS IS, WHERE IS, WITH ALL
FAULTS", WITH NO RIGHT OF SETOFF OR REDUCTION IN THE PURCHASE PRICE;
(B) EXCEPT FOR PRUDENTIAL'S REPRESENTATIONS AND WARRANTIES SET FORTH IN
SECTION 8.2 HEREOF, THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
ANY ESTOPPEL LETTER DELIVERED BY SELLER IN ACCORDANCE WITH THE TERMS
OF SECTION 6.4 HEREOF, AND THE LIMITED WARRANTIES OF TITLE TO BE
GIVEN IN THE DEEDS (HEREIN COLLECTIVELY CALLED THE "PRUDENTIAL'S
WARRANTIES"), NONE OF PRUDENTIAL, ITS COUNSEL, ITS SALES AGENTS, NOR
ANY PARTNER, OFFICER, DIRECTOR, EMPLOYEE, AGENT OR ATTORNEY OF
PRUDENTIAL, ITS COUNSEL, BROKER, OR ITS SALES AGENTS, NOR ANY OTHER
PARTY RELATED IN ANY WAY TO ANY OF THE FOREGOING (ALL OF WHICH
PARTIES ARE HEREIN COLLECTIVELY CALLED THE "PRUDENTIAL PARTIES")
HAVE OR SHALL BE DEEMED TO HAVE MADE ANY VERBAL OR WRITTEN
REPRESENTATIONS, WARRANTIES, PROMISES OR GUARANTEES (WHETHER
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) TO MERIDIAN WITH RESPECT
TO ANY FACILITY, ANY MATTER SET FORTH, CONTAINED OR ADDRESSED IN THE
DOCUMENTS (INCLUDING, BUT NOT LIMITED TO, THE ACCURACY AND
COMPLETENESS THEREOF) OR THE RESULTS OF THE INVESTIGATIONS; AND
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MERIDIAN HAS CONFIRMED INDEPENDENTLY ALL INFORMATION THAT IT
CONSIDERS MATERIAL TO ITS PURCHASE OF THE FACILITIES OR THE
TRANSACTION.
(C) MERIDIAN SPECIFICALLY ACKNOWLEDGES THAT, EXCEPT FOR PRUDENTIAL'S
WARRANTIES (AS SUCH TERM IS HEREIN DEFINED), MERIDIAN IS NOT RELYING
ON (AND PRUDENTIAL AND EACH OF THE OTHER PRUDENTIAL PARTIES DOES
HEREBY DISCLAIM AND RENOUNCE) ANY REPRESENTATIONS OR WARRANTIES OF
ANY KIND OR NATURE WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, FROM PRUDENTIAL OR ANY OTHER
PRUDENTIAL PARTIES, AS TO: (I) THE OPERATION OF ANY FACILITY OR THE
INCOME POTENTIAL, USES, OR MERCHANTABILITY OR FITNESS OF ANY PORTION
OF ANY SUCH FACILITY FOR A PARTICULAR PURPOSE; (II) THE PHYSICAL
CONDITION OF ANY FACILITY OR THE CONDITION OR SAFETY OF ANY FACILITY
OR ANY IMPROVEMENTS THEREON, INCLUDING, BUT NOT LIMITED TO,
PLUMBING, SEWER, HEATING AND ELECTRICAL SYSTEMS, ROOFING, AIR
CONDITIONING, FOUNDATIONS, SOILS AND GEOLOGY, INCLUDING HAZARDOUS
MATERIALS, LOT SIZE, OR SUITABILITY OF SUCH FACILITY OR ANY
IMPROVEMENTS THEREON FOR A PARTICULAR PURPOSE; (III) THE PRESENCE OR
ABSENCE, LOCATION OR SCOPE OF ANY HAZARDOUS MATERIALS IN, AT, OR
UNDER ANY FACILITY; (IV) WHETHER THE APPLIANCES, IF ANY, PLUMBING OR
UTILITIES ARE IN WORKING ORDER; (V) THE HABITABILITY OR SUITABILITY
FOR OCCUPANCY OF ANY STRUCTURE AND THE QUALITY OF ITS CONSTRUCTION;
(VI) WHETHER THE IMPROVEMENTS ARE STRUCTURALLY SOUND, IN GOOD
CONDITION, OR IN COMPLIANCE WITH APPLICABLE MUNICIPAL, COUNTY, STATE
OR FEDERAL STATUTES, CODES OR ORDINANCES; (VII) THE ACCURACY OF ANY
STATEMENTS, CALCULATIONS OR CONDITIONS STATED OR SET FORTH IN
PRUDENTIAL'S BOOKS AND RECORDS CONCERNING ANY FACILITY OR SET FORTH
IN ANY OF PRUDENTIAL'S OFFERING MATERIALS WITH RESPECT TO THE
FACILITIES; (VIII) THE DIMENSIONS OF ANY FACILITY OR THE ACCURACY OF
ANY FLOOR PLANS, SQUARE FOOTAGE, LEASE ABSTRACTS, SKETCHES, REVENUE
OR EXPENSE PROJECTIONS RELATED TO ANY FACILITY; (IX) THE OPERATING
PERFORMANCE, THE INCOME AND EXPENSES OF ANY FACILITY OR THE ECONOMIC
STATUS OF ANY FACILITY; (X) THE ABILITY OF MERIDIAN TO OBTAIN ANY
AND ALL NECESSARY GOVERNMENTAL APPROVALS OR PERMITS FOR MERIDIAN'S
INTENDED USE AND DEVELOPMENT OF ANY FACILITY OR ANY OF THE
DOCUMENTS; (XI) THE LEASING STATUS OF ANY FACILITY OR THE INTENTIONS
OF ANY PARTIES WITH RESPECT TO THE NEGOTIATION AND/OR EXECUTION OF
ANY LEASE FOR ANY PORTION OF ANY FACILITY; AND (XII) PRUDENTIAL'S
OWNERSHIP OF ANY PORTION OF ANY FACILITY. MERIDIAN FURTHER
ACKNOWLEDGES AND AGREES THAT PRUDENTIAL IS UNDER NO DUTY TO MAKE ANY
AFFIRMATIVE DISCLOSURES OR INQUIRY REGARDING ANY MATTER WHICH MAY OR
MAY NOT BE KNOWN TO PRUDENTIAL, ITS OFFICERS, DIRECTORS,
CONTRACTORS, AGENTS OR EMPLOYEES.
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(D) ANY REPORTS, REPAIRS OR WORK REQUIRED BY MERIDIAN ARE THE SOLE
RESPONSIBILITY OF MERIDIAN, AND MERIDIAN AGREES THAT THERE IS NO
OBLIGATION ON THE PART OF PRUDENTIAL TO MAKE ANY CHANGES,
ALTERATIONS OR REPAIRS TO ANY FACILITY OR TO CURE ANY VIOLATIONS OF
LAW OR TO COMPLY WITH THE REQUIREMENTS OF ANY INSURER. MERIDIAN IS
SOLELY RESPONSIBLE FOR OBTAINING ANY CERTIFICATE OF OCCUPANCY OR
ANY OTHER APPROVAL OR PERMIT NECESSARY FOR TRANSFER OR OCCUPANCY
OF THE FACILITIES AND FOR ANY REPAIRS OR ALTERATIONS NECESSARY TO
OBTAIN THE SAME, ALL AT MERIDIAN'S SOLE COST AND EXPENSE.
(E) MERIDIAN, FOR MERIDIAN AND MERIDIAN'S SUCCESSORS AND ASSIGNS, HEREBY
RELEASES PRUDENTIAL FROM, AND WAIVES ALL CLAIMS AND LIABILITY
AGAINST PRUDENTIAL FOR OR ATTRIBUTABLE TO THE FOLLOWING:
(i) ANY AND ALL STATEMENTS OR OPINIONS HERETOFORE OR HEREAFTER
MADE, OR INFORMATION FURNISHED, BY PRUDENTIAL PARTIES TO
MERIDIAN OR ITS AGENTS OR REPRESENTATIVES, EXCEPT FOR
PRUDENTIAL'S WARRANTIES (AS SUCH TERM IS HEREIN DEFINED); AND
(ii) ANY STRUCTURAL, PHYSICAL OR ENVIRONMENTAL CONDITION AT ANY
FACILITY, INCLUDING WITHOUT LIMITATION, CLAIMS OR LIABILITIES
RELATING TO THE PRESENCE, DISCOVERY OR REMOVAL OF ANY
HAZARDOUS MATERIALS IN, AT, ABOUT OR UNDER ANY FACILITY, OR
FOR, CONNECTED WITH OR ARISING OUT OF ANY AND ALL CLAIMS OR
CAUSES OF ACTION BASED UPON CERCLA (COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF
1980, 42 U.S.C. "9601 ET SEQ., AS AMENDED BY SUPERFUND
AMENDMENT AND REAUTHORIZATION ACT OF 1986 AND AS MAY BE
FURTHER AMENDED FROM TIME TO TIME), THE RESOURCE CONSERVATION
AND RECOVERY ACT OF 1976, 42 U.S.C. "6901 ET SEQ., OR ANY
RELATED CLAIMS OR CAUSES OF ACTION OR ANY OTHER FEDERAL OR
STATE BASED STATUTORY OR REGULATORY CAUSES OF ACTION FOR
ENVIRONMENTAL CONTAMINATION AT, IN OR UNDER ANY FACILITY.
(F) EXCEPT AS EXPRESSLY PROVIDED TO THE CONTRARY IN THIS SUBSECTION
8.1.24(F), MERIDIAN HEREBY ASSUMES AND TAKES RESPONSIBILITY AND
LIABILITY FOR ALL LOSSES, COSTS, CLAIMS, LIABILITIES, EXPENSES,
DEMANDS AND OBLIGATIONS OF ANY KIND OR NATURE WHATSOEVER
ATTRIBUTABLE TO THE FACILITIES, WHETHER ARISING OR ACCRUING BEFORE
OR AFTER THE DATE HEREOF AND WHETHER ATTRIBUTABLE TO EVENTS OR
CIRCUMSTANCES WHICH HAVE HERETOFORE OR MAY HEREAFTER OCCUR,
INCLUDING, WITHOUT LIMITATION, ALL LOSSES, COSTS, CLAIMS,
LIABILITIES, EXPENSES AND DEMANDS WITH RESPECT TO THE STRUCTURAL,
PHYSICAL OR, EXCEPT AS PROVIDED IN CLAUSES (iii) AND (iv) BELOW,
ENVIRONMENTAL CONDITION OF
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<PAGE> 37
ANY FACILITY (INCLUDING, WITHOUT LIMITATION, ANY HAZARDOUS
MATERIALS, IN AT, UNDER OR ABOUT ANY FACILITY) AND MERIDIAN AGREES
TO INDEMNIFY, DEFEND AND HOLD HARMLESS PRUDENTIAL FROM ANY LOSS,
COST, CLAIM, LIABILITY, EXPENSE OR DEMAND WITH RESPECT THERETO. BY
ITS EXECUTION OF THIS AGREEMENT, MERIDIAN HEREBY AGREES THAT IT
SHALL AT ALL TIMES COMPLY WITH ALL APPLICABLE FEDERAL, STATE AND
LOCAL LAWS, RULES AND REGULATIONS INVOLVING HAZARDOUS MATERIALS IN,
AT, UNDER OR ABOUT THE FACILITY OR THEIR REMOVAL FROM ANY FACILITY.
NOTWITHSTANDING THE FOREGOING, HOWEVER, MERIDIAN DOES NOT ASSUME
(AND SHALL NOT BE REQUIRED TO INDEMNIFY PRUDENTIAL FOR) ANY
RESPONSIBILITY OR LIABILITY ARISING OUT OF OR IN CONNECTION WITH:
(i) ANY CLAIMS MADE OR CAUSES OF ACTION BROUGHT BY ANY THIRD
PARTY UNRELATED TO MERIDIAN ALLEGING A DEFAULT OR BREACH BY
PRUDENTIAL WHICH IS ALLEGED TO HAVE OCCURRED PRIOR TO THE
CLOSING DATE UNDER ANY CONTRACT OR AGREEMENT (OTHER THAN
ANY LEASE) ENTERED INTO BETWEEN PRUDENTIAL AND ANY SUCH
CLAIMANT; PROVIDED, HOWEVER, THAT MERIDIAN SHALL BE DEEMED TO
ASSUME AND SHALL INDEMNIFY PRUDENTIAL IN ACCORDANCE WITH THE
TERMS OF THIS SUBSECTION 8.1.24(F) WITH RESPECT TO ANY SUCH
CLAIMS OR CAUSES OF ACTION TO THE EXTENT THAT THE SAME RELATE
TO ANY ALLEGED DEFAULTS OR THE BREACH OF ANY OF THE LEASES, IT
BEING UNDERSTOOD AND AGREED BY MERIDIAN AND PRUDENTIAL THAT
MERIDIAN SHALL RELY SOLELY UPON ITS DUE DILIGENCE WITH RESPECT
TO THE FACILITIES, PRUDENTIAL'S WARRANTIES AND SUCH TENANT
ESTOPPEL CERTIFICATES AS MERIDIAN MAY RECEIVE ON OR BEFORE THE
CLOSING DATE WITH RESPECT TO PROTECTION AGAINST ANY ALLEGED
BREACH OR DEFAULT BY PRUDENTIAL UNDER ANY OF THE LEASES THAT
MAY HAVE OCCURRED PRIOR TO THE CLOSING DATE; OR
(ii) ANY TORT CLAIMS MADE OR BROUGHT BY A THIRD PARTY UNRELATED TO
MERIDIAN WHICH ARISE FROM ANY ACTS OR OMISSIONS OF PRUDENTIAL
WHICH OCCURRED DURING THE TIME THAT PRUDENTIAL OWNED FEE TITLE
TO THE FACILITY;
(iii) ANY CLAIMS MADE OR CAUSES OF ACTION BROUGHT BY ANY
GOVERNMENTAL ENTITY WITH RESPECT TO HAZARDOUS MATERIALS
DEPOSITED OR PLACED IN, AT ABOUT OR UNDER THE FACILITIES
DURING THE TIME THAT PRUDENTIAL OWNED FEE TITLE TO THE
FACILITIES UNLESS:
(a) MERIDIAN KNOWS OR IS DEEMED TO KNOW (AS DEFINED IN
SUBSECTION 8.3.3 HEREOF) OF SUCH CLAIM OR CAUSE OF
ACTION ON OR BEFORE THE CLOSING DATE; OR
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(b) THE GOVERNMENTAL ENTITY THAT BRINGS ANY SUCH CLAIMS OR
CAUSES OF ACTION IS AN OWNER OR TENANT OF THE FACILITY
THAT SUCH CLAIM OR CAUSE OF ACTION RELATES TO AT THE
TIME SUCH CLAIM OR CAUSE OF ACTION IS BROUGHT OR MADE.
(iv) ANY CLAIMS MADE OR CAUSES OF ACTION BROUGHT BY ANY THIRD PARTY
UNRELATED TO MERIDIAN (EXCLUDING GOVERNMENTAL ENTITIES) WITH
RESPECT TO HAZARDOUS MATERIALS DEPOSITED OR PLACED IN, AT,
ABOUT OR UNDER THE FACILITY PRIOR TO THE CLOSING DATE.
6. Meridian is familiar with California Civil Code Section 1542 the text
of which is set forth as follows:
Section 1542 of the California Civil Code provides as follows: "A
general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor."
For a valuable consideration, Meridian hereby waives its rights, if any, under
Section 1541.
MERIDIAN'S INITIALS ________________
The representations and warranties of Meridian in this Agreement shall survive
the Closing and be true and correct in all material respects on and as of the
Closing as if such representations and warranties were made on and as such date
(subject to revisions to reflect changed circumstances or knowledge obtained
between execution of the Agreement and the Closing.
.2 Prudential's Representations. Prudential represents and warrants to
Meridian as of the date hereof as follows:
.2.1 Prudential's Authorization. Prudential is (a) duly organized
(or formed), validly existing and in good standing under the laws of its State
of organization and the States in which the Facilities are located, (b) is
authorized to consummate the Transaction and fulfill all of its obligations
hereunder and under all documents contemplated hereunder to be executed by
Prudential, and (c) has all necessary power to execute and deliver this
Agreement and all documents contemplated hereunder to be executed by Prudential
and to perform its obligations hereunder and thereunder. This Agreement and all
documents contemplated hereunder to be executed by Prudential have been duly
authorized by all requisite corporate action on the part of Prudential and are
the valid and legally binding obligation of Prudential enforceable in accordance
with their respective terms. Neither the execution and delivery of this
Agreement and all documents contemplated hereunder to be executed by Prudential
nor the performance of the obligations of Prudential hereunder or thereunder
will result in the violation of any provision of the articles of incorporation
and by-laws of Prudential or will conflict with any order or decree of any court
or governmental instrumentality of any nature by which Prudential is bound.
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.2.2 Investment Intent. Prudential represents and warrants to
Meridian that the Acquisition Common Stock to be acquired by it hereunder is
being acquired for its own account for investment and with no intention of
distributing or reselling such Acquisition Common Stock or any part thereof or
interest therein in any transaction which would be in violation of the
securities laws of the United States of America or any State or any foreign
country or jurisdiction.
.2.3 Transfer Restrictions. If Prudential should decide to dispose
of any of the Acquisition Common Stock, Prudential understands and agrees that
it may do so only pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from registration under the
Securities Act. In connection with any offer, resale, pledge or other transfer
(individually and collectively, a "TRANSFER") of any Acquisition Common Stock
other than pursuant to an effective registration statement, Meridian may require
that the transferor of such Acquisition Common Stock provide to Meridian an
opinion of counsel which opinion shall be reasonably satisfactory in form and
substance to Meridian, to the effect that such Transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and any State or foreign securities laws.
Prudential agrees to the imprinting, so long as appropriate, of substantially
the following legend on certificates representing the Acquisition Common Stock:
THE SHARES OF COMMON STOCK (THE "SHARES") EVIDENCED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER
AGREES THAT IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER
(INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER") THE SHARES EVIDENCED HEREBY,
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT SUCH AS THE EXEMPTION SET FORTH IN RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE). IF THE PROPOSED TRANSFER IS TO BE MADE
OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO MERIDIAN AND THE TRANSFER AGENT SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAW.
The legend set forth above may be removed if and when the Acquisition
Common Stock represented by such certificate are disposed of pursuant to an
effective registration statement under the Securities Act or the opinion of
counsel referred to above has been provided to Meridian. The share certificates
shall also bear legends regarding permitted ownership levels of Acquisition
Common Stock and any additional legends required by applicable Federal, State or
foreign securities Laws or necessary under applicable tax Laws, which legends
may be removed when, in the opinion of counsel to Meridian, the same are no
longer required under the Charter or the applicable requirements of such
securities or tax Laws. Prudential agrees that, in connection with any Transfer
of Acquisition Common Stock by it pursuant to an effective registration
statement under the Securities Act, Prudential will comply with all prospectus
delivery requirements of the Securities Act.
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Meridian makes no representation, warranty or agreement as to the availability
of any exemption from registration under the Securities Act with respect to any
resale of Acquisition Common Stock.
.2.4 Stop Transfer Instruction. Prudential agrees that Meridian
shall be entitled to make a notation on its records and give instructions to any
transfer agent for the Acquisition Common Stock in order to implement the
restrictions on transfer set forth in this Agreement.
.2.5 Prudential Status. Prudential represents and warrants to, and
covenants and agrees with, Meridian that (i) at the time Prudential was offered
the Acquisition Common Stock, Prudential was, (ii) at the date hereof,
Prudential is, and (iii) at the Closing Date, Prudential will be, a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act or an
"accredited investor" as defined in Rule 501 under the Securities Act, and has
such knowledge, sophistication and experience in business and financial matters
so as to be capable of evaluating Meridian and an investment in the Acquisition
Common Stock, and is able to bear the economic risk of such investment.
.2.6 Authority. Prudential represents and warrants to Meridian that,
assuming the accuracy of the representation of Meridian in Section 8.1.10
hereof, (i) as of the Closing Date, the purchase of the Acquisition Common Stock
to be purchased by it has been duly and properly authorized and this Agreement
has been duly executed and delivered by it or on its behalf and constitutes the
valid and legally binding obligation of Prudential, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity; (ii) the purchase of the Acquisition Common Stock to be purchased by
it does not conflict with or violate (A) its articles of incorporation or bylaws
or (B) any Law applicable to it in a manner that could materially hinder or
impair the completion of the transactions contemplated hereby; and (iii) the
purchase of Acquisition Common Stock to be purchased by it does not impose any
penalty or other onerous condition on Prudential that could materially hinder or
impact the completion of the transactions contemplated hereby.
.2.7 Access to Information. Prudential acknowledges as of the date
hereof that it has been afforded: (i) the opportunity to ask such questions as
it has deemed necessary of, and to receive answers from, representatives of
Meridian concerning the terms and conditions of the offering of the Acquisition
Common Stock and the merits and risks of investing in the Acquisition Common
Stock; (ii) access to information about Meridian, Meridian's financial
condition, pro forma results of operations, business properties, management and
prospects sufficient to enable it to evaluate its investment in the Acquisition
Common Stock; and (iii) the opportunity to obtain such additional information
which Meridian possesses or can acquire without unreasonable effort or expense
that is necessary to verify the accuracy and completeness of the information
contained in the SEC Documents.
.2.8 Reliance. Prudential also understands and acknowledges that (i)
the Acquisition Common Stock is being offered and sold without registration
under the Securities Act in a transaction that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption
depends in part on, and that Meridian and, for purposes of the opinion to be
delivered to Prudential pursuant to Section 7.1(c) hereof, Vinson & Elkins
L.L.P. will rely upon, the accuracy and truthfulness of the foregoing
representations and Prudential hereby consents to such reliance.
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.2.9 Separate Account Investors. Prudential represents that each
employee benefit plan, as defined in Section 3(3) of ERISA, that has an interest
in a separate account on behalf of which Prudential is acting in this
Transaction is set forth in Schedule 8.2.9.
.2.10 Other Prudential's Representations. To Prudential's knowledge
(as such term is hereinafter defined):
(a) Except as listed in EXHIBIT O attached hereto and
incorporated herein by this reference, Prudential has not received (i) any
written notice of pending litigation against Prudential which would, if
determined adversely to Prudential, adversely affect the Facilities, or (ii) any
written notice of pending or threatened condemnation with respect to any of the
Facilities.
(b) Prudential has not entered into any service, supply,
maintenance or utility contracts affecting any Facility which will be binding
upon Meridian after the Closing other than the Contracts listed in EXHIBIT B
attached hereto.
(c) Set forth in EXHIBIT C attached hereto is a list of (i)
all certificates of occupancy, licenses and permits in Prudential's possession
that are necessary and material to the operation of the Facilities and (ii) all
personal property owned by Prudential that is necessary and material to the
operation of the Facilities.
(d) As of the date of this Agreement, the only tenants of each
Facility are the tenants listed with respect to each such Facility in EXHIBIT I
attached hereto and incorporated herein by this reference.
(e) Except as listed in EXHIBIT O attached hereto, Prudential
has not received any written notice from any governmental authority of any
violation of any zoning, building, fire, or health code, statute, ordinance,
rule or regulation applicable to any of the Facilities. Notwithstanding the
foregoing, however, Prudential shall not be required to disclose to Meridian
(and shall not be deemed to make any representation or warranty with respect to)
any notices relating to the environmental condition of any of the Facilities or
Hazardous Materials in, at, under or about any of the Facilities, it being
acknowledged and agreed to by both Meridian and Prudential that Meridian will
investigate and satisfy itself with regard to the environmental condition of
each Facility and the presence or absence of Hazardous Materials during the Due
Diligence Period, provided, however, that pursuant to and in accordance with the
terms and limitations of Article 4 of this Agreement, in order to assist
Meridian in its investigation of the environmental condition of the Facilities,
Prudential has agreed (during the Due Diligence Period) to make available to
Meridian and otherwise allow Meridian access to, certain non-confidential
information regarding the Facilities, including, but not limited to,
environmental reports of the Facilities.
.2.11 No Other Agreements. Prudential has not entered into any
currently effective agreement to sell or dispose of all of its interest in and
to any of the Facilities (except for this Agreement and any options to purchase
any Facility or a portion thereof that may be contained in any of the Leases).
.3 General Provisions.
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.3.1 No Representation As to Leases. Prudential does not represent
or warrant that any particular Lease or Leases will be in force or effect on the
Closing Date or that the tenants will have performed their obligations
thereunder.
.3.2 Definition of "Prudential's Knowledge". All references in this
Agreement to "PRUDENTIAL'S KNOWLEDGE" or words of similar import shall refer
only to the actual knowledge of the Designated Employee with respect to each
Facility and shall not be construed to refer to the knowledge of the Designated
Employee of any other Facility, or any other officer, agent or employee of
Prudential or any affiliate thereof, or to impose or have imposed upon the
Designated Employee any duty to investigate the matters to which such knowledge,
or the absence thereof, pertains, including, but not limited to, the contents of
the files, documents and materials made available to or disclosed to Meridian or
the contents of files maintained by the Designated Employee. The "DESIGNATED
EMPLOYEE" with respect to each Facility is the person designated as such next to
the name of such Facility on EXHIBIT P attached hereto and incorporated herein
by this reference. There shall be no personal liability on the part of any
Designated Employee arising out of any representations or warranties made
herein.
.3.3 Prudential's Representations Deemed Modified. To the extent
that Meridian knows or is deemed to know prior to the expiration of the Due
Diligence Period that Prudential's representations and warranties are
inaccurate, untrue or incorrect in any way, such representations and warranties
shall be deemed modified to reflect Meridian's knowledge or deemed knowledge, as
the case may be. For purposes of this Agreement, Meridian shall be "deemed to
know" that a representation or warranty was untrue, inaccurate or incorrect to
the extent that this Agreement, the Documents, any estoppel certificate executed
by any tenant of any Facility and delivered to Meridian, or any studies, tests,
reports, or analyses prepared by or for Meridian or any of its employees,
agents, representatives or attorneys (all of the foregoing being herein
collectively called the "MERIDIAN'S REPRESENTATIVES") or otherwise obtained by
Meridian or Meridian's Representatives contains information which is
inconsistent with such representation or warranty.
.3.4 Notice of Breach; Prudential's Right to Cure. If after the date
hereof but prior to the Closing, Meridian or any Meridian's Representative
obtains actual knowledge that any of the representations or warranties made
herein by Prudential are untrue, inaccurate or incorrect in any material
respect, Meridian shall give Prudential written notice thereof within five (5)
business days of obtaining such knowledge (but, in any event, prior to the
Closing). If at or prior to the Closing, Prudential obtains knowledge that any
of the representations or warranties made herein by Prudential are untrue,
inaccurate or incorrect in any material respect, Prudential shall give Meridian
written notice thereof within five (5) business days of obtaining such knowledge
(but, in any event, prior to the Closing). In either such event, Prudential
shall have the right to cure such misrepresentation or breach and shall be
entitled to a reasonable adjournment of the Closing (not to exceed ninety (90)
days) for the purpose of such cure. If Prudential is unable to so cure any
misrepresentation or breach, then Meridian, as its sole remedy for any and all
such materially untrue, inaccurate or incorrect material representations or
warranties, shall elect either (a) to waive such misrepresentations or breaches
of warranties and consummate the Transaction without any reduction of or credit
against the Purchase Price, or (b) to terminate this Agreement by written notice
given to Prudential on the Closing Date, in which event this Agreement shall be
terminated, and, thereafter, neither party shall have any further rights or
obligations hereunder except as provided in any section hereof that by its terms
expressly provides that it survives any termination of this Agreement. If any
such representation or warranty is untrue, inaccurate or incorrect but
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is not untrue, inaccurate or incorrect in any material respect, Meridian shall
be deemed to waive such misrepresentation or breach of warranty, and Meridian
shall be required to consummate the Transaction without any reduction of or
credit against the Purchase Price. The untruth, inaccuracy or incorrectness of a
representation or warranty shall be deemed material only if Meridian's aggregate
damages resulting from the untruth, inaccuracy or incorrectness of any of the
representations or warranties are reasonably estimated by Meridian to exceed One
Hundred Thousand Dollars ($100,000.00).
.3.5 Survival. The representations and warranties made by Prudential
in this Agreement shall survive the Closing and not be merged therein for a
period of ninety (90) days and Prudential shall only be liable to Meridian
hereunder for a breach of a representation and warranty made herein or in any of
the documents executed by Prudential at the Closing with respect to which a
claim is made by Meridian against Prudential on or before the ninetieth (90th)
day after the date of the Closing.
.3.6 Limitation on Prudential's Liability. Anything in this
Agreement to the contrary notwithstanding, the maximum aggregate liability of
Prudential for Prudential's breaches of representations and warranties herein or
in any documents executed by Prudential at Closing (including, but not limited
to, any Prudential estoppel letters delivered pursuant to Section 6.4(e)) shall
be limited as set forth in Section 14.16 hereof. Notwithstanding the foregoing,
however, if the Closing occurs, Meridian hereby expressly waives, relinquishes
and releases any right or remedy available to it at law, in equity or under this
Agreement to make a claim against Prudential for damages that Meridian may
incur, or to rescind this Agreement and the Transaction, as the result of any of
Prudential's representations or warranties being untrue, inaccurate or incorrect
if (a) Meridian knew or is deemed to know that such representation or warranty
was untrue, inaccurate or incorrect at the time of the Closing, or (b)
Meridian's damages as a result of such representations or warranties being
untrue, inaccurate or incorrect are reasonably estimated to aggregate less than
$500,000.00.
ARTICLE 9 - COVENANTS
.1 Meridian's Covenants. Meridian hereby covenants as follows:
.1.1 Confidentiality. Meridian acknowledges that any information
furnished to Meridian with respect to the Facilities is and has been so
furnished on the condition that Meridian maintain the confidentiality thereof.
Accordingly, Meridian shall hold, and shall cause its directors, officers and
other personnel and representatives to hold, in strict confidence, and not
disclose to any other person without the prior written consent of Prudential
until the Closing shall have been consummated, any of the information in respect
of each Facility delivered to or for the benefit of Meridian whether by agents,
consultants, employees or representatives of Meridian or by Prudential or any of
its agents, representatives or employees, including, but not limited to, any
information obtained by Meridian or any of Meridian's Representatives in
connection with any studies, inspections, testings or analyses conducted by
Meridian as part of its Due Diligence. In the event the Closing does not occur
and this Agreement is terminated, Meridian shall promptly return to Prudential
all copies of documents containing any of such information without retaining any
copy thereof or extract therefrom. Notwithstanding anything to the contrary
hereinabove set forth, Meridian may disclose such information (i) on a
need-to-know basis to its employees or members of professional firms serving it,
and (ii) as any governmental
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agency may require in order to comply with applicable laws or regulations. The
provisions of this Subsection 9.1.1 shall survive the Closing (and not be merged
therein) or earlier termination of this Agreement.
.1.2 Approvals not a Condition to Meridian's Performance. Meridian
acknowledges and agrees that its obligation to perform under this Agreement is
not contingent upon Meridian's ability to obtain any (a) governmental or
quasi-governmental approval of changes or modifications in use or zoning, or (b)
modification of any existing land use restriction, or (c) consents to
assignments of any service contracts, management agreements or other agreements
which Meridian requests, or (d) endorsements to any of the Title Policies.
.1.3 Meridian's Indemnity; Delivery of Reports. Meridian hereby
agrees to indemnify, defend, and hold Prudential and the other Prudential
Parties free and harmless from and against any and all costs, loss, damages and
expenses, of any kind or nature whatsoever (including attorneys fees and costs),
arising out of or resulting from the entry and/or the conduct of activities upon
any of the Facilities by Meridian, its agents, contractors and/or subcontractors
in connection with the inspections, examinations, testings and investigations of
any of the Facilities conducted at any time prior to the Closing, which
indemnity shall survive the Closing (and not be merged therein) or any earlier
termination of this Agreement. Meridian shall use all reasonable efforts to
deliver promptly to Prudential copies of all third party reports commissioned by
Meridian evidencing the results of tests, studies or inspections of the
Facilities.
.1.4 Limit on Government Contacts. Notwithstanding any provision in
this Agreement to the contrary, except in connection with the preparation of
so-called "Phase I" environmental reports with respect to the Facilities,
Meridian shall not contact any governmental official or representative regarding
Hazardous Materials on or the environmental condition of any of the Facilities
without Prudential's prior written consent thereto, which consent shall not be
unreasonably withheld. In addition, if Prudential's consent is obtained by
Meridian, Prudential shall be entitled to receive at least five (5) days prior
written notice of the intended contact and to have a representative present when
Meridian has any such contact with any governmental official or representative.
.1.5 Real Estate Investment Trust. Meridian shall use its best
efforts to continue to qualify as a REIT and so long as Prudential holds the
Acquisition Common Stock representing, in the aggregate, at least the Minimum
Ownership Level. Meridian shall not, without Prudential's written consent, take
any action that could reasonably be expected to disqualify Meridian as a REIT.
.1.6 Conduct of Business. Meridian covenants and agrees that until
the earlier of the Closing Date or the termination of this Agreement, Meridian
shall, and shall cause the Meridian Affiliates to, continue to engage in an
efficient and economical manner solely in a business of the same general type as
conducted by it on the date of this Agreement in the ordinary course, consistent
with past practices; and use its reasonable best efforts to preserve the
business of Meridian and the Meridian Affiliates and to preserve the goodwill of
customers and others having business relations with Meridian and the Meridian
Affiliates.
.1.7 Negative Covenants of Meridian. Meridian covenants and agrees
as follows, and shall not enter into any agreement or take any other action
inconsistent with the following, in each case until the
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earlier of the Closing Date or the termination of this Agreement, except as
specifically contemplated by this Agreement or to the extent such action shall
not reasonably be expect to result in a Material Adverse Effect.
(a) Organizational Documents. Meridian shall not amend its
Charter or Bylaws and shall not permit any of the Meridian Affiliates to amend
its organizational documents.
(b) Mergers, Etc. Except as shall have been previously agreed
in writing by the parties, Meridian shall not, and shall not permit any of the
Meridian Affiliates to, merge or consolidate with any entity, sell, lease,
license or otherwise dispose of all or substantially all of its assets (whether
now owned or hereafter acquired) to any entity or acquire all or substantially
all of the assets or business of any entity in each case whether in one
transaction or in a series of transactions pursuant to which Meridian or such
Meridian Affiliate shall not be the surviving entity.
.1.8 Maintenance of Books and Records. Meridian shall keep proper
books of record and account, in which full and correct entries shall be made of
all financial transactions and the assets and business of Meridian in accordance
with generally accepted accounting principles, and Meridian shall cause the
Meridian Affiliates to do the same.
.1.9 Party in Interest. Meridian shall not enter into any agreement
or take any action that would cause Meridian to be a party in interest, as
defined in Section 3(14) of ERISA, with respect to any employee benefit plan set
forth in Schedule 8.2.9 for so long as Prudential holds any Shares.
.1.10 Real Estate Operating Company. Meridian shall continue to
operate as a REOC for so long as Prudential holds the Acquisition Common Stock
in an amount representing in the aggregate at least the Minimum Ownership Level.
.1.11 Amendment to Investor Rights Agreement. Meridian shall use its
best efforts in order to obtain all necessary consents in order (i) to provide
Prudential rights that are pari passu with those of each of Meridian's
shareholders party to the Investor Rights Agreement under the penultimate
paragraph of Section 2(b) and Section 2(c)(i) and (ii) of the Investor Rights
Agreement and (ii) to provide that such shareholders shall not have any right to
be included in the shelf registration to be filed by Meridian for the benefit of
Prudential.
.1.12 Book Entry Shares. Meridian hereby covenants that if the
Acquisition Common Stock is issued in certificate form at Closing then Meridian
will, if requested in writing by Prudential, accept delivery of the certificate
or certificates representing the Acquisition Common Stock and cause the
appropriate book entry to be made indicating Prudential's ownership of such
Acquisition Common Stock.
.1.13 Listing Approval. Meridian hereby covenants that on or before
September 15, 1997 the Acquisition Common Stock shall have been approved for
listing on the NYSE.
.1.14 Survival. The covenants of Meridian in this Section 9.1 shall
survive the Closing and shall not be merged therein.
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.2 Prudential's Covenants. Prudential hereby covenants as follows:
.2.1 Service Contracts. Without Meridian's prior consent, which
consent shall not be unreasonably withheld, between the date hereof and the
Closing Date, Prudential shall not extend, renew, replace or modify any Contract
unless such contract (as so extended, renewed, replaced or modified) can be
terminated by the owner of the applicable Facility without penalty on not more
than thirty (30) days' notice.
.2.2 Maintenance of Facilities. Except to the extent Prudential is
relieved of such obligations by Article 11 hereof, between the date hereof and
the Closing Date, Prudential shall maintain and keep each of the Facilities in a
manner consistent with Prudential's past practices with respect to such
Facility. Between the date hereof and the Closing Date, Prudential will advise
Meridian in writing of any written notice Prudential receives after the date
hereof from any governmental authority relating to the violation of any law or
ordinance regulating the condition or use of the Facilities (such notice to
Meridian, a "VIOLATION NOTICE"). Within five (5) days of receipt of a Violation
Notice from Prudential, Meridian may deliver to Prudential a written notice of
Meridian's objection to the existence of the violation specified in the
Violation Notice (such notice to Prudential, a "VIOLATION OBJECTION"). Upon
Prudential's receipt of a Violation Objection Prudential shall notify Meridian
in writing whether Prudential elects to cure the same. If Prudential is unable
to cure any such violation prior to the Closing, or if Prudential elects not to
cure one or more such violations, Meridian may elect to either (a) terminate
this Agreement, in which event the parties shall have no further rights or
obligations hereunder except for obligations which expressly survive the
termination of this Agreement, or (b) waive such violation, in which event the
Closing shall occur as herein provided without any reduction of or credit
against the Purchase Price. Notwithstanding anything herein to the contrary,
Meridian hereby agrees that it shall accept each of the Facilities subject to,
and Prudential shall have no obligation to cure, (i) all violations of law or
municipal ordinances, orders or requirements and (ii) all physical conditions
which would give rise to violations existing, which, with respect to both
clauses (i) and (ii), exist on the date hereof.
.2.3 Access to Facilities. From and after the date hereof, Meridian
shall not be permitted to perform any further testing or other physical
evaluation of the Facilities prior to Closing.
.2.4 Sale of Acquisition Common Stock by Prudential. Prudential
hereby agrees that during the ninety (90) day period commencing on the Closing
Date it will not sell, assign, transfer or otherwise in any manner dispose of
any of the Acquisition Common Stock, other than sales, assignments, transfers or
dispositions: (i) in connection with any merger or consolidation of Meridian;
(ii) pursuant to a tender or exchange offer for shares of Common Stock; (iii) to
an affiliate of Prudential provided that such person or entity agrees to be
bound by the terms and conditions of this Agreement and the Registration Rights
Agreement, including, without limitation, Section 6 of the Registration Rights
Agreement; (iv) as a result of any pledge by Prudential of the Acquisition
Common Stock as security for any indebtedness or guaranty of Prudential,
provided that such pledgee agrees to be bound by the terms and conditions of
this Agreement and the Registration Rights Agreement including, without
limitation, Section 6 of the Registration Rights Agreement upon the exercise of
its rights under such pledge; or (v) in private transactions pursuant to one or
more exemptions from registration under the Securities Act.
.2.5 Meridian Audit Rights. Prudential acknowledges that Meridian is
required to have audits performed of the records of the real properties acquired
by Meridian. Accordingly, for the period from the
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Closing Date through December 31, 1998, upon fifteen (15) days advance written
notice from Meridian, Prudential agrees to make available to Meridian's
independent accountants those items respecting the Facilities described in
Exhibit R attached hereto.
.2.6 Survival. The covenant of Prudential set forth in Sections
9.2.4 and 9.2.5 of this Agreement shall survive the Closing and shall not be
merged therein.
.3 Mutual Covenants.
.3.1 Publicity. Prudential and Meridian each hereby covenant that
(a) prior to the Closing neither Prudential nor Meridian shall issue any press
release or public statement (a "RELEASE") with respect to the Transaction
without the prior consent of the other, except to the extent required by law,
and (b) after the Closing, any Release issued by either Prudential or Meridian
shall be subject to the review and approval of both parties (which approval
shall not be unreasonably withheld). If either Prudential or Meridian is
required by law to issue a Release, such party shall, at least two (2) business
days prior to the issuance of the same, deliver a copy of the proposed Release
to the other party for its review.
.3.2 Broker. Prudential and Meridian each represents and warrants to
the other that it has not dealt with any broker in the Transaction and each
agrees to hold harmless the other and indemnify the other from and against any
and all damages, costs or expenses (including, but not limited to, reasonable
attorneys' fees and disbursements) suffered by the indemnified party as a result
of acts of the indemnifying party that would constitute a breach of its
representation and warranty in this section (which obligation of Meridian shall
survive the Closing and not be merged therein).
.3.3 Tax Refunds and Credits. All real estate and personal property
tax refunds and credits with respect to any Facility shall be apportioned
between Meridian and Prudential as follows:
(a) with respect to any refunds or credits attributable to
real estate and personal property taxes due and payable in the calendar year in
which the Closing occurs (regardless of the year for which such taxes are
assessed), such refunds and credits shall be apportioned between Meridian and
Prudential in proportion to the number of days in such calendar year that each
party owned such Facility (with title to such Facility being deemed to have
passed as of 12:01 a.m. on the Closing Date);
(b) with respect to any refunds or credits attributable to
real estate and personal property taxes due and payable during any period prior
to the calendar year in which the Closing occurs (regardless of the year for
which such taxes are assessed), Prudential shall be entitled to the entire
refunds and credits; and
(c) with respect to any refunds or credits attributable to
real estate and personal property taxes due and payable during any period after
the calendar year in which the Closing occurs (regardless of the year for which
such taxes are assessed), Meridian shall be entitled to the entire refunds and
credits.
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.3.4 Survival. The provisions of this Section 9.3 shall survive the
Closing (and not be merged therein) or earlier termination of this Agreement.
.3.5 Approvals. Meridian and Prudential each agree to cooperate and
use their reasonable best efforts to obtain (and will immediately prepare all
registrations, filings, applications, requests and notices preliminary to) all
approvals that may be necessary or which may be reasonably requested by Meridian
or Prudential to consummate the transactions contemplated by this Agreement.
Meridian shall, prior to the Closing Date, take all actions necessary to ensure
that Prudential shall have full voting rights with respect to each Share of the
Acquisition Common Stock (including, without limitation, obtaining approvals of
the Board of Directors of Meridian and amending the Charter or Bylaws of
Meridian, as applicable).
.3.6 Notification of Certain Matters. Meridian shall give prompt
notice to Prudential, and Prudential shall give prompt notice to Meridian, of
(a) the occurrence, or failure to occur, of any event that causes any
representation or warranty contained in any document relating to the Transaction
to be untrue or inaccurate in any material respect at any time from the date of
this Agreement to the Closing Date and b) any failure of Meridian, on the one
hand, or Prudential, on the other hand, to comply with or satisfy, in any
material respect, any covenant, condition or agreement to be complied with or
satisfied by it under any document relating to the Transaction.
.3.7 Further Assurances. Promptly upon request by the other party,
each party shall, and shall cause its affiliates to, take, execute, acknowledge,
deliver, file, re-file, register and re-register, any and all such further acts,
certificates, assurances and other instruments as the requesting party may
require from time to time in order to carry out more effectively the purposes of
the Transaction and to better transfer, preserve, protect and confirm to the
requesting party the rights granted or now or hereafter intended to be granted
to the requesting party under the Transaction.
ARTICLE 11 - FAILURE OF CONDITIONS
11.1 To Prudential's Obligations. If, on or before the Closing Date, (i)
Meridian is in default of any of its obligations hereunder, or (ii) any of
Meridian's material representations or warranties are untrue in any material
respect, or (iii) the Closing otherwise fails to occur by reason of Meridian's
failure or refusal to perform its obligations hereunder in a prompt and timely
manner, then Prudential may elect to (a) terminate this Agreement by written
notice to Meridian; or (b) proceed to close the Transaction. If this Agreement
is so terminated, then Prudential shall be entitled to seek and recover
compensatory and consequential damages to the full extent available at law and
in equity, and thereafter neither party to this Agreement shall have any further
rights or obligations hereunder other than any arising under any section herein
which expressly provides that it survives the termination of this Agreement.
11.2 To Meridian's Obligations. If, at the Closing, (i) Prudential is in
default of any of its obligations hereunder, or (ii) any of Prudential's
material representations or warranties are untrue in any material respect, or
(iii) the Closing otherwise fails to occur by reason of Prudential's failure or
refusal to perform its obligations hereunder in a prompt and timely manner,
Meridian shall have the right, to elect, as its sole and exclusive remedy, to
(a) terminate this Agreement by written notice to Prudential, or (b) waive the
condition and proceed
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to close the Transaction, or (c) seek specific performance of this Agreement by
Prudential. If this Agreement is terminated pursuant to provision (a) of the
preceding sentence, neither party to this Agreement shall have any further
rights or obligations hereunder other than any arising under any Section herein
which expressly provides that it survives the termination of this Agreement.
ARTICLE 11 - CONDEMNATION/CASUALTY
11.1 Condemnation.
11.1.1 Right to Adjust. If, prior to the Closing Date, all or any
significant portion (as hereinafter defined) of any Facility is taken by eminent
domain (or is the subject of a pending taking which has not yet been
consummated), Prudential shall notify Meridian in writing of such fact promptly
after obtaining knowledge thereof, and Meridian shall have the right to
terminate this Agreement by giving written notice to Prudential no later than
ten (10) days after the giving of Prudential's notice, and the Closing Date
shall be extended, if necessary, to provide sufficient time for Meridian to make
such election. The failure by Meridian to so elect in writing to terminate this
Agreement within such ten (10) day period shall be deemed an election not to
terminate this Agreement. For purposes hereof, a "SIGNIFICANT PORTION" of a
Facility shall mean (i) such portion as shall have a value, as reasonably
determined by Prudential, in excess of One Hundred Thousand Dollars
($100,000.00) with respect to such Facility or (ii) such portion, the taking of
which shall have a Material Adverse Effect on the operation of such Facility. If
Meridian elects to terminate this Agreement as aforesaid, the provisions of
Section 11.4 shall apply.
11.1.2 Assignment of Proceeds. If (a) Meridian does not elect to
adjust this Agreement as aforesaid if all or any significant portion of a
Facility is taken, or if (b) a portion of a Facility not constituting a
significant portion of such Facility is taken or becomes subject to a pending
taking, by eminent domain, there shall be no abatement of the Purchase Price;
provided, however, that, at the Closing, Prudential shall pay to Meridian the
amount of any award for or other proceeds on account of such taking which have
been actually paid to Prudential prior to the Closing Date as a result of such
taking (less all costs and expenses, including attorneys' fees and costs,
incurred by Prudential as of the Closing Date in obtaining payment of such award
or proceeds) and, to the extent such award or proceeds have not been paid,
Prudential shall assign to Meridian at the Closing (without recourse to
Prudential) the rights of Prudential to, and Meridian shall be entitled to
receive and retain, all awards for the taking of such Facility or such portion
thereof.
11.2 Destruction or Damage. In the event any Facility is damaged or
destroyed prior to the Closing Date, Prudential shall notify Meridian in writing
of such fact promptly after obtaining knowledge thereof. If any such damage or
destruction (a) would cost less than or equal to One Hundred Thousand Dollars
($100,000.00) to repair or restore, and (b) would not give any tenant thereof
the right to terminate or materially alter its Lease, then this Agreement shall
remain in full force and effect and Meridian shall acquire the affected Facility
together with the remaining Facilities upon the terms and conditions set forth
herein. In such event, Meridian shall receive a credit against the Acquisition
Cash portion of the Purchase Price equal to the deductible amount applicable
under Prudential's casualty policy (less all costs and expenses, including
attorneys' fees and costs, incurred by Prudential as of the Closing Date in
connection with the negotiation and/or settlement of the casualty claim with the
insurer (the "REALIZATION COSTS")), and Prudential shall assign to
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Meridian all of Prudential's right, title and interest in and to all proceeds of
insurance on account of such damage or destruction. In the event a Facility is
damaged or destroyed prior to the Closing Date and as a result either (a) the
cost of repair would cost more than One Hundred Thousand Dollars ($100,000.00)
or (b) any tenant with respect to such Facility would have the right to
terminate or materially alter its Lease, then, notwithstanding anything to the
contrary set forth above in this section, Meridian shall have the right, at its
election, to terminate this Agreement. Meridian shall have thirty (30) days
after Prudential notifies Meridian that a casualty has occurred to make such
election by delivery to the other of a written election notice (the "ELECTION
NOTICE") and the Closing Date shall be extended, if necessary, to provide
sufficient time for Meridian to make such election. The failure by Meridian to
deliver the Election Notice within such thirty (30) day period shall be deemed
an election not to terminate this Agreement. If Meridian does not elect to
terminate this Agreement as set forth above, this Agreement shall remain in full
force and effect, Prudential shall assign to Meridian all of Prudential's right,
title and interest in and to any and all proceeds of insurance on account of
such damage or destruction, if any, and, if the casualty was an insured
casualty, Meridian shall receive a credit against the Purchase Price equal to
the deductible amount (less the Realization Costs) under Prudential's casualty
insurance policy.
11.3 Insurance. Prudential shall maintain the property insurance coverage
currently in effect for each of the Facilities through the Closing Date.
11.4 Effect of Termination. If this Agreement is terminated pursuant to
Section 11.1 or Section 11.2, neither party to this Agreement shall have any
further rights or obligations hereunder other than any arising under any section
herein which expressly provides that it shall survive the termination of this
Agreement.
11.5 Waiver. The provisions of this Article 11 supersede the provisions of
any applicable statutory or decisional law with respect to the subject matter of
this Article 11.
ARTICLE 12 - ESCROW
The Escrow Amount and any other sums which the parties agree shall be held in
escrow (herein collectively called the "ESCROW DEPOSITS"), together with all
interest earned thereon, shall be held by the Escrow Agent, in trust, and
disposed of only in accordance with the following provisions:
(a) The Escrow Agent shall deposit the Escrow Deposits with a bank
or trust company mutually satisfactory to Meridian and Prudential in a separate
money market rate interest-bearing commercial bank account in the State of
Illinois ( or otherwise invested in government insured instruments as may be
agreed in writing by Prudential, Meridian and Escrow Agent), shall not commingle
the Escrow Deposits with any funds of the Escrow Agent or others, and shall
promptly advise Meridian and Prudential of the number of such account.
(b) At Closing Meridian shall deposit the Escrow Amount into an
escrow account with Escrow Agent to be held and disbursed in accordance with the
terms of Article 12 and any subsequent escrow agreement entered into among
Meridian, Prudential and Escrow Agent. Notwithstanding Section 13.2 and subject
to Article 12, the Escrow Amount shall be used to reimburse Meridian for the
Pella Expenses. If a new
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lease for all or any portion of the Pella Space is secured with a tenant
reasonably satisfactory to Meridian under the following, or comparable terms and
conditions during the Escrow Term, Prudential shall be paid the Escrow Amount
(or if such lease is for a portion of the Pella Space, a pro rata portion of the
Escrow Amount), less Meridian's Pella Expenses actually incurred during the
Escrow Term with respect to such lease, up to the time such new lease is
executed by all relevant parties: (i) annual base rent of not less than $4.50
per rentable square foot; (ii) a term of not less than five years; and (iii) a
"standard" tenant improvement package (as determined by the relevant market). If
an acceptable new lease for the Pella Space is not secured during the Escrow
Term, Meridian shall be paid the balance, if any, of the Escrow Amount upon the
expiration of the Escrow Term and Prudential shall have no further obligation or
liability with respect thereto. Prior to the expiration of the Escrow Term
Meridian shall be entitled to make draws upon the Escrow Amount for Pella
Expenses that have actually been incurred in any one or more calendar months by
submitting to Escrow Agent a certificate of Meridian which has been reviewed and
approved by Prudential in its reasonable discretion and setting forth in
reasonable detail the amount, composition and calculation of such Pella Expenses
for the time period covered by such certificate.
(c) The parties acknowledge that the Escrow Agent is acting solely
as a stakeholder at their request and for their convenience, that the Escrow
Agent shall not be deemed to be the agent of either of the parties, and that the
Escrow Agent shall not be liable to either of the parties for any action or
omission on its part taken or made in good faith,and not in disregard of this
Agreement, but shall be liable for its negligent acts and for any loss, cost or
expense incurred by Prudential or Meridian resulting from the Escrow Agent's
mistake of law respecting the Escrow Agent's scope or nature of its duties.
Prudential and Meridian shall jointly and severally indemnify and hold the
Escrow Agent harmless from and against all costs, claims and expenses, including
reasonable attorneys' fees, incurred in connection with the performance of the
Escrow Agent's duties hereunder, except with respect to actions or omissions
taken or made by the Escrow Agent in bad faith, in disregard of this Agreement
or involving negligence on the part of the Escrow Agent.
(d) The party or parties receiving payment of all or any portion of
the Escrow Amount shall pay any income taxes on any interest earned on such
portion. Meridian represents and warrants to the Escrow Agent that its taxpayer
identification number is 94-3224765. Prudential represents and warrants to the
Escrow Agent that its taxpayer identification number is 22-1211670.
(e) The Escrow Agent has executed this Agreement in the place
indicated on the signature page hereof in order to confirm that the Escrow Agent
has received and shall hold the Escrow Deposits and the interest earned thereon,
in escrow, and shall disburse the Escrow Deposits, and the interest earned
thereon, pursuant to the provisions of this Article 12.
(f) The obligations of Prudential, Meridian and Escrow Agent under
this Article 12 shall survive the Closing.
ARTICLE 13 - LEASING MATTERS
13.1 New Leases. After the date of that certain letter from Meridian dated
June 16, 1997 and executed by Prudential as of June 16, 1997 (the "LETTER OF
INTEREST"), Prudential shall not, without Meridian's prior written consent in
each instance, which consent shall not be unreasonably withheld and shall be
given or
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denied, with the reasons for such denial specified in reasonable detail, within
three (3) business days after receipt by Meridian of the information referred to
in the next sentence, enter into a new lease for space in any Facility or renew
or extend any Lease (except pursuant to the exercise by a tenant of a renewal,
extension or expansion option contained in such tenant's Lease). Prudential
shall furnish Meridian with all information regarding any proposed new leases,
renewals and extensions reasonably necessary to enable Meridian to make informed
decisions with respect to the advisability of the proposed action. If Meridian
fails to object in writing to any such proposed new lease, renewal or extension,
as the case may be, within three (3) business days after receipt of the
aforementioned information, Meridian shall be deemed to have approved the
proposed new lease, renewal or extension, as the case may be. If Meridian
rejects the proposed action, Prudential nevertheless retains full right, power
and authority to execute such documents as are necessary to effect such action,
and Prudential shall promptly advise Meridian of the same. The foregoing
notwithstanding, in the event Meridian has rejected the proposed action but
Prudential nonetheless proceeds to effect it, Meridian shall have the right,
within three (3) business days after receipt of Prudential's notice that
Prudential has taken such action, to elect to terminate this Agreement by the
delivery to Prudential of a written notice of termination, in which case the
parties shall have no further rights or obligations hereunder other than any
arising under any section herein which expressly provides that it shall survive
the termination of this Agreement. If Meridian fails to notify Prudential within
such time period, Meridian shall be deemed to have fully waived any rights to
terminate this Agreement pursuant to this Section 13.1. Prudential shall deliver
to Meridian a true and complete copy of each such new lease, renewal and
extension agreement, if any, promptly after the execution and delivery thereof.
13.2 Lease Expenses. At Closing, Meridian shall reimburse Prudential for
any and all fees paid by Prudential prior to Closing or costs and expenses
incurred by Prudential prior to Closing (such fees, costs and expenses being
herein collectively called the "LEASE EXPENSES"), arising out of or in
connection with:
(a) any extensions, renewals or expansions under the Leases
exercisable and exercised by any tenant between the date of the full execution
of the Letter of Interest and the Closing Date; and
(b) any lease for space at any Facility entered into between the
date of the full execution of the Letter of Interest and the Closing Date, or
any extension, renewal or expansion of a Lease where such Lease does not provide
for its extension, renewal or expansion, entered into on or after the date of
the full execution of the Letter of Interest (a "NEW LEASE").
Lease Expenses shall include, without limitation, (i) brokerage commissions and
fees to effect any such leasing transaction, (ii) expenses incurred for repairs,
improvements, equipment, painting, decorating, partitioning and other items to
satisfy the tenant's requirements with regard to such leasing transaction, (iii)
legal fees for services in connection with the preparation of documents and
other services rendered in connection with the effectuation of the leasing
transaction, (iv) if there are any rent concessions covering any period that the
tenant has the right to be in possession of the demised space, the rents that
would have accrued during the period of such concession prior to the Closing
Date as if such concession were amortized over (A) with respect to any extension
or renewal, the term of such extension or renewal, (B) with respect to any
expansion, that portion of the term remaining under the subject Lease after the
date of any expansion, or (C) with respect to any New Lease, the entire initial
term of any New Lease, and (v) expenses incurred for the purpose of satisfying
or terminating the obligations of a tenant under a New Lease to the landlord
under another lease (whether or not such other lease covers space in a
Facility). At the Closing, Meridian shall assume Prudential's obligations
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to pay, when due (whether on a stated due date or accelerated) any Lease
Expenses unpaid as of the Closing, and Meridian hereby agrees to indemnify and
hold Prudential harmless from and against any and all claims for such Lease
Expenses which remain unpaid for any reason at the time of Closing, which
obligations of Meridian shall survive the Closing and shall not be merged
therein. Each party shall make available to the other all records, bills,
vouchers and other data in such party's control verifying Lease Expenses and the
payment thereof.
13.3 Other Lease Activity. Except as provided in this Section 13.3,
without the prior consent of Meridian, which shall not be unreasonably withheld
(a) no Lease shall be modified or amended except as provided in Section 13.1
with respect to extensions, renewals or expansions of Leases and the execution
of New Leases, (b) Prudential shall not consent to any assignment or sublease in
connection with any Lease or New Lease and (c) Prudential shall not remove any
tenant under any Lease or New Lease, whether by summary proceedings or
otherwise, except by reason of a default of the tenant under the Lease or New
Lease. In furtherance of the foregoing, Prudential shall deliver to Meridian a
written notice of each proposed action of the type described in clauses (a)
through (c) above which Prudential has been asked or proposes to take, stating,
if applicable, whether Prudential is willing to consent to such action and
setting forth the relevant information therefor. Meridian shall notify
Prudential in writing whether or not it approves such action within three (3)
business days after delivery to Meridian of Prudential's notice containing the
aforementioned information. If Meridian notifies Prudential that it disapproves
such action, Meridian's notice shall state with specificity the reasons for such
disapproval. If Meridian shall not give written notice of its disapproval of
such action within such three (3) business day period, Meridian shall be deemed
to have approved such action. If any Lease requires that the landlord's consent
be given under the applicable circumstances (or not be unreasonably withheld),
then Meridian shall be deemed ipso facto to have approved such action. Subject
to its reimbursement rights pursuant to Section 13.2, Prudential shall perform
all of the obligations of the landlord under the Leases and New Leases which
under the terms of such Leases and New Leases are required to be performed by
the landlord prior to the Closing Date.
13.4 Lease Enforcement. Subject to the provisions of Section 13.3 above,
prior to the Closing Date, Prudential shall have the right, but not the
obligation (except to the extent that Prudential's failure to act shall
constitute a waiver of such rights or remedies), to enforce the rights and
remedies of the landlord under any Lease or New Lease, by summary proceedings or
otherwise, and to apply all or any portion of any security deposits then held by
Prudential toward any loss or damage incurred by Prudential by reason of any
defaults by tenants.
13.5 Lease Termination Prior to Closing. The termination of any Lease or
New Lease or the removal of any tenant by reason of a default by such tenant (by
summary proceedings or otherwise) prior to the Closing shall not affect the
obligations of Meridian under this Agreement in any manner or entitle Meridian
to a reduction in, or credit or allowance against, the Purchase Price or give
rise to any other claim on the part of Meridian.
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ARTICLE 14 - MISCELLANEOUS
14.1 Assignment.
(a) Meridian's Assignment. Meridian shall not assign this Agreement
or its rights hereunder to any individual or entity without the prior written
consent of Prudential, which consent Prudential may grant or withhold in its
sole discretion, and any such assignment shall be null and void. Notwithstanding
the foregoing, Meridian shall be permitted to assign this Agreement to an entity
in which Meridian owns or controls one hundred percent (100%) of the beneficial
interests provided (a) Meridian effectuates such assignment in writing prior to
the Closing, (b) the assignee assumes the obligations of Meridian under the
terms of this Agreement, and (c) Meridian remains liable to Prudential under the
terms of this Agreement. In the event Meridian assigns this Agreement or its
rights hereunder to a Meridian Affiliate, Meridian shall provide written notice
of such assignment to Prudential within five (5) business days of the execution
of such an assignment.
(b) Prudential's Assignment. Prudential may assign this Agreement
and/or its rights and obligations hereunder, without the prior consent of
Meridian, as Prudential deems necessary to complete the Transaction; provided,
however, that in the event of such an assignment, Prudential shall provide
written notice thereof to Meridian within five (5) business days of the
execution of any such assignment.
14.2 Designation Agreement. Section 6045(e) of the United States Internal
Revenue Code and the regulations promulgated thereunder (herein collectively
called the "REPORTING REQUIREMENTS") require an information return to be made to
the United States Internal Revenue Service, and a statement to be furnished to
Prudential, in connection with the Transaction. Escrow Agent is either (i) the
person responsible for closing the Transaction (as described in the Reporting
Requirements) or (ii) the disbursing title or escrow company that is most
significant in terms of gross proceeds disbursed in connection with the
Transaction (as described in the Reporting Requirements). Accordingly:
(a) Escrow Agent is hereby designated as the "REPORTING PERSON" (as
defined in the Reporting Requirements) for the Transaction. Escrow Agent shall
perform all duties that are required by the Reporting Requirements to be
performed by the Reporting Person for the Transaction.
(b) Prudential and Meridian shall furnish to Escrow Agent, in a
timely manner, any information requested by Escrow Agent and necessary for
Escrow Agent to perform its duties as Reporting Person for the Transaction.
(c) Escrow Agent hereby requests Prudential to furnish to Escrow
Agent Prudential's correct taxpayer identification number. Prudential
acknowledges that any failure by Prudential to provide Escrow Agent with
Prudential's correct taxpayer identification number may subject Prudential to
civil or criminal penalties imposed by law. Accordingly, Prudential hereby
certifies to Escrow Agent, under penalties of perjury, that Prudential's correct
taxpayer identification number is 22-1211670.
(d) Each of the parties hereto shall retain this Agreement for a
period of four (4) years following the calendar year during which Closing
occurs.
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14.3 Survival/Merger. Except for the provisions of this Agreement which
are explicitly stated to survive the Closing, (a) none of the terms of this
Agreement shall survive the Closing, and (b) the delivery of the Deeds and any
other documents and instruments by Prudential and the acceptance thereof by
Meridian shall effect a merger, and be deemed the full performance and discharge
of every obligation on the part of Meridian and Prudential to be performed
hereunder.
14.4 Integration; Waiver. This Agreement, together with the Schedules and
Exhibits hereto, embodies and constitutes the entire understanding between the
parties with respect to the Transaction and all prior agreements,
understandings, representations and statements, oral or written, are merged into
this Agreement. Neither this Agreement nor any provision hereof may be waived,
modified, amended, discharged or terminated except by an instrument signed by
the party against whom the enforcement of such waiver, modification, amendment,
discharge or termination is sought, and then only to the extent set forth in
such instrument. No waiver by either party hereto of any failure or refusal by
the other party to comply with its obligations hereunder shall be deemed a
waiver of any other or subsequent failure or refusal to so comply.
14.5 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New Jersey except to the extent its
conflict of law principles would direct the application of the law of a
different state of forum.
14.6 Captions Not Binding; Schedules and Exhibits. The captions in this
Agreement are inserted for reference only and in no way define, describe or
limit the scope or intent of this Agreement or of any of the provisions hereof.
All Schedules and Exhibits attached hereto shall be incorporated by reference as
if set out herein in full.
14.7 Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
14.8 Severability. If any term or provision of this Agreement or the
application thereof to any persons or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
14.9 Notices. Any notice, request, demand, consent, approval and other
communications under this Agreement shall be in writing, and shall be deemed
duly given or made at the time and on the date when personally delivered as
shown on a receipt therefor (which shall include delivery by a nationally
recognized overnight delivery service) or three (3) business days after being
mailed by prepaid registered or certified mail, return receipt requested, to the
address for each party set forth below, or by telecopy on the date shown on the
receiving party's confirmation thereof, unless such telecopy is received after
2:00 p.m., in which case the date of delivery shall be the next succeeding
business day. Any party, by written notice to the other in the manner herein
provided, may designate an address different from that set forth below.
II-54
<PAGE> 56
IF TO MERIDIAN:
MERIDIAN INDUSTRIAL TRUST, INC.
455 Market Street, 17th Floor
San Francisco, California 94105
Attention: Dennis D. Higgs, Executive Vice President
Telephone: (415) 281-3900
Telecopy: (415) 284-2840
WITH COPIES TO:
MERIDIAN INDUSTRIAL TRUST, INC.
455 Market Street, 17th Floor
San Francisco, California 94105
Attention: Robert A. Dobbin, General Counsel
Telephone: (415) 281-3900
Telecopy: (415) 284-2840
AND TO:
VINSON & ELKINS L.L.P.
3700 Trammel Crow Center
Dallas, Texas 75201
Attention: Phillip Weller, Esq.
Telephone: (214) 220-7738
Telecopy: (214) 220-7716
IF TO PRUDENTIAL:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
Eight Campus Drive, 4th Floor
Parsippany, New Jersey 07054
Attention: Mr. Joel W. Stoesser
Telephone: (210) 683-1718
Telecopy: (210) 683-1795
II-55
<PAGE> 57
WITH A COPY TO:
GOODWIN, PROCTER & HOAR LLP
300 Park Avenue, 17th Floor
New York, New York 10022
Attention: Robert S. Insolia, Esq.
Telephone: (212) 572-6321
Telecopy: (212) 572-6482
14.10 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original and all of which counterparts taken together shall
constitute one and the same agreement.
14.11 No Recordation. Prudential and Meridian each agrees that neither
this Agreement nor any memorandum or notice hereof shall be recorded and
Meridian agrees (a) not to file any notice of pendency or other instrument
(other than a judgment or lis pendens filed by Meridian in connection with
Meridian's enforcement of its rights hereunder) against any of the Facilities or
any portion thereof in connection herewith and (b) to indemnify Prudential
against all costs, expenses and damages, including, without limitation,
reasonable attorneys' fees and disbursements, incurred by Prudential by reason
of the filing by Meridian of such notice of pendency or other instrument.
14.12 Additional Agreements; Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto shall execute and deliver
such documents as the other party shall reasonably request in order to
consummate and make effective the Transaction; provided, however, that the
execution and delivery of such documents by such party shall not result in any
additional liability or cost to such party.
14.13 Construction. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendment, Schedule or Exhibit hereto.
14.14 Intentionally Omitted.
14.15 Business Day. As used herein, the term "BUSINESS DAY" shall mean any
day other than a Saturday, Sunday, or any Federal or State of New Jersey
holiday.
14.16 Prudential's Maximum Aggregate Liability. Notwithstanding any
provision to the contrary contained in this Agreement or any documents executed
by Prudential pursuant hereto or in connection herewith, the maximum aggregate
liability of Prudential, and the maximum aggregate amount which may be awarded
to and collected by Meridian, under this Agreement (including, without
limitation, the breach of any representations and warranties contained herein)
and any and all documents executed pursuant hereto or in connection herewith
(including, without limitation, any Prudential's estoppel letter provided in
accordance with the terms of Section 6.4(e) hereof), for which one or more
claims (in the aggregate) are timely made by Meridian shall not exceed Three
Million Dollars ($3,000,000.00). The provisions of this section shall survive
the Closing and shall not be merged therein.
II-56
<PAGE> 58
14.17 WAIVER OF TRIAL BY JURY. MERIDIAN AND PRUDENTIAL HEREBY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM FILED BY MERIDIAN OF PRUDENTIAL, WHETHER IN CONTRACT,
TORT OR OTHERWISE, WHICH RIGHT OR CLAIM RELATES DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, ANY DOCUMENTATION RELATED THERETO, OR ANY ACTS OR OMISSIONS IN
CONNECTION WITH THIS AGREEMENT. THIS WAIVER HAS BEEN AGREED TO AFTER
CONSULTATION WITH LEGAL COUNSEL SELECTED BY MERIDIAN AND PRUDENTIAL.
This Waiver is agreed to: Meridian's Initials ( )
Prudential's Initials ( )
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
II-57
<PAGE> 59
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly
executed on its behalf on the day and year first above written.
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation
By: /s/ John Maurer
________________________________
John Maurer
Vice President
MERIDIAN INDUSTRIAL TRUST, INC.,
a Maryland corporation
By: /s/ Milton K. Reeder
________________________________
Name: Milton K. Reeder
Its: President
II-58
<PAGE> 60
The undersigned has executed this
Agreement solely to confirm its
agreement to (i) hold the Escrow
Deposits in escrow in accordance
with the provisions hereto,(ii) comply
with the provisions of Article 12 and
Section 14.2 and (iii) to provide the
Release to Meridian and Prudential under the
conditions described in Article 3.
FIRST AMERICAN TITLE INSURANCE COMPANY
By: /s/ Mary Lou Kennedy
________________________________
Name: Mary Lou Kennedy
Its: Vice President
Date: August 27, 1997
II-59
<PAGE> 1
EXHIBIT III
<PAGE> 2
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
BY AND BETWEEN
MERIDIAN INDUSTRIAL TRUST, INC.,
AS SELLER
AND
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
AS PURCHASER
COMMON STOCK
(par value $.001 per share)
June 12, 1997
III-1
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I DEFINITIONS............................................................... 1
Section 1.1 Definition................................................................. 1
ARTICLE II PURCHASE OF COMMON STOCK.................................................. 6
Section 2.1 Purchase of Shares; Closing................................................ 6
Section 2.2 Dividend Adjustment........................................................ 7
ARTICLE III REPRESENTATIONS AND WARRANTIES............................................ 7
Section 3.1 Representations and Warranties of the Company.............................. 7
Section 3.2 Representations and Warranties of Purchaser................................ 15
ARTICLE IV CONDITIONS PRECEDENT TO CLOSING........................................... 17
Section 4.1 Conditions Precedent to Obligations of Purchaser........................... 17
Section 4.2 Conditions Precedent to Obligations of the Company......................... 19
ARTICLE V COVENANTS................................................................. 20
Section 5.1 Furnishing of Information.................................................. 20
Section 5.2 Real Estate Investment Trust............................................... 21
Section 5.3 Sale of Shares by Purchaser................................................ 21
Section 5.4 Approvals.................................................................. 21
Section 5.5 Registration Rights Agreement.............................................. 21
Section 5.6 Excepted Holder Agreements................................................. 21
Section 5.7 Notification of Certain Matters............................................ 21
Section 5.8 Nomination of Board Member................................................. 22
Section 5.9 Shareholders' Meeting; Preparation of Proxy Statement...................... 22
Section 5.10 Publicity and Reports...................................................... 23
Section 5.11 Conduct of Business........................................................ 23
Section 5.12 Negative Covenants of the Company.......................................... 23
Section 5.13 Inspection Rights.......................................................... 24
Section 5.14 [Reserved]................................................................. 24
Section 5.15 Real Estate Operating Company.............................................. 24
Section 5.16 Amendment to Investor Rights Agreement..................................... 24
Section 5.17 Delivery of Certain Documents.............................................. 24
Section 5.18 Further Assurances......................................................... 24
</TABLE>
III-2
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VI MISCELLANEOUS............................................................. 25
Section 6.1 Survival of Provisions............................................... 25
Section 6.2 Termination.......................................................... 25
Section 6.3 No Waiver; Modification in Writing................................... 26
Section 6.4 Communications....................................................... 26
Section 6.5 Execution in Counterparts............................................ 26
Section 6.6 Binding Effect; Assignment........................................... 26
Section 6.7 Governing Law........................................................ 27
Section 6.8 Expenses............................................................. 27
Section 6.9 Severability of Provisions........................................... 27
Section 6.10 Headings............................................................. 27
Section 6.11 Integration.......................................................... 27
Section 6.12 Enforcement of Covenants............................................. 27
Section 6.13 Waiver by Jury Trial................................................. 28
</TABLE>
III-3
<PAGE> 5
EXHIBITS
Exhibit A Form of Registration Rights Agreement
Exhibit B Form of Excepted Holder Agreement
SCHEDULES
Schedule 3.1(c) List of Rights to Acquire Equity Securities; Voting
Restrictions;Etc.
Schedule 3.1(d) List of Third Party Consents
Schedule 3.1(i) List of Governmental Consents, Etc.
Schedule 3.1(o) List of Certain Liabilities
Schedule 3.1(s) List of Ownership in Subsidiaries
Schedule 3.1(y) List of Merger, Sale of Equity and Sale of Assets
III-4
<PAGE> 6
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT, dated as of June 12, 1997,
by and among Meridian Industrial Trust, Inc., a Maryland corporation (the
"COMPANY"), and The Prudential Insurance Company of America, a New Jersey
insurance company (the "PURCHASER").
RECITALS
WHEREAS, the Company and the Purchaser have entered into that certain
Stock Purchase Agreement dated as of May 27, 1997 (the "Existing Stock Purchase
Agreement");
WHEREAS, under the Existing Stock Purchase Agreement, the Purchaser agreed
to purchase from the Company, and the Company agreed to sell to the Purchaser,
3,548,256 shares of Common Stock;
WHEREAS, the Purchaser and the Company desire to increase the number of
shares of Common Stock to be sold to the Purchaser by an additional 253,447
shares from 3,548,256 shares to 3,801,703 shares; and
WHEREAS, the Purchaser and Company desire to amend and restate the
Existing Stock Purchase Agreement to provide for an increase the number of
shares purchased by Purchaser from 3,548,256 shares to 3,801,703 shares and as
otherwise set forth herein;
NOW THEREFORE, In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definition. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Accrued Dividends Per Share" means the product of (i) the dividends per
Share distributed by the Company for the quarter ending September 30, 1997
multiplied by (ii) the Dividend Adjustment.
"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 Stock Purchase Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
III-5
<PAGE> 7
"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.
"Benefit Plans" means all employee benefit plans and collective
bargaining, labor and employment agreements or other similar benefit
arrangements to which the Company or any Subsidiary of the Company will be a
party at the Closing or by which the Company or any Subsidiary of the Company
will be bound at the Closing, including (A) any profit-sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retainer,
consulting, retirement, severance, welfare or incentive plan, agreement or
arrangement, (B) any plan, agreement or arrangement providing for "fringe
benefits" or perquisites to employees, officers, directors 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, (C) any employment agreement not terminable on 30 days
(or less) written notice or (D) any other "employee benefit plan" within the
meaning of Section 3(3) of ERISA.
"Books and Records" means the books and records of the Company and each of
its Subsidiaries, including without limitation financial data (including
projections) and operating data covering each of such entities, their
businesses, operations and financial performance.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York generally are authorized or required by law or other government actions
to close.
"Bylaws" means the Company's Second Amended and Restated Bylaws dated as
of January 26, 1996, as amended from time to time.
"Charter" means the Company's Third Amended and Restated Articles of
Incorporation dated as of March 30, 1996, as amended from time to time.
"Closing" has the meaning provided therefor in Section 2.1(b) of this
Agreement.
"Closing Date" has the meaning provided therefor in Section 2.1(b) of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $.001 per
share.
"Company" means Meridian Industrial Trust, Inc., a Maryland corporation.
"Confidential Information" has the meaning provided therefor in Section
5.1(b) of this Agreement.
III-6
<PAGE> 8
"Current SEC Reports" means the 1996 Form 10-K, the 1997 Form 10-Q and the
1997 Proxy Statement.
"Dividend Adjustment" means the quotient of (x) the number of calendar
days between July 1, 1997 (including such date) and the Closing Date (excluding
such date) divided by (y) 92 days.
"Employee and Director Stock Plan" means the Company's Amended and
Restated Employee and Director Stock Plan dated as of January 26, 1996, as
amended through the date hereof, a true, correct and complete copy of which has
been delivered to Purchaser prior to the date hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended (or, with respect to any provision thereof referred to herein, any
corresponding provision of any succeeding law).
"Excepted Holder Agreement" means the Excepted Holder Agreement,
substantially in the form of Exhibit B hereto, as the same may be amended,
restated, supplemented or otherwise modified in accordance with its terms.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Existing Stock Purchase Agreement" means the Stock Purchase Agreement,
dated as of May 27, 1997, entered into between the Purchaser and the Company.
"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.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended and related rules, regulations and published
interpretations thereunder.
"Initial Purchase Price" means the aggregate purchase price for the Shares
based on the price per Share set forth in Section 2(a).
"Investor Rights Agreement" means that certain Amended and Restated
Investor Rights Agreement dated as of February 23, 1996 by and among the Company
and certain shareholders of the Company.
"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).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in or on such asset or the
revenues or income thereon or therefrom.
"Material Adverse Effect" shall have the meaning set forth in Section
3.1(a).
III-7
<PAGE> 9
"Minimum Ownership Level" means, at any time, 10% of the outstanding
shares of Common Stock on a fully diluted basis.
"NYSE" means the New York Stock Exchange.
"Order" means any decree, injunction, judgment, order, ruling, assessment
or writ.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proxy Statement" shall have the meaning set forth in Section 5.9.
"Purchaser" means The Prudential Insurance Company of America and its
successors and permitted assigns.
"Recommendations" shall have the meaning set forth in Section 3.1(u).
"REIT" shall have the meaning set forth in Section 3.1(q).
"Registration Rights Agreement" means the Registration Rights Agreement,
substantially in the form of Exhibit A hereto, as the same may be amended,
restated, supplemented or otherwise modified in accordance with its terms.
"REOC" shall have the meaning set forth in Section 3.1(k).
"Rule 144" means Rule 144 under the Securities Act of 1933, as amended,
and any successor rule thereto.
"SEC Documents" shall have the meaning set forth in Section 3.1(x).
"SEC Financial Statements" shall have the meaning set forth in Section
3.1(x).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Separate Account Purchaser" shall have the meaning set forth in Section
5.14.
"Series B Preferred Stock" means the shares of Series B Preferred Stock,
par value $.001 per share, of the Company.
"Shareholders' Meeting" shall have the meaning set forth in Section 5.9.
"Shares" means the shares of Common Stock purchased by Purchaser pursuant
to this Agreement.
III-8
<PAGE> 10
"Subsequent Purchasers" shall mean the purchasers, if any, of shares of
Common Stock as contemplated by Section 5.14.
"Subsidiary" means, with respect to any Person, (a) a corporation, a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a Subsidiary of such Person or by such Person and a Subsidiary thereof or (b)
any other Person (other than a corporation) in which such Person, a Subsidiary
thereof or such Person and a Subsidiary thereof, directly or indirectly, at the
date of determination thereof has at least a majority ownership interest.
"Taxes" means all taxes, charges, fees, levies, duties, imposts,
withholdings, restrictions, fines, interest, penalties, additions to tax or
other assessments or charges, including, but not limited to, income, excise,
property, withholding, sales, use, gross receipts, value added and franchise
taxes, license recording, documentation and registration fees and custom duties
imposed by any Governmental Entity.
"Tax Return" means a report, return or other information required to be
filed by a Person with or submitted to a Governmental Entity with respect to
Taxes, including, where permitted or required, combined or consolidated returns
for any group of entities that includes the Person.
"Termination Date" means the earlier of (i) September 30, 1997 and (ii)
the record date established by the Board of Directors of the Company for the
distribution of dividends for the fiscal quarter of the Company ended September
30, 1997.
"Transaction Documents" means this Agreement, the Registration Rights
Agreement, the Excepted Holder Agreement and all other documents executed in
connection therewith.
"Transfer" shall have the meaning set forth in Section 3.2(b).
"1996 Form 10-K" means the Company's annual report on Form 10-K for the
year ended December 31, 1996 filed with the Commission.
"1997 Form 10-Q" means the Company's quarterly report on Form 10-Q for the
fiscal quarter ended March 31, 1997 filed with the Commission.
"1997 Proxy Statement" means that certain Proxy Statement dated April 14,
1997 in respect of the annual meeting of the shareholders of the Company held on
May 16, 1997.
III-9
<PAGE> 11
ARTICLE II
PURCHASE OF COMMON STOCK
Section 2.1 Purchase of Shares; Closing.
(a) Subject to the terms and conditions herein set forth and the
Dividend Adjustment, the Company will sell to Purchaser, and Purchaser will
purchase from the Company, 3,801,703 shares of Common Stock at a purchase price
of $19.728 per Share (the "Initial Purchase Price").
(b) The purchase and sale of the Shares will take place at a closing
(the "CLOSING") to be held at the offices of O'Melveny & Myers LLP, 275 Battery
Street, San Francisco, California 94111 or such other location as may be
mutually agreed upon by the parties hereto on a date mutually agreed upon by the
parties hereto, provided that the Closing shall occur on or before the earlier
of (i) the fifth calendar day after all conditions set forth in Article IV have
been satisfied or waived by the appropriate party and (ii) the Termination Date.
The date and time at which the Closing is to be concluded is the "CLOSING DATE."
(c) Delivery of the Shares shall be made at the Closing by delivery
to Purchaser, against payment of the Initial Purchase Price therefor as provided
herein, of a share certificate representing the total number of Shares or, at
Purchaser's option, issuance of the Shares in book entry form.
(d) Payment of the Initial Purchase Price shall be made by or on
behalf of Purchaser by wire transfer of immediately available funds to an
account of the Company (the number for which account shall have been furnished
to Purchaser at least two Business Days prior to the Closing Date), or certified
or official bank check payable in immediately available funds to the order of
the Company.
Section 2.2 Dividend Adjustment. In addition to the Initial Purchase
Price, Purchaser shall pay to the Company, promptly after receipt of dividends
for the quarter ended September 30, 1997, an amount equal to the product of (x)
Accrued Dividends Per Share (x) multiplied by (y) 3,801,703 shares. Payment of
such Dividend Adjustment shall be made in the manner as set forth in Section
2.1(d) or as otherwise agreed to by Purchaser and the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company. The Company
represents and warrants as of the date hereof as follows.
(a) Organization and Good Standing. (i) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland. Each Subsidiary of the Company is a corporation or other
entity duly organized, validly existing and, with respect to each Subsidiary
that is a corporation, in good standing under the laws of its state of
incorporation or formation, as the case may
III-10
<PAGE> 12
be. The Company and each Subsidiary of the Company is duly qualified or licensed
and, with respect to each Subsidiary that is a corporation, in good standing as
a foreign corporation and authorized to do business, in each jurisdiction in
which the ownership or leasing of its properties or the character of its
operations makes such qualification, licensing or authorization necessary,
except where the failure to obtain such qualification, license, authorization or
good standing would not individually or in the aggregate reasonably be expected
to have a material adverse effect upon the assets, liabilities, financial
condition, earnings or operations of the Company and its Subsidiaries taken as a
whole or any transaction contemplated by the Transaction Documents (any such
material adverse effect, whether individually or in the aggregate, a "MATERIAL
ADVERSE EFFECT"). The Company and each Subsidiary of the Company has all
requisite corporate power and authority to own its assets and to carry on its
business as presently proposed to be conducted except where a lack of such
corporate power or authority could not reasonably be expected to have a Material
Adverse Effect.
(ii) The Company has delivered to Purchaser true, correct and
complete copies of the Charter and the Bylaws of the Company.
(b) Authorizations. The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations under the
Transaction Documents. The execution and delivery by the Company of the
Transaction Documents and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the Company.
(c) Capitalization. As of the date hereof, the equity capitalization
of the Company is as set forth in the balance sheet of the Company included in
the 1997 Form 10-Q, except for any shares of Common Stock issued under the
Employee and Director Stock Plan since March 31, 1997. At the Closing Date, all
of the outstanding shares of stock of the Company will be duly and validly
issued, fully paid and non-assessable and not subject to any preemptive rights
of other shareholders. Except as set forth in the Current SEC Reports and in
Schedule 3.1(c), a certificate (certified by the Chief Executive Officer or
Chief Financial Officer of the Company) delivered to Purchaser on or prior to
the Closing Date or contemplated by the Employee and Director Stock Plan, (i)
there are no outstanding securities or indebtedness convertible into,
exchangeable for, or carrying the right to acquire, Common Stock or other equity
securities of the Company, or subscriptions, warrants, options, rights, or other
arrangements or commitments obligating the Company to issue or dispose of any
Common Stock or other equity securities or any ownership therein, (ii) there is
no agreement or arrangement restricting the voting or transfer of any equity
securities of the Company, and (iii) there are no outstanding contractual
obligations, commitments, understandings or arrangements of the Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire, require or make
any payment in respect of any shares of equity securities of the Company or such
Subsidiary. Except with respect to statutory restrictions of general
application, as provided in the Charter with respect to the Series B Preferred
Stock and the terms of the Company's Second Amended and Restated Revolving
Credit Agreement with The First National Bank of Boston and certain other Banks
named therein, there are no legal, contractual or other restrictions on the
payment of dividends or other distributions or amounts on or in respect of the
Common Stock. As of the date hereof, except as contemplated by the Registration
Rights Agreement and the Investor Rights Agreement, there are no agreements or
arrangements to which any of the Company or its Subsidiaries is a party pursuant
to which the Company is or could be required to register shares of Common Stock
or other securities under the Securities Act.
III-11
<PAGE> 13
(d) Conflicting Agreements and Other Matters. Neither the Company
nor any of its Subsidiaries is a party to any contract or agreement or subject
to any charter or other corporate restriction compliance with which could
reasonably be expected to have a Material Adverse Effect. Assuming the filing of
a Form D with the Commission, the listing of the Shares on the NYSE and the
accuracy of the representations and warranties of, and the performance of the
agreements of, Purchaser set forth in Section 3.2 and elsewhere herein, neither
the execution and delivery of the Transaction Documents nor fulfillment of nor
compliance with the terms and provisions thereof, nor the issuance of the Shares
will (i) violate any provision of any Law presently in effect or in effect at
the Closing Date having applicability to the Company or any Subsidiary or any of
their properties, except such violations as could not reasonably be expected to
have a Material Adverse Effect, (ii) conflict with or result in a breach of or
constitute a default under the Charter or Bylaws of the Company or any
organizational document of its Subsidiaries, (iii) except as set forth in
Schedule 3.1(d), require any consent, approval or notice under, or conflict with
or result in a breach of, constitute a default or accelerate any right under,
any note, bond, mortgage, license, indenture or loan or credit agreement, or any
other agreement or instrument, to which the Company or any of its Subsidiaries
is a party or by which any of their respective properties is bound, except such
consents, approvals, notices, conflicts, breaches or defaults as could not
reasonably be expected to have a Material Adverse Effect or (iv) result in, or
require the creation or imposition of, any Lien upon or with respect to any of
the properties now owned or hereafter acquired by the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is bound by any
agreement which would impose upon Purchaser any personal obligation or personal
liability which is greater than the personal obligations and personal
liabilities imposed upon Purchaser under this Agreement, the Registration Rights
Agreement and the Excepted Holder Agreement to be entered into by the Company
and Purchaser pursuant to Sections 5.5 and 5.6 hereof. In addition, the Company
is not aware of any facts or circumstances that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(e) Due Execution, etc. This Agreement, constitutes, and when
executed and delivered by the Company at the Closing each of the Registration
Rights Agreement and the Excepted Holder Agreement will constitute, a legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
(f) Litigation, Proceeding, etc. There is no action, suit, notice of
violation, proceeding or investigation pending or, to the best knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any of their respective properties before or by any Governmental Entity which
(i) challenges the legality, validity or enforceability of any of the
Transaction Documents or the Shares or (ii) could (individually or in the
aggregate) reasonably be expected to have a Material Adverse Effect or (iii)
would (individually or in the aggregate) impair the ability of the Company to
perform fully on a timely basis any obligations which it has under any of the
Transaction Documents.
(g) No Default or Violation. Neither the Company nor any of its
Subsidiaries is (i) in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, except such defaults or
violations as could not reasonably be expected to have a Material Adverse
Effect, (ii) in violation of any Order of any Governmental Entity, except for
such violations as could not reasonably be expected to have a Material Adverse
Effect, or
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<PAGE> 14
(iii) in violation of any Law which could reasonably be expected to (A)
adversely affect the legality, validity or enforceability of the Transaction
Documents, (B) have a Material Adverse Effect or (C) adversely impair the
Company's ability or obligation to perform fully on a timely basis any
obligation which it has under the Transaction Documents.
(h) Status of Shares. Subject to approval of the shareholders of the
Company, which approval shall be solicited pursuant to Section 5.9 prior to the
Closing, the issuance and sale of the Shares have been duly authorized by all
necessary corporate action on the part of the Company and such Shares, when
delivered to Purchaser at the Closing against payment therefor as provided
herein, will be validly issued, fully paid and non-assessable and the issuance
and sale of the Shares is not and will not be subject to preemptive rights of
any other shareholder of the Company.
(i) Governmental Consents, etc. Except as may be required under any
applicable securities law in connection with the performance by the Company of
its obligations under the Registration Rights Agreement, and except for the
filing of a Form D with the Commission and the listing of the Shares on the
NYSE, and assuming the accuracy of the representations and warranties of, and
the performance of the agreements of, Purchaser set forth in Section 3.2 and
elsewhere herein, no authorization, consent, approval, waiver, license,
qualification or formal exemption from, nor any filing, declaration,
qualification or registration with, any Governmental Entity or any securities
exchange is required in connection with the execution, delivery or performance
by the Company of this Agreement and the issuance, sale or delivery of the
Shares except for those that (i) have been made or obtained by the Company as of
the date hereof or (ii) are set forth in Schedule 3.1(i) and by the Closing
shall be made or received by the Company. At the Closing Date, the Company will
have made all filings and given all notices to Governmental Entities and
obtained all necessary ordinances, registrations, declarations, approvals,
orders, consents, qualifications, franchises, certificates, permits and
authorizations from any Governmental Entity, to own or lease its properties and
to conduct its facilities and businesses as currently conducted, except where
failure to do so could not reasonably be expected to have a Material Adverse
Effect. At the Closing Date, all such registrations, declarations, approvals,
orders, consents, qualifications, franchises, certificates, permits and
authorizations, the failure of which to file, give notice of or obtain could
reasonably be expected to have a Material Adverse Effect, will be in full force
and effect. The assets of the Company qualify as exempt assets for purposes of
the Hart-Scott-Rodino Act and no filing under the Hart-Scott-Rodino Act is
required in connection with the sale and issuance of the Shares hereunder.
(j) Private Offering. Neither the Company nor any Person acting on
its behalf has taken or will take any action (including, without limitation, any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Shares under
the Securities Act) which might subject the offering, issuance or sale of the
Shares to the registration requirements of Section 5 of the Securities Act.
(k) ERISA.
(i) Company Status. The Company currently qualifies as a "real
estate operating company" ("REOC") within the meaning of 29 C.F.R. Section
2510.3-101(e), and has qualified as a REOC during all valuation periods
within the meaning of 29 C.F.R. Section 2510.3-101(d)(5).
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<PAGE> 15
(ii) Benefit Plans. To the extent applicable, the Benefit
Plans comply, in all material respects, with the requirements of ERISA and
the Code (including reporting requirements). Neither any Benefit Plan nor
the Company or any Subsidiary of the Company has incurred any liability or
penalty under Section 4975 of the Code or Section 502(i) of ERISA. Each
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. There are no pending, or to the knowledge of the
Company threatened, material claims (other than claims for benefits
pursuant to the terms of any such plan) against or otherwise involving any
of the Benefit Plans and no action has been brought against or with
respect to any Benefit Plan, and neither the Company nor any Subsidiary of
the Company incurred any material liability to any party with respect to
any Benefit Plan. All contributions required to be made to the Benefit
Plans have been made or provided for as of the date hereof. No Benefit
Plan is subject to Title IV of ERISA and neither the Company nor any
Subsidiary of the Company 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 3.1(k), (i) the term "COMPANY" includes any entity required to be
aggregated with the Company pursuant to Code Section 414(b),(c),(m) or (o)
and (ii) provisions of ERISA or the Code include regulations prescribed
under such provisions.
(iii) The terms of this transaction are not less favorable to
Purchaser than the terms that would be available generally in an
arms'-length transaction between unrelated parties.
(l) Financial Statements. The consolidated balance sheets and
statements of operations of the Company and its consolidated Subsidiaries as of
the last day of its latest complete fiscal year and the related consolidated
statements of operations, shareholders' equity and cash flows for the fiscal
year then ended, reported on by the independent public accountants (and, with
respect to the Company, filed with the Commission on Form 10-K) for the years
ended December 31, 1995 and December 31, 1996 and the consolidated balance
sheets and statements of operations of the Company and its consolidated
Subsidiaries as of the fiscal quarter ended March 31, 1997 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the fiscal quarter then ended (and, with respect to the Company, included in the
1997 Form 10-Q), present fairly in all material respects the financial position
of the Company and its consolidated Subsidiaries as of the dates indicated and
the results of operations of the Company and its consolidated Subsidiaries, for
the periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis and all adjustments necessary for a fair presentation of results for such
periods have been made (subject, in the case of unaudited financial statements,
to normal year-end audit adjustments).
(m) Insurance. At Closing, the Company and its Subsidiaries will
have (i) "all risk" property insurance, including fire, flood, earthquake,
extended coverage and rental loss insurance and (ii) general commercial
liability insurance, under terms and in such amounts and covering such risks
that are customary for properties similar to those of the Company and its
Subsidiaries. There are currently no outstanding material losses for which the
Company or any of its Subsidiaries has failed to give or present notice or claim
under any policy. Policies for all the insurance are in full force and effect
and none of the Company or its Subsidiaries is in default in any material
respect under any of the policies.
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<PAGE> 16
(n) Information Provided. Neither this Agreement, the schedules and
exhibits hereto, the Current SEC Reports nor any other written document
delivered to Purchaser in connection with the transactions contemplated hereby
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements herein or therein, as the case may be, in light
of the circumstances under which it was made, not misleading, and all material
information regarding the Company and its Subsidiaries is provided therein.
(o) No Other Liabilities. Except as set forth in Schedule 3.1(o),
neither the Company nor any Subsidiary of the Company will have any material
liability, whether absolute, accrued, contingent or otherwise, except
liabilities (i) reflected on the consolidated balance sheet of the Company and
its Subsidiaries as at March 31, 1997, or (ii) liabilities that (1) are incurred
by the Company and its Subsidiaries after March 31, 1997 in the ordinary course
of business and (2) could not reasonably be expected to have a Material Adverse
Effect.
(p) 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 the
Company in connection with the negotiation, execution or performance of 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 other than any such fees or
commissions that have been disclosed to Purchaser and as to which the Company
shall have full and sole responsibility.
(q) Taxes; REIT Status. Each of the Company and its Subsidiaries has
filed all Tax Returns that are required to be filed with any Governmental Entity
and has paid all Taxes due pursuant to the Tax Returns or any assessment
received by it or otherwise required to be paid, except Taxes being contested in
good faith by appropriate proceedings and for which adequate reserves or other
provisions are maintained, and except for the filing of Tax Returns as to which
the failure to file could not, individually or in the aggregate, have a Material
Adverse Effect. The Company (i) elected to be taxed as a "real estate investment
trust" as defined in Section 856 of the Code ("REIT") effective for each of the
taxable years since the Company has been incorporated, (ii) has not revoked such
election, (iii) qualifies for taxation as a REIT for each such taxable year and
for its current taxable year and (iv) has not sold or otherwise disposed of any
assets which could give rise to a material amount of tax pursuant to any
election made by the Company under Notice 88-19, 1988-1 C.B. 486 and does not
expect to effect any such sale or other disposition.
(r) Compliance with Laws. Neither the Company nor any of its
Subsidiaries has been in or is in, and none of them has received notice of,
violation of or default with respect to, any Law or any decision, ruling, order
or award of any arbitrator applicable to it or its business, properties or
operations, except for violations or defaults that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
(s) Subsidiaries.
(i) The 1996 Form 10-K sets forth a correct and complete list
of all of the Company's Subsidiaries as of the date hereof.
(ii) As of the date hereof, except as set forth on Schedule
3.1(s), all outstanding shares of capital stock or other evidences of
equity ownership of each Subsidiary of the Company are duly
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<PAGE> 17
authorized, validly issued, fully paid and nonassessable and are owned
directly or indirectly, beneficially and of record by the Company, free
and clear of all Liens.
(t) Material Contracts. (i) The 1997 Form 10-Q, the 1996 Form 10-K
and Schedule 3.1(c) includes a correct and complete list of the following with
respect to the Company and any of its Subsidiaries: (1) agreements with any
shareholder having beneficial ownership of 5% or more of the shares of common
stock of the Company or such Subsidiary then issued and outstanding, director or
officer of the Company or such Subsidiary and all shareholders' agreements and
voting trusts; and (2) agreements not made in the ordinary course of business
and which could reasonably by expected to result in a Material Adverse Effect.
(ii) All property management agreements to which the Company
is a party provide for a right (without payment of any penalty or
termination fee) of the Company to terminate such agreement upon 30-day
prior written notice and the Company shall deliver each such agreement
reasonably requested by Purchaser within 10 days after the date of such
request.
(u) Recommendations. The Board of Directors of the Company, at a
meeting duly called and held, has duly (i) determined that the Transaction
Documents and the transactions contemplated thereby, taken as a whole, are in
the best interests of the Company and its shareholders, (ii) resolved to
recommend that holders of shares of Common Stock and Series B Preferred Stock
approve the Transaction Documents and the transactions contemplated thereby
(collectively, the "RECOMMENDATIONS") and (iii) approved the Transaction
Documents and the transactions contemplated thereby.
(v) Shareholder Approval. The affirmative vote of a majority of the
shares of the Common Stock and the Series B Preferred Stock, voting together as
a single class, voted at the duly convened shareholders meeting of the Company
(or any other duly convened meeting of the holders of the Common Stock and the
Series B Preferred Stock) is the only vote of the holders of any class or series
of the equity securities of the Company necessary to approve the Transaction
Documents and the transactions contemplated thereby.
(w) No Restrictions on Shares. As of the Closing Date, subject to
satisfaction of Section 4.1(l), no provision of the Charter or Bylaws of the
Company, any other agreement, indenture or other instrument to which the Company
or its properties are subject, or any Law applicable to the Company (i), except
as provided in the Excepted Holder Agreement, directly or indirectly restricts
or impairs the right or ability of Purchaser to vote, or otherwise to exercise
the rights and receive the benefits of a shareholder with respect to the Shares,
including, without limitation, restrictions based upon the size of the security
holdings of Purchaser, the business in which it is engaged or other
considerations applicable to it and not to security holders generally, or (ii)
provides any other security holder of the Company with any preemptive rights.
(x) SEC Documents. The Company has filed with the Commission all
reports, schedules, forms, statements and other documents required by the
Exchange Act to be filed by the Company (collectively, and in each case
including all exhibits and schedules thereto and documents incorporated by
reference therein, the "SEC DOCUMENTS"). The Company has delivered or made
available to Purchaser all SEC Documents. As of their respective dates, except
to the extent revised or superseded by a subsequent filing with the Commission,
the SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of the SEC
Documents (including any and all financial
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<PAGE> 18
statements included therein) as of such dates contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of the Company and its Subsidiaries included in all SEC
Documents, including any amendments thereto (the "SEC FINANCIAL STATEMENTS"),
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto.
(y) No Merger Agreements. As of the date hereof, except as set forth
in Schedule 3.1(y), none of Company or its Subsidiaries has entered into any
agreement with any Person which has not been terminated as of the date of this
Agreement and under which there remains any liability or obligation thereof with
respect to a merger or consolidation with any of the Company or its
Subsidiaries, or any other acquisition of a substantial amount of the assets of
the Company or its Subsidiaries.
Section 3.2 Representations and Warranties of Purchaser.
(a) Investment Intent. Purchaser represents and warrants to the
Company that the Shares to be acquired by it hereunder are being acquired for
its own account for investment and with no intention of distributing or
reselling such Shares or any part thereof or interest therein in any transaction
which would be in violation of the securities laws of the United States of
America or any State or any foreign country or jurisdiction.
(b) Transfer Restrictions. If Purchaser should decide to dispose of
any of the Shares, Purchaser understands and agrees that it may do so only
pursuant to an effective registration statement under the Securities Act or
pursuant to an exemption from registration under the Securities Act. In
connection with any offer, resale, pledge or other transfer (individually and
collectively, a "TRANSFER") of any Shares other than pursuant to an effective
registration statement, the Company may require that the transferor of such
Shares provide to the Company an opinion of counsel which opinion shall be
reasonably satisfactory in form and substance to the Company, to the effect that
such Transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act and any
State or foreign securities laws. Purchaser agrees to the imprinting, so long as
appropriate, of substantially the following legend on certificates representing
the Shares:
THE SHARES OF COMMON STOCK (THE "SHARES") EVIDENCED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER
AGREES THAT IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER
(INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER") THE SHARES EVIDENCED HEREBY,
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT SUCH AS THE EXEMPTION SET FORTH IN RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE). IF THE PROPOSED TRANSFER IS TO BE MADE
OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AND THE TRANSFER AGENT SUCH
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<PAGE> 19
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAW.
The legend set forth above may be removed if and when the Shares
represented by such certificate are disposed of pursuant to an effective
registration statement under the Securities Act or the opinion of counsel
referred to above has been provided to the Company. The share certificates shall
also bear legends regarding permitted ownership levels of Shares and any
additional legends required by applicable Federal, State or foreign securities
Laws or necessary under applicable tax Laws, which legends may be removed when,
in the opinion of counsel to the Company, the same are no longer required under
the Charter or the applicable requirements of such securities or tax Laws.
Purchaser agrees that, in connection with any Transfer of Shares by it pursuant
to an effective registration statement under the Securities Act, Purchaser will
comply with all prospectus delivery requirements of the Securities Act. The
Company makes no representation, warranty or agreement as to the availability of
any exemption from registration under the Securities Act with respect to any
resale of Shares.
(c) Stop Transfer Instruction. Purchaser agrees that the Company
shall be entitled to make a notation on its records and give instructions to any
transfer agent for the Shares in order to implement the restrictions on transfer
set forth in this Agreement.
(d) Purchaser Status. Purchaser represents and warrants to, and
covenants and agrees with, the Company that (i) at the time it was offered the
Shares, it was, (ii) at the date hereof, it is, and (iii) at the Closing Date,
it will be, a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act or an "accredited investor" as defined in Rule 501 under the
Securities Act, and has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the Company and
an investment in the Shares, and is able to bear the economic risk of such
investment.
(e) Authority. Purchaser represents and warrants to the Company
that, assuming the accuracy of the representation of the Company in Section
3.1(i) hereof, (i) as of the Closing Date, the purchase of the Shares to be
purchased by it has been duly and properly authorized and this Agreement has
been duly executed and delivered by it or on its behalf and constitutes the
valid and legally binding obligation of Purchaser, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity; (ii) the purchase of the Shares to be purchased by it does not
conflict with or violate (A) its charter or by-laws or (B) any Law applicable to
it in a manner that could materially hinder or impair the completion of the
transactions contemplated hereby; and (iii) the purchase of Shares to be
purchased by it does not impose any penalty or other onerous condition on
Purchaser that could materially hinder or impact the completion of the
transactions contemplated hereby.
(f) Access to Information. Purchaser acknowledges as of the date of
approval by the Finance Committee of the Board of Directors of Purchaser that it
has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Shares and the merits
and risks of investing in the
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<PAGE> 20
Shares; (ii) access to information about the Company, the Company's financial
condition, pro forma results of operations, business properties, management and
prospects sufficient to enable it to evaluate its investment in the Shares; and
(iii) the opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy and completeness of the information contained
in the SEC Documents.
(g) Reliance. Purchaser also understands and acknowledges that (i)
the Shares are being offered and sold without registration under the Securities
Act in a transaction that is exempt from the registration provisions of the
Securities Act and (ii) the availability of such exemption depends in part on,
and that the Company and, for purposes of the opinion to be delivered to
Purchaser pursuant to Section 4.1(a) hereof, Vinson & Elkins L.L.P. will rely
upon, the accuracy and truthfulness of the foregoing representations and
Purchaser hereby consents to such reliance.
(h) 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 any
Purchaser in connection with the negotiation, execution or performance of 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 other than any such fees or
commission that have been disclosed to the Company and as to which Purchaser
shall have full and sole responsibility.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1 Conditions Precedent to Obligations of Purchaser. The
obligations of Purchaser to purchase the Shares are subject, at the Closing
Date, to the prior or simultaneous satisfaction or waiver by it of the following
conditions:
(a) Purchaser shall have received an opinion of Vinson & Elkins
L.L.P., counsel for the Company; provided that the form of opinion shall be
negotiated to reasonable satisfaction of Purchaser and its counsel on or before
June 12, 1997. In rendering the foregoing opinion, such counsel may rely as to
factual matters upon certificates or other documents furnished by directors and
officers of the Company and by government officials, and upon such other
documents as such counsel deem appropriate as a basis for such opinion. Such
counsel may specify the jurisdictions in which they are admitted to practice and
that they are not admitted to practice in any other jurisdiction and are not
experts in the law of any other jurisdiction. To the extent such opinion
concerns the laws of any other such jurisdiction, such counsel may either
provide an opinion of counsel admitted to practice in such jurisdiction (which
counsel shall be reasonably acceptable to Purchaser) in lieu of its own opinion
or rely upon the opinion of such counsel. Purchaser hereby agrees that the firm
of Ballard Spahr Andrews & Ingersoll is acceptable to Purchaser for purposes of
providing such opinions involving the laws of the State of Maryland. To the
extent that any opinion rendered by counsel admitted to practice in another
jurisdiction or relied upon by Vinson & Elkins L.L.P., including any exception
or limitation thereto, is materially different from the opinion to be delivered
at Closing by Vinson & Elkins L.L.P. such opinion shall be reasonably
satisfactory to Purchaser and a copy of such opinion shall be delivered to
Purchaser at the Closing.
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<PAGE> 21
(b) The representations and warranties made by the Company herein
shall be true and correct in all material respects on the date hereof and on and
as of the Closing Date (except as otherwise limited by their terms to the date
hereof) with the same effect as though such representations and warranties had
been made on and as of the Closing Date and the Company shall have complied in
all material respects with all agreements required to be performed by it
hereunder at or prior to the Closing Date.
(c) There shall not have occurred any event which has had, or could
reasonably be expected to have, a Material Adverse Effect subsequent to March
31, 1997.
(d) At the Closing Date, Purchaser shall have received a
certificate, dated the Closing Date, signed by the Chief Executive Officer of
the Company in such capacity and not individually to the effect set forth in
Sections 4.1(b) and (c), and stating that the conditions specified in this
Section 4.1 have been satisfied at the Closing Date.
(e) At the Closing Date, Purchaser shall have received a
certificate, dated the Closing Date, signed by the Secretary or an Assistant
Secretary of the Company in such capacity and not individually and certifying
(i) that attached thereto is a true, correct and complete copy of (A) the
Charter, (B) Bylaws and (C) resolutions duly adopted by the Board of Directors
of the Company authorizing the execution and delivery of the Transaction
Documents and all other documents to be executed in connection therewith and the
issuance and sale of the Shares, (ii) the incumbency of officers executing this
Agreement and the other Transaction Documents, and (iii) that attached thereto
is a specimen of the share certificate for the Common Stock.
(f) 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.
(g) The Company shall have entered into the Registration Rights
Agreement for the benefit of Purchaser, and Purchaser shall have received a copy
of such Registration Rights Agreement duly executed by the Company in favor of
Purchaser.
(h) The shareholders of the Company shall have duly approved the
issuance of the Shares as contemplated by the Transaction Documents at the
Shareholders' Meeting.
(i) All Approvals set forth in Schedule 3.1(d) and Schedule 3.1(i)
shall have been received or the applicable waiting periods shall have expired.
(j) The Finance Committee of the Board of Directors of Purchaser
shall have duly authorized the purchase of the Shares pursuant to this Agreement
and the execution, delivery and performance by Purchaser of its obligations
under this Agreement.
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<PAGE> 22
(k) Purchaser shall be reasonably satisfied that the Company is
qualified as a "real estate operating company" within the meaning of 29 C.F.R.
Section 2510.3-101(e).
(l) The Company shall have taken all actions necessary to ensure
that Purchaser shall have full voting rights with respect to each of the Shares
(including, without limitation, obtaining approvals of the Board of Directors of
the Company and amending the Charter or By Laws of the Company, as applicable).
Section 4.2 Conditions Precedent to Obligations of the Company. The
obligation of the Company to issue and sell the Shares hereunder is subject, at
the Closing Date, to the prior or simultaneous satisfaction or waiver by it of
the following conditions:
(a) The representations and warranties made by Purchaser herein
shall be true and correct in all material respects on the date hereof and on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except as otherwise
limited by their terms to the date hereof) and Purchaser shall have complied in
all material respects with all agreements required to be performed by it
hereunder at or prior to the Closing Date and Purchaser shall have provided such
evidence thereof as the Company may reasonably request.
(b) 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.
(c) The shareholders of the Company shall have duly approved the
issuance of the Shares as contemplated by the Transaction Documents at the
Shareholders' Meeting.
(d) All Approvals set forth in Schedule 3.1(d) and Schedule 3.1(i)
shall have been received or the applicable waiting periods shall have expired.
(e) The Finance Committee of the Board of Directors of Purchaser
shall have duly authorized the purchase of the Shares pursuant to this Agreement
and the execution, delivery and performance by Purchaser of its obligations
under this Agreement.
(f) The Shares owned by Purchaser will not cause the Company to be
treated as the owner of a 9.8% or more interest in any tenant of the Company
listed on Annex 1 to the Excepted Holder Agreement attached hereto as Exhibit B.
(g) At the Closing Date, the Company shall have received a
certificate, dated the Closing Date, signed by the managing director of
Purchaser in such capacity and not individually to the effect set forth in
Section 4.2(a) and certifying that attached thereto is a true, correct and
complete copy of resolutions duly
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<PAGE> 23
adopted by the Finance Committee of the Board of Directors of Purchaser
authorizing the purchase of the Shares.
ARTICLE V
COVENANTS
Section 5.1 Furnishing of Information. (a) As long as Purchaser owns
Shares representing at least the Minimum Ownership Level, from and after the
Closing Date the Company will promptly furnish to Purchaser all reports filed by
it pursuant to Section 13(a) or 15(d) of the Exchange Act (or if the Company is
not at the time required to file reports pursuant to said Section 13(a) or
15(d), annual and quarterly reports comparable to those required by Sections
13(a) or 15(d) of the Exchange Act) and all material non-confidential filings or
notifications made with any Governmental Entity. As long as the Company is
required to deliver to Purchaser the reports described in the first sentence of
this Section 5.1, upon request of Purchaser, the Company shall deliver to
Purchaser, the executive summary and all other documents delivered to the Board
of Directors of the Company in connection with any prior meeting of the Board of
Directors of the Company.
(b) Purchaser shall limit access to any confidential information received
by it pursuant to this Section 5.1 and Section 5.13 hereof ("Confidential
Information") to its executives and employees assigned to review and analyze the
Confidential Information. Purchaser shall not disseminate, or in any way
disclose, directly or indirectly, to any other person, firm or corporation any
Confidential Information without receiving prior written permission from the
Company; provided, however, that Purchaser may divulge such information to its
accountants, attorneys, investment advisors and other advisors in connection
with evaluation of the investment in the Shares or for other legitimate business
purposes, and Purchaser may divulge the Confidential Information to the extent
that it is legally obligated to do so. If Purchaser is legally obligated to
disclose any of the Confidential Information, Purchaser shall use best efforts
to provide the Company with prompt notice so that the Company may seek a
protective order or other appropriate remedy. In the event that the Company is
not able to obtain such protective order or other remedy within a reasonable
time from the giving of notice to the Company as aforesaid, Purchaser will
furnish only that portion of the Confidential Information which it is legally
required to disclose.
Section 5.2 Real Estate Investment Trust. The Company shall use its best
efforts to continue to qualify as a REIT and so long as Purchaser holds Shares
representing, in the aggregate, at least the Minimum Ownership Level, the
Company shall not, without Purchaser's written consent, take any action that
could reasonably be expected to disqualify the Company as a REIT.
Section 5.3 Sale of Shares by Purchaser. Purchaser hereby agrees that
during the ninety (90) day period commencing on the Closing Date it will not
sell, assign, transfer or otherwise in any manner dispose of any of the Shares,
other than sales, assignments, transfers or dispositions: (i) in connection with
any merger or consolidation of the Company; (ii) pursuant to a tender or
exchange offer for shares of Common Stock; (iii) to an Affiliate of Purchaser,
provided that such Person agrees to be bound by the terms and conditions of this
Agreement and the Registration Rights Agreement, including, without limitation,
Section 6 of the Registration Rights Agreement; (iv) as a result of any pledge
by Purchaser of the Shares as security for any indebtedness
III-22
<PAGE> 24
or guaranty of Purchaser, provided that such pledgee agrees to be bound by the
terms and conditions of this Agreement and the Registration Rights Agreement,
including, without limitation, Section 6 of the Registration Rights Agreement,
upon the exercise of its rights under such pledge; or (v) in private
transactions pursuant to one or more exemptions from registration under the
Securities Act.
Section 5.4 Approvals. The Company and Purchaser each agree to cooperate
and use their reasonable best efforts to obtain (and will immediately prepare
all registrations, filings and applications, requests and notices preliminary
to) all approvals that may be necessary or which may be reasonably requested by
the Company or Purchaser to consummate the transactions contemplated by this
Agreement. The Company shall, prior to the Closing Date, take all actions
necessary to ensure that Purchaser shall have full voting rights with respect to
each of the Shares (including, without limitation, obtaining approvals of the
Board of Directors of the Company and amending the Charter or Bylaws of the
Company, as applicable).
Section 5.5 Registration Rights Agreement. On or before the Closing Date,
the Company and Purchaser shall enter into an Registration Rights Agreement
substantially in the form of Exhibit A.
Section 5.6 Excepted Holder Agreements. On or before the Closing Date, the
Company and Purchaser shall enter into an Excepted Holder Agreement
substantially in the form of Exhibit B.
Section 5.7 Notification of Certain Matters. The Company shall give prompt
notice to Purchaser, and Purchaser shall give prompt notice to the Company, of
(a) the occurrence, or failure to occur, of any event that causes any
representation or warranty contained in any Transaction Document to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
to the Closing Date and (b) any failure of the Company, on the one hand, or
Purchaser, on the other hand, to comply with or satisfy, in any material
respect, any covenant, condition or agreement to be complied with or satisfied
by it under any Transaction Document.
Section 5.8 Nomination of Board Member. The Company shall use its
commercially reasonable efforts to cause the Board of Directors of the Company
to increase the size of the Board of Directors by one person and to elect a
designee of the Purchaser to fill such vacancy and shall endorse the selection
of such designee for appointment as a member of the Board Affairs Committee of
the Board of Directors promptly after the Closing Date; provided that, on or
prior to the Closing Date, the Company receives written notice executed by
Purchaser, which notice shall name such designee and shall provide all other
information relating to such designee as the Company may be required to disclose
to its stockholders in connection with such appointment.
Section 5.9 Shareholders' Meeting; Preparation of Proxy Statement. The
Company shall, in accordance with applicable law, as soon as practicable
following the execution and delivery of this Agreement, prepare and file with
the Commission a proxy statement in form and substance reasonably satisfactory
to Purchaser (such proxy statement, including the form of proxy and all such
other materials distributed in connection therewith, as amended or supplemented
from time to time, the "PROXY STATEMENT"). Purchaser will cooperate with the
Company in the preparation of the Proxy Statement and will provide the Company
with material and information required to be included therein. The Company shall
use its commercially reasonable efforts to cause the Proxy Statement to be
mailed to its shareholders at the earliest practicable date. The Company shall
call a meeting of its shareholders (the "SHAREHOLDERS MEETING") to be held as
promptly as
III-23
<PAGE> 25
practicable after the date hereof (but not before July 9, 1997) for the purpose,
among other things, of considering and taking action upon the issuance of the
shares of Common Stock to Purchaser and the Subsequent Purchasers, if any, as
contemplated hereunder and shall use its commercially reasonable efforts to
obtain and furnish the information required to be included by it in the Proxy
Statement and, after consultation with Purchaser, respond promptly to any
comments made by the Commission with respect to the Proxy Statement and any
preliminary version thereof. The Company will, through its Board of Directors,
include the Recommendations in the Proxy Statement and shall solicit and use its
reasonable best efforts to obtain proxies in favor of the issuance of the shares
of Common Stock to Purchaser and the Subsequent Purchasers, if any, as
contemplated hereunder. The Company shall cause the Proxy Statement and the
distribution thereof to comply in all material respects with the Exchange Act
and ensure that the Proxy Statement will not, at the date the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to shareholders
and at the time of the Shareholders' Meeting, be false or misleading with
respect to any material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Shareholders' Meeting which has become false
or misleading. None of the information relating solely to Purchaser as a
shareholder of the Company that is supplied by Purchaser in writing specifically
for inclusion or incorporation by reference in the Proxy Statement will, at the
time the Proxy Statement is filed with the Commission and at the time of the
Shareholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements made therein not misleading, in the light of the circumstances
under which they were made. The obligations of the Company to distribute the
Proxy Statement and convene the Shareholders Meeting pursuant to this Section
5.9 shall not be affected by the withdrawal or modification of the
Recommendations.
Section 5.10 Publicity and Reports. Except as may be required by
applicable Law, or by obligations pursuant to any listing agreement with a
national securities exchange, neither the Company nor Purchaser shall, without
the approval of the other party, issue any press release or make any public
statement with respect to the transactions contemplated hereby or that refer to
such other party.
Section 5.11 Conduct of Business. The Company covenants and agrees that
until the earlier of the Closing Date or the termination of this Agreement, the
Company shall, and shall cause its Subsidiaries to, continue to engage in an
efficient and economical manner solely in a business of the same general type as
conducted by it on the date of this Agreement in the ordinary course, consistent
with past practices; and use its reasonable best efforts to preserve the
business of the Company and its Subsidiaries and to preserve the goodwill of
customers and others having business relations with the Company and its
Subsidiaries.
Section 5.12 Negative Covenants of the Company. The Company covenants and
agrees as follows, and shall not enter into any agreement or take any other
action inconsistent with the following, in each case until the earlier of the
Closing Date or the termination of this Agreement, except as specifically
contemplated by this Agreement or to the extent such action shall not reasonably
be expected to result in a Material Adverse Effect.
(a) Charter documents. The Company shall not amend the Charter
or Bylaws and shall not permit any of its Subsidiaries to amend its
organizational documents.
III-24
<PAGE> 26
(b) Mergers, Etc. Except as shall have been previously agreed
in writing by the parties, the Company shall not, and shall not permit any of
its Subsidiaries to, merge or consolidate with any Person, sell, lease, license
or otherwise dispose of all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person or acquire all or substantially all
of the assets or the business of any Person, in each case whether in one
transaction or in a series of transactions pursuant to which Company or such
Subsidiary shall not be the surviving entity.
Section 5.13 Inspection Rights. The Company shall keep proper books of
record and account, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Company in accordance
with generally accepted accounting principles, and the Company shall cause its
Subsidiaries to do the same. As long as Purchaser owns shares representing at
least the Minimum Ownership Level, the Company shall, upon reasonable notice by
Purchaser, provide Purchaser with reasonable access to all Books and Records
during regular business hours and allow Purchaser to make copies and abstracts
thereof and the Company shall cause its Subsidiaries to do the same. Purchaser
shall have the right to consult from time to time with management of the Company
at its place of business regarding operating and financial matters of the
Company and its Subsidiaries. Purchaser shall be bound by the provisions of
Section 5.1(b) with respect to information obtained pursuant to this Section.
Section 5.14 [Reserved].
Section 5.15 Real Estate Operating Company. The Company shall continue to
operate as a REOC for so long as Purchaser holds Shares representing in the
aggregate at least the Minimum Ownership Level.
Section 5.16 Amendment to Investor Rights Agreement. The Company shall use
its best efforts in order to obtain all necessary consents in order (i) to
provide Purchaser and the Subsequent Purchasers rights that are pari passu with
those of each of the Company's shareholders party to the Investor Rights
Agreement under the penultimate paragraph of Section 2(b) and Section 2(c)(i)
and (ii) of the Investor Rights Agreement and (ii) to provide that such
shareholders shall not have any right to be included in the shelf registration
to be filed by the Company for the benefit of the Purchaser and the Subsequent
Purchasers.
Section 5.17 Delivery of Certain Documents. The Company shall deliver at
least ten days prior to the scheduled date of the Shareholders Meeting, all
agreements, contracts, promissory notes, letters of intent and similar documents
that (i) have been entered into by the Company or any of its Subsidiaries
between March 31, 1997 and the date that is no more than 15 days prior to the
scheduled date for the Shareholders Meeting, (ii) have not been terminated and
(iii) relate to an acquisition or sale of assets, stock or other equity interest
or the incurrence or guarantee of indebtedness by the Company or such
Subsidiary, involving a maximum purchase price or obligation of more than
$75,000,000.
Section 5.18 Further Assurances. Promptly upon request by the other party,
each party shall, and shall cause its Subsidiaries to, take, execute,
acknowledge, deliver, file, re-file, register and re-register, any and all such
further acts, certificates, assurances and other instruments as the requesting
party may require from time to time in order to carry out more effectively the
purposes of each Transaction Document and to better transfer, preserve, protect
and confirm to the requesting party the rights granted or now or hereafter
intended to be granted to the requesting party under each Transaction Document.
III-25
<PAGE> 27
ARTICLE VI
MISCELLANEOUS
Section 6.1 Survival of Provisions. The representations, warranties and
covenants of the Company and Purchaser made herein shall remain operative and in
full force and effect pursuant to their terms (a) regardless of (i) any
investigation made by or on behalf of Purchaser or the Company, as the case may
be, or (ii) acceptance of any of the Shares and payment by Purchaser therefor
and (b) except as specifically provided otherwise, after the Closing Date.
Section 6.2 Termination. This Agreement and the transactions contemplated
by this Agreement may be terminated at any time prior to the Closing Date as
follows and in no other manner:
(a) By either the Company or Purchaser if the Closing has not
occurred on or prior to the Termination Date;
(b) By mutual consent of Purchaser and the Company;
(c) By Purchaser at any time on or prior to June 12, 1997, if the
Finance Committee of the Board of Directors of Purchaser shall not have
authorized the purchase of the Shares pursuant to this Agreement on or before
such date;
(d) By the Company at any time on or prior to August 5, 1997;
(e) By Purchaser if (i) the Board of Directors of the Company shall
have withdrawn or modified the Recommendations in a manner adverse to Purchaser
or (ii) the shareholders shall have failed to approve the issuance of the Shares
pursuant to this Agreement at the Shareholders Meeting; and
(f) By either Purchaser, on the one hand, or the Company, on the
other hand, with written notice to the other party if there has been a
misrepresentation or material breach on the part of the Company or Purchaser,
respectively, in their respective representations, warranties and covenants set
forth herein.
In the event that this Agreement should be terminated pursuant to Section
6.2, all further obligations of the parties under this Agreement shall
terminate, provided, however, that a termination under Section 6.2(f) shall not
relieve any party of any liability for a breach of, or any misrepresentation
under, this Agreement or be deemed to constitute a waiver of any available
remedy for any such breach of misrepresentation; provided, further, that in the
event of a termination pursuant to Section 6.2(e) or the failure of the Company
to obtain the consents set forth in Schedule 3.1(d) and 3.1(i), Company shall
pay Purchaser within five business days after such termination, a fee equal to
$1,500,000. Notwithstanding anything in the foregoing to the contrary, no party
that is in material breach of this Agreement shall be entitled to terminate this
Agreement except with the consent of the other party.
Section 6.3 No Waiver; Modification in Writing.
III-26
<PAGE> 28
(a) No failure or delay on the part of the Company or Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
Purchaser at law or in equity. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company, on the one hand, and Purchaser, on
the other hand, provided that notice of any such waiver shall be given to each
party hereto as set forth below. Any amendment, supplement or modification of or
to any provision of this Agreement, or any waiver of any provision of this
Agreement, shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement, no notice to or demand on any party hereto in any case shall
entitle the other party to any other or further notice or demand in similar or
other circumstances.
Section 6.4 Communications. All notices and demands provided for hereunder
shall be in writing, and shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
delivery, and, if to Purchaser, addressed to 8 Campus Drive, 4th Floor,
Parsippany, New Jersey 07054, Fax No.: (201) 734-1472, Attention: Jeffrey L.
Danker, with copies to: O'Melveny & Myers LLP, 153 East 53rd Street, New York,
New York 10022, Fax No. (212) 326-2061, Attention: Robert S. Insolia, Esq., or
to the Company at: Meridian Industrial Trust, Inc., 50 California Street, Suite
1600, San Francisco, California 94111, Fax No.: (415) 344-8430, Attention: Chief
Executive Officer, with a copy to Michael D. Wortley, Esq., Vinson & Elkins
L.L.P., 2001 Ross Avenue, Suite 3700, Dallas, Texas 75201, Fax No.: (214)
999-7732 or to such other address as Purchaser and Company, as the case may be,
may designate in writing, and shall be deemed given when received.
Section 6.5 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute one and the same agreement.
Section 6.6 Binding Effect; Assignment. Except as provided in Section 5.3
hereof, the rights and obligations of the parties under this Agreement may not
be assigned to any other person; provided, however, that (i) prior to the
Closing, Purchaser may assign part or all of its rights under this Agreement to
Strategic Value Investors, L.L.C. or its successor ("SVI") so long as SVI agrees
to bound by the terms of this Agreement and the Registration Rights Agreement
(and Purchaser shall be released from its obligations under this Agreement and
the Registration Rights Agreement to the extent of such assignment) and agrees
to enter into an Excepted Holder Agreement substantially in the form of Exhibit
B hereto if such assignment would result in SVI owning shares representing more
than 8.5% of the issued and outstanding shares of Common Stock of the Company on
the Closing Date; and provided further, that Purchaser shall not have any
further rights under Section 5.8 if it assigns its rights hereunder and
thereunder to SVI and (ii) after the Closing the Company may assign its rights
hereunder to any successor entity to the Company, whether pursuant to a sale of
substantially all of the Company's assets, or the merger or consolidation of the
Company, that agrees to be bound by the terms and conditions hereof and the
other Transactional Documents. Except as expressly provided in this Agreement,
this Agreement shall not be construed so as to confer any right or benefit upon
any Person other than the parties to this Agreement, and their respective
successors and permitted assigns.
III-27
<PAGE> 29
This Agreement shall be binding upon the Company and Purchaser, and their
respective successors and permitted assigns.
Section 6.7 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF MARYLAND, AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
Section 6.8 Expenses. Each of the parties hereto shall pay its own
respective costs and expenses incurred in connection with the negotiation,
execution and performance of this Agreement. Notwithstanding the foregoing, the
costs and expenses of preparing and distributing the Proxy Statement and
obtaining and complying with the antitrust requirements of any Governmental
Entity shall be paid by the Company.
Section 6.9 Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 6.10 Headings. The Article and Section headings and Table of
Contents used or contained in this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement.
Section 6.11 Integration. This Agreement (including the exhibits hereto)
constitutes the entire agreement among the parties with respect to the purchase
and sale of the Shares and there are no promises or undertakings with respect
thereto relative to the subject matter hereof not expressly set forth or
referred to herein or in exhibits hereto.
Section 6.12 Enforcement of Covenants. The Company agrees that a violation
on its part of the covenants contained in Section 5.8 shall cause irreparable
damage to Purchaser and, consequently, the Company further agrees that Purchaser
shall be entitled, as a matter of right, to an injunction restraining any
violation of such covenants by the Company. Such right to an injunction shall be
cumulative with any and all other remedies Purchaser may have, including, but
not limited to, recover of damages.
Section 6.13 Waiver by Jury Trial. Each party waives any right to a trial
by jury in any action, suit or other proceeding to enforce or defend any right
under any Transaction Document or any amendment, instrument, document or
agreement delivered, or which in the future may be delivered, in connection with
any Transaction Document and agrees that any such action, suit or other
proceeding shall be tried before a court and not before a jury.
[Remainder of this page intentionally left blank]
III-28
<PAGE> 30
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer as of the date first written
above.
MERIDIAN INDUSTRIAL
TRUST, INC.
By: /s/ Allen J. Anderson
____________________________________
Name: Allen J. Anderson
Title: Chief Executive Officer
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Jeffrey L. Danker
____________________________________
Name: Jeffrey L. Danker
Title: Managing Director
III-29
<PAGE> 1
EXHIBIT IV
<PAGE> 2
MERIDIAN INDUSTRIAL TRUST, INC.
455 MARKET STREET, 17TH FLOOR
SAN FRANCISCO, CALIFORNIA 94105
September 24, 1997
The Prudential Insurance Company of America
8 Campus Drive, 4th Floor
Parsippany, New Jersey 07054
Ladies and Gentlemen:
Reference is made to the Amended and Restated Stock Purchase Agreement
dated as of June 12, 1997 (the "PRUDENTIAL PURCHASE AGREEMENT"), by and between
Meridian Industrial Trust, Inc., a Maryland corporation (the "COMPANY"), and the
Prudential Insurance Company of America ("PRUDENTIAL"). Terms that are defined
in the Prudential Purchase Agreement that are used in this letter and are not
defined herein shall have the meanings given such terms in the Prudential
Purchase Agreement.
Pursuant to Section 5.8 of the Prudential Purchase Agreement, the Company
has agreed to use its commercially reasonable efforts to cause the Board of
Directors of the Company to increase the size of the Board of Directors by one
person and to elect a designee of Prudential to fill such vacancy and shall
endorse the selection of such designee for appointment as a member of the Board
Affairs Committee of the Board of Directors promptly after the Closing Date;
provided that, on or prior to the Closing Date, the Company receives written
notice executed by Prudential (the "DIRECTOR NOTICE"), which Director Notice
names such designee and provides all other information relating to such designee
as the Company may be required to disclose to its stockholders in connection
with such appointment. In consideration for their mutual agreement,
notwithstanding the provisions of Section 5.8 of the Prudential Purchase
Agreement, the Company and Prudential agree that Prudential may deliver the
Director Notice to the Company at any time on or after the Closing Date and the
Company shall be required to comply with its obligations under Section 5.8 only
after the Director Notice is delivered to the Company; provided however that the
Director Notice shall not be delivered to the Company during the sixty day
period immediately prior to the Company's 1998 annual meeting of stockholders.
IV-1
<PAGE> 3
Please indicate your agreement to the foregoing by executing this letter
in the space provided below for your signature.
MERIDIAN INDUSTRIAL TRUST, INC.
By: /s/ Robert A. Dobbin
____________________________
Name: Robert A. Dobbin
Title: Secretary
Accepted and agreed to as of
the date first written above:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Robert W. Gadsden
___________________________________
Name: Robert W. Gadsden
Title: Vice President
IV-2
<PAGE> 1
EXHIBIT V
<PAGE> 2
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
MERIDIAN INDUSTRIAL TRUST, INC.,
AS SELLER
AND
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
ON BEHALF OF A SINGLE CLIENT
INSURANCE COMPANY SEPARATE
ACCOUNT CONTAINED IN GROUP
ANNUITY CONTRACT NO. GA-9032,
AS PURCHASER
COMMON STOCK
(par value $.001 per share)
June 12, 1997
V-1
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS.................................... 1
Section 1.1 Definition.......................................................... 1
ARTICLE II
PURCHASE OF COMMON STOCK ................................ 6
Section 2.1 Purchase of Shares; Closing......................................... 6
Section 2.2 Dividend Adjustment................................................. 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES........................... 7
Section 3.1 Representations and Warranties of the Company....................... 7
Section 3.2 Representations and Warranties of Purchaser......................... 14
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING.......................... 17
Section 4.1 Conditions Precedent to Obligations of Purchaser.................... 17
Section 4.2 Conditions Precedent to Obligations of the Company.................. 19
ARTICLE V
COVENANTS..................................... 20
Section 5.1 Furnishing of Information........................................... 20
Section 5.2 Real Estate Investment Trust........................................ 20
Section 5.3 Sale of Shares by Purchaser......................................... 20
Section 5.4 Approvals........................................................... 21
Section 5.5 Registration Rights Agreement....................................... 21
Section 5.6 [Reserved].......................................................... 21
Section 5.7 Notification of Certain Matters..................................... 21
Section 5.8 [Reserved].......................................................... 21
Section 5.9 Shareholders' Meeting; Preparation of Proxy Statement............... 22
Section 5.10 Publicity and Reports............................................... 22
Section 5.11 Conduct of Business................................................. 23
Section 5.12 Negative Covenants of the Company................................... 23
Section 5.13 [Reserved.]......................................................... 23
Section 5.14 Party in Interest................................................... 23
</TABLE>
V-2
<PAGE> 4
<TABLE>
<S> <C>
Section 5.15 Real Estate Operating Company.................................. 23
Section 5.16 Amendment to Investor Rights Agreement......................... 23
Section 5.17 Delivery of Certain Documents.................................. 24
Section 5.18 Further Assurances............................................. 24
ARTICLE VI
MISCELLANEOUS................................... 24
Section 6.1 Survival of Provisions......................................... 24
Section 6.2 Termination.................................................... 24
Section 6.3 No Waiver; Modification in Writing............................. 25
Section 6.4 Communications................................................. 25
Section 6.5 Execution in Counterparts...................................... 26
Section 6.6 Binding Effect; Assignment..................................... 26
Section 6.7 Governing Law.................................................. 26
Section 6.8 Expenses....................................................... 26
Section 6.9 Severability of Provisions..................................... 26
Section 6.10 Headings....................................................... 27
Section 6.11 Integration.................................................... 27
Section 6.12 [Reserved]..................................................... 27
Section 6.13 Waiver by Jury Trial........................................... 27
</TABLE>
V-3
<PAGE> 5
EXHIBITS
Exhibit A Form of Registration Rights Agreement
SCHEDULES
Schedule 3.1(c) List of Rights to Acquire Equity Securities; Voting
Restrictions;Etc.
Schedule 3.1(d) List of Third Party Consents
Schedule 3.1(i) List of Governmental Consents, Etc.
Schedule 3.1(o) List of Certain Liabilities
Schedule 3.1(s) List of Ownership in Subsidiaries
Schedule 3.1(y) List of Merger, Sale of Equity and Sale of Assets
Schedule 3.2(i) Separate Account Investors
V-4
<PAGE> 6
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of June 12, 1997, by and among Meridian
Industrial Trust, Inc., a Maryland corporation (the "COMPANY"), and The
Prudential Insurance Company of America, a New Jersey insurance company, on
behalf of a single client insurance company separate account contained in Group
Annuity Contract No. GA-9032 (the "PURCHASER").
In consideration of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definition. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Accrued Dividends Per Share" means the product of (i) the dividends per
Share distributed by the Company for the quarter ending September 30, 1997
multiplied by (ii) the Dividend Adjustment.
"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 Stock Purchase Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"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.
"Benefit Plans" means all employee benefit plans and collective
bargaining, labor and employment agreements or other similar benefit
arrangements to which the Company or any Subsidiary of the Company will be a
party at the Closing or by which the Company or any Subsidiary of the Company
will be bound at the Closing, including (A) any profit-sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retainer,
consulting, retirement, severance, welfare or incentive plan, agreement or
arrangement, (B) any plan, agreement or arrangement providing for "fringe
benefits" or perquisites to employees, officers, directors 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, (C) any employment agreement not terminable on 30 days
(or less) written notice or (D) any other "employee benefit plan" within the
meaning of Section 3(3) of ERISA.
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"Books and Records" means the books and records of the Company and each of
its Subsidiaries, including without limitation financial data (including
projections) and operating data covering each of such entities, their
businesses, operations and financial performance.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York generally are authorized or required by law or other government actions
to close.
"Bylaws" means the Company's Second Amended and Restated Bylaws dated as
of January 26, 1996, as amended from time to time.
"Charter" means the Company's Third Amended and Restated Articles of
Incorporation dated as of March 30, 1996, as amended from time to time.
"Closing" has the meaning provided therefor in Section 2.1(b) of this
Agreement.
"Closing Date" has the meaning provided therefor in Section 2.1(b) of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $.001 per
share.
"Company" means Meridian Industrial Trust, Inc., a Maryland corporation.
"Confidential Information" has the meaning provided therefor in Section
5.1(b) of this Agreement.
"Current SEC Reports" means the 1996 Form 10-K, the 1997 Form 10-Q and the
1997 Proxy Statement.
"Dividend Adjustment" means the quotient of (x) the number of calendar
days between July 1, 1997 (including such date) and the Closing Date (excluding
such date) divided by (y) 92 days.
"Employee and Director Stock Plan" means the Company's Amended and
Restated Employee and Director Stock Plan dated as of January 26, 1996, as
amended through the date hereof, a true, correct and complete copy of which has
been delivered to Purchaser prior to the date hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended (or, with respect to any provision thereof referred to herein, any
corresponding provision of any succeeding law).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
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"Excepted Holder Agreement" means the Excepted Holder Agreement to be
entered into between Prudential and the Company in accordance with the terms of
the Amended and Restated Stock Purchase Agreement dated as of June 12, 1997 by
and between Prudential and the Company, as the same may be amended, restated,
supplemented or otherwise modified in accordance with its terms.
"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.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended and related rules, regulations and published
interpretations thereunder.
"Initial Purchase Price" means the aggregate purchase price for the Shares
based on the price per Share set forth in Section 2(a).
"Investor Rights Agreement" means that certain Amended and Restated
Investor Rights Agreement dated as of February 23, 1996 by and among the Company
and certain shareholders of the Company.
"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).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in or on such asset or the
revenues or income thereon or therefrom.
"Material Adverse Effect" shall have the meaning set forth in Section
3.1(a).
"Minimum Ownership Level" means, at any time, 10% of the outstanding
shares of Common Stock on a fully diluted basis.
"NYSE" means the New York Stock Exchange.
"Order" means any decree, injunction, judgment, order, ruling, assessment
or writ.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proxy Statement" shall have the meaning set forth in Section 5.9.
"Prudential" shall mean The Prudential Insurance Company of America.
"Purchaser" means The Prudential Insurance Company of America on behalf of
a single client insurance company separate account contained in Group Annuity
Contract No. GA-9032.
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"Recommendations" shall have the meaning set forth in Section 3.1(u).
"REIT" shall have the meaning set forth in Section 3.1(q).
"Registration Rights Agreement" means the Registration Rights Agreement,
substantially in the form of Exhibit A hereto, as the same may be amended,
restated, supplemented or otherwise modified in accordance with its terms.
"REOC" shall have the meaning set forth in Section 3.1(k).
"Rule 144" means Rule 144 under the Securities Act of 1933, as amended,
and any successor rule thereto.
"SEC Documents" shall have the meaning set forth in Section 3.1(x).
"SEC Financial Statements" shall have the meaning set forth in Section
3.1(x).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Series B Preferred Stock" means the shares of Series B Preferred Stock,
par value $.001 per share, of the Company.
"Shareholders' Meeting" shall have the meaning set forth in Section 5.9.
"Shares" means the shares of Common Stock purchased by Purchaser pursuant
to this Agreement.
"Subsidiary" means, with respect to any Person, (a) a corporation, a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a Subsidiary of such Person or by such Person and a Subsidiary thereof or (b)
any other Person (other than a corporation) in which such Person, a Subsidiary
thereof or such Person and a Subsidiary thereof, directly or indirectly, at the
date of determination thereof has at least a majority ownership interest.
"Taxes" means all taxes, charges, fees, levies, duties, imposts,
withholdings, restrictions, fines, interest, penalties, additions to tax or
other assessments or charges, including, but not limited to, income, excise,
property, withholding, sales, use, gross receipts, value added and franchise
taxes, license recording, documentation and registration fees and custom duties
imposed by any Governmental Entity.
"Tax Return" means a report, return or other information required to be
filed by a Person with or submitted to a Governmental Entity with respect to
Taxes, including, where permitted or required, combined or consolidated returns
for any group of entities that includes the Person.
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"Termination Date" means the earlier of (i) September 30, 1997 and (ii)
the record date established by the Board of Directors of the Company for the
distribution of dividends for the fiscal quarter of the Company ended September
30, 1997.
"Transaction Documents" means this Agreement, the Registration Rights
Agreement and all other documents executed in connection therewith.
"Transfer" shall have the meaning set forth in Section 3.2(b).
"1996 Form 10-K" means the Company's annual report on Form 10-K for the
year ended December 31, 1996 filed with the Commission.
"1997 Form 10-Q" means the Company's quarterly report on Form 10-Q for the
fiscal quarter ended March 31, 1997 filed with the Commission.
"1997 Proxy Statement" means that certain Proxy Statement dated April 14,
1997 in respect of the annual meeting of the shareholders of the Company held on
May 16, 1997.
ARTICLE II
PURCHASE OF COMMON STOCK
Section 2.1 Purchase of Shares; Closing.
(a) Subject to the terms and conditions herein set forth and the
Dividend Adjustment, the Company will sell to Purchaser, and Purchaser will
purchase from the Company, 1,774,128 shares of Common Stock at a purchase price
of $19.728 per Share (the "Initial Purchase Price").
(b) The purchase and sale of the Shares will take place at a closing
(the "CLOSING") to be held at the offices of O'Melveny & Myers LLP, 275 Battery
Street, San Francisco, California 94111 or such other location as may be
mutually agreed upon by the parties hereto on a date mutually agreed upon by the
parties hereto, provided that the Closing shall occur on or before the earlier
of (i) the fifth calendar day after all conditions set forth in Article IV have
been satisfied or waived by the appropriate party and (ii) the Termination Date.
The date and time at which the Closing is to be concluded is the "CLOSING DATE."
(c) Delivery of the Shares shall be made at the Closing by delivery
to Purchaser, against payment of the Initial Purchase Price therefor as provided
herein, of a share certificate representing the total number of Shares or, at
Purchaser's option, issuance of the Shares in book entry form.
(d) Payment of the Initial Purchase Price shall be made by or on
behalf of Purchaser by wire transfer of immediately available funds to an
account of the Company (the number for which account shall have been furnished
to Purchaser at least two Business Days prior to the Closing Date), or certified
or official bank check payable in immediately available funds to the order of
the Company.
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Section 2.2 Dividend Adjustment. In addition to the Initial Purchase
Price, Purchaser shall pay to the Company, promptly after receipt of dividends
for the quarter ended September 30, 1997, an amount equal to the product of (x)
Accrued Dividends Per Share (x) multiplied by (y) 1,774,128 shares. Payment of
such Dividend Adjustment shall be made in the manner as set forth in Section
2.1(d) or as otherwise agreed to by Purchaser and the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company. The Company
represents and warrants as of the date hereof as follows.
(a) Organization and Good Standing. (i) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland. Each Subsidiary of the Company is a corporation or other
entity duly organized, validly existing and, with respect to each Subsidiary
that is a corporation, in good standing under the laws of its state of
incorporation or formation, as the case may be. The Company and each Subsidiary
of the Company is duly qualified or licensed and, with respect to each
Subsidiary that is a corporation, in good standing as a foreign corporation and
authorized to do business, in each jurisdiction in which the ownership or
leasing of its properties or the character of its operations makes such
qualification, licensing or authorization necessary, except where the failure to
obtain such qualification, license, authorization or good standing would not
individually or in the aggregate reasonably be expected to have a material
adverse effect upon the assets, liabilities, financial condition, earnings or
operations of the Company and its Subsidiaries taken as a whole or any
transaction contemplated by the Transaction Documents (any such material adverse
effect, whether individually or in the aggregate, a "MATERIAL ADVERSE EFFECT").
The Company and each Subsidiary of the Company has all requisite corporate power
and authority to own its assets and to carry on its business as presently
proposed to be conducted except where a lack of such corporate power or
authority could not reasonably be expected to have a Material Adverse Effect.
(ii) The Company has delivered to Purchaser true, correct and
complete copies of the Charter and the Bylaws of the Company.
(b) Authorizations. The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations under the
Transaction Documents. The execution and delivery by the Company of the
Transaction Documents and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the Company.
(c) Capitalization. As of the date hereof, the equity capitalization
of the Company is as set forth in the balance sheet of the Company included in
the 1997 Form 10-Q, except for any shares of Common Stock issued under the
Employee and Director Stock Plan since March 31, 1997. At the Closing Date, all
of the outstanding shares of stock of the Company will be duly and validly
issued, fully paid and non-assessable and not subject to any preemptive rights
of other shareholders. Except as set forth in the Current SEC Reports and in
Schedule 3.1(c), a certificate (certified by the Chief Executive Officer or
Chief Financial Officer of the Company) delivered to Purchaser on or prior to
the Closing Date or contemplated by the Employee and
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Director Stock Plan, (i) there are no outstanding securities or indebtedness
convertible into, exchangeable for, or carrying the right to acquire, Common
Stock or other equity securities of the Company, or subscriptions, warrants,
options, rights, or other arrangements or commitments obligating the Company to
issue or dispose of any Common Stock or other equity securities or any ownership
therein, (ii) there is no agreement or arrangement restricting the voting or
transfer of any equity securities of the Company, and (iii) there are no
outstanding contractual obligations, commitments, understandings or arrangements
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire, require or make any payment in respect of any shares of equity
securities of the Company or such Subsidiary. Except with respect to statutory
restrictions of general application, as provided in the Charter with respect to
the Series B Preferred Stock and the terms of the Company's Second Amended and
Restated Revolving Credit Agreement with The First National Bank of Boston and
certain other Banks named therein, there are no legal, contractual or other
restrictions on the payment of dividends or other distributions or amounts on or
in respect of the Common Stock. As of the date hereof, except as contemplated by
the Registration Rights Agreement and the Investor Rights Agreement, there are
no agreements or arrangements to which any of the Company or its Subsidiaries is
a party pursuant to which the Company is or could be required to register shares
of Common Stock or other securities under the Securities Act.
(d) Conflicting Agreements and Other Matters. Neither the Company
nor any of its Subsidiaries is a party to any contract or agreement or subject
to any charter or other corporate restriction compliance with which could
reasonably be expected to have a Material Adverse Effect. Assuming the filing of
a Form D with the Commission, the listing of the Shares on the NYSE and the
accuracy of the representations and warranties of, and the performance of the
agreements of, Purchaser set forth in Section 3.2 and elsewhere herein, neither
the execution and delivery of the Transaction Documents nor fulfillment of nor
compliance with the terms and provisions thereof, nor the issuance of the Shares
will (i) violate any provision of any Law presently in effect or in effect at
the Closing Date having applicability to the Company or any Subsidiary or any of
their properties, except such violations as could not reasonably be expected to
have a Material Adverse Effect, (ii) conflict with or result in a breach of or
constitute a default under the Charter or Bylaws of the Company or any
organizational document of its Subsidiaries, (iii) except as set forth in
Schedule 3.1(d), require any consent, approval or notice under, or conflict with
or result in a breach of, constitute a default or accelerate any right under,
any note, bond, mortgage, license, indenture or loan or credit agreement, or any
other agreement or instrument, to which the Company or any of its Subsidiaries
is a party or by which any of their respective properties is bound, except such
consents, approvals, notices, conflicts, breaches or defaults as could not
reasonably be expected to have a Material Adverse Effect or (iv) result in, or
require the creation or imposition of, any Lien upon or with respect to any of
the properties now owned or hereafter acquired by the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is bound by any
agreement which would impose upon Purchaser any personal obligation or personal
liability which is greater than the personal obligations and personal
liabilities imposed upon Purchaser under this Agreement and the Registration
Rights Agreement to be entered into by the Company and Purchaser pursuant to
Section 5.5 hereof. In addition, the Company is not aware of any facts or
circumstances that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(e) Due Execution, etc. This Agreement, constitutes, and when
executed and delivered by the Company at the Closing the Registration Rights
Agreement will constitute, a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
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fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity.
(f) Litigation, Proceeding, etc. There is no action, suit, notice of
violation, proceeding or investigation pending or, to the best knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any of their respective properties before or by any Governmental Entity which
(i) challenges the legality, validity or enforceability of any of the
Transaction Documents or the Shares or (ii) could (individually or in the
aggregate) reasonably be expected to have a Material Adverse Effect or (iii)
would (individually or in the aggregate) impair the ability of the Company to
perform fully on a timely basis any obligations which it has under any of the
Transaction Documents.
(g) No Default or Violation. Neither the Company nor any of its
Subsidiaries is (i) in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, except such defaults or
violations as could not reasonably be expected to have a Material Adverse
Effect, (ii) in violation of any Order of any Governmental Entity, except for
such violations as could not reasonably be expected to have a Material Adverse
Effect, or (iii) in violation of any Law which could reasonably be expected to
(A) adversely affect the legality, validity or enforceability of the Transaction
Documents, (B) have a Material Adverse Effect or (C) adversely impair the
Company's ability or obligation to perform fully on a timely basis any
obligation which it has under the Transaction Documents.
(h) Status of Shares. Subject to approval of the shareholders of the
Company, which approval shall be solicited pursuant to Section 5.9 prior to the
Closing, the issuance and sale of the Shares have been duly authorized by all
necessary corporate action on the part of the Company and such Shares, when
delivered to Purchaser at the Closing against payment therefor as provided
herein, will be validly issued, fully paid and non-assessable and the issuance
and sale of the Shares is not and will not be subject to preemptive rights of
any other shareholder of the Company.
(i) Governmental Consents, etc. Except as may be required under any
applicable securities law in connection with the performance by the Company of
its obligations under the Registration Rights Agreement, and except for the
filing of a Form D with the Commission and the listing of the Shares on the
NYSE, and assuming the accuracy of the representations and warranties of, and
the performance of the agreements of, Purchaser set forth in Section 3.2 and
elsewhere herein, no authorization, consent, approval, waiver, license,
qualification or formal exemption from, nor any filing, declaration,
qualification or registration with, any Governmental Entity or any securities
exchange is required in connection with the execution, delivery or performance
by the Company of this Agreement and the issuance, sale or delivery of the
Shares except for those that (i) have been made or obtained by the Company as of
the date hereof or (ii) are set forth in Schedule 3.1(i) and by the Closing
shall be made or received by the Company. At the Closing Date, the Company will
have made all filings and given all notices to Governmental Entities and
obtained all necessary ordinances, registrations, declarations, approvals,
orders, consents, qualifications, franchises, certificates, permits and
authorizations from any Governmental Entity, to own or lease its properties and
to conduct its facilities and businesses as currently conducted, except where
failure to do so could not reasonably be expected to have a Material Adverse
Effect. At the Closing Date, all such registrations, declarations, approvals,
orders, consents, qualifications, franchises, certificates, permits and
authorizations, the failure of which to file, give notice of
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or obtain could reasonably be expected to have a Material Adverse Effect, will
be in full force and effect. The assets of the Company qualify as exempt assets
for purposes of the Hart-Scott-Rodino Act and no filing under the
Hart-Scott-Rodino Act is required in connection with the sale and issuance of
the Shares hereunder.
(j) Private Offering. Neither the Company nor any Person acting on
its behalf has taken or will take any action (including, without limitation, any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Shares under
the Securities Act) which might subject the offering, issuance or sale of the
Shares to the registration requirements of Section 5 of the Securities Act.
(k) ERISA.
(i) Company Status. The Company currently qualifies as a "real
estate operating company" ("REOC") within the meaning of 29 C.F.R. Section
2510.3-101(e), and has qualified as a REOC during all valuation periods
within the meaning of 29 C.F.R. Section 2510.3-101(d)(5).
(ii) Benefit Plans. To the extent applicable, the Benefit
Plans comply, in all material respects, with the requirements of ERISA and
the Code (including reporting requirements). Neither any Benefit Plan nor
the Company or any Subsidiary of the Company has incurred any liability or
penalty under Section 4975 of the Code or Section 502(i) of ERISA. Each
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. There are no pending, or to the knowledge of the
Company threatened, material claims (other than claims for benefits
pursuant to the terms of any such plan) against or otherwise involving any
of the Benefit Plans and no action has been brought against or with
respect to any Benefit Plan, and neither the Company nor any Subsidiary of
the Company incurred any material liability to any party with respect to
any Benefit Plan. All contributions required to be made to the Benefit
Plans have been made or provided for as of the date hereof. No Benefit
Plan is subject to Title IV of ERISA and neither the Company nor any
Subsidiary of the Company 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 3.1(k), (i) the term "COMPANY" includes any entity required to be
aggregated with the Company pursuant to Code Section 414(b),(c),(m) or (o)
and (ii) provisions of ERISA or the Code include regulations prescribed
under such provisions.
(iii) The terms of this transaction are not less favorable to
Purchaser than the terms that would be available generally in an
arms'-length transaction between unrelated parties. The Company does not
have, and during the immediately preceding year has not had, the power to
appoint or terminate Prudential as investment manager of any assets of the
Western Conference of Teamsters Pension Trust Fund or to negotiate the
terms of Prudential's investment management agreement with Prudential on
behalf of such Fund.
(iv) The Company is not a party in interest, as defined in
Section 3(14) of ERISA, with respect to any employee benefit plan listed
on Schedule 3.2(i).
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(l) Financial Statements. The consolidated balance sheets and
statements of operations of the Company and its consolidated Subsidiaries
as of the last day of its latest complete fiscal year and the related
consolidated statements of operations, shareholders' equity and cash flows
for the fiscal year then ended, reported on by the independent public
accountants (and, with respect to the Company, filed with the Commission
on Form 10-K) for the years ended December 31, 1995 and December 31, 1996
and the consolidated balance sheets and statements of operations of the
Company and its consolidated Subsidiaries as of the fiscal quarter ended
March 31, 1997 and the related consolidated statements of operations,
shareholders' equity and cash flows for the fiscal quarter then ended
(and, with respect to the Company, included in the 1997 Form 10-Q),
present fairly in all material respects the financial position of the
Company and its consolidated Subsidiaries as of the dates indicated and
the results of operations of the Company and its consolidated
Subsidiaries, for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis and all adjustments necessary for a fair
presentation of results for such periods have been made (subject, in the
case of unaudited financial statements, to normal year-end audit
adjustments).
(m) Insurance. At Closing, the Company and its Subsidiaries will
have (i) "all risk" property insurance, including fire, flood, earthquake,
extended coverage and rental loss insurance and (ii) general commercial
liability insurance, under terms and in such amounts and covering such risks
that are customary for properties similar to those of the Company and its
Subsidiaries. There are currently no outstanding material losses for which the
Company or any of its Subsidiaries has failed to give or present notice or claim
under any policy. Policies for all the insurance are in full force and effect
and none of the Company or its Subsidiaries is in default in any material
respect under any of the policies.
(n) Information Provided. Neither this Agreement, the schedules and
exhibits hereto, the Current SEC Reports nor any other written document
delivered to Purchaser in connection with the transactions contemplated hereby
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements herein or therein, as the case may be, in light
of the circumstances under which it was made, not misleading, and all material
information regarding the Company and its Subsidiaries is provided therein.
(o) No Other Liabilities. Except as set forth in Schedule 3.1(o),
neither the Company nor any Subsidiary of the Company will have any material
liability, whether absolute, accrued, contingent or otherwise, except
liabilities (i) reflected on the consolidated balance sheet of the Company and
its Subsidiaries as at March 31, 1997, or (ii) liabilities that (1) are incurred
by the Company and its Subsidiaries after March 31, 1997 in the ordinary course
of business and (2) could not reasonably be expected to have a Material Adverse
Effect.
(p) 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 the
Company in connection with the negotiation, execution or performance of 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 other than any such fees or
commissions that have been disclosed to Purchaser and as to which the Company
shall have full and sole responsibility.
(q) Taxes; REIT Status. Each of the Company and its Subsidiaries has
filed all Tax Returns that are required to be filed with any Governmental Entity
and has paid all Taxes due pursuant to the Tax
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Returns or any assessment received by it or otherwise required to be paid,
except Taxes being contested in good faith by appropriate proceedings and for
which adequate reserves or other provisions are maintained, and except for the
filing of Tax Returns as to which the failure to file could not, individually or
in the aggregate, have a Material Adverse Effect. The Company (i) elected to be
taxed as a "real estate investment trust" as defined in Section 856 of the Code
("REIT") effective for each of the taxable years since the Company has been
incorporated, (ii) has not revoked such election, (iii) qualifies for taxation
as a REIT for each such taxable year and for its current taxable year and (iv)
has not sold or otherwise disposed of any assets which could give rise to a
material amount of tax pursuant to any election made by the Company under Notice
88-19, 1988-1 C.B. 486 and does not expect to effect any such sale or other
disposition.
(r) Compliance with Laws. Neither the Company nor any of its
Subsidiaries has been in or is in, and none of them has received notice of,
violation of or default with respect to, any Law or any decision, ruling, order
or award of any arbitrator applicable to it or its business, properties or
operations, except for violations or defaults that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
(s) Subsidiaries.
(i) The 1996 Form 10-K sets forth a correct and complete list
of all of the Company's Subsidiaries as of the date hereof.
(ii) As of the date hereof, except as set forth on Schedule
3.1(s), all outstanding shares of capital stock or other evidences of
equity ownership of each Subsidiary of the Company are duly authorized,
validly issued, fully paid and nonassessable and are owned directly or
indirectly, beneficially and of record by the Company, free and clear of
all Liens.
(t) Material Contracts. (i) The 1997 Form 10-Q, the 1996 Form 10-K
and Schedule 3.1(c) includes a correct and complete list of the following with
respect to the Company and any of its Subsidiaries: (1) agreements with any
shareholder having beneficial ownership of 5% or more of the shares of common
stock of the Company or such Subsidiary then issued and outstanding, director or
officer of the Company or such Subsidiary and all shareholders' agreements and
voting trusts; and (2) agreements not made in the ordinary course of business
and which could reasonably by expected to result in a Material Adverse Effect.
(ii) All property management agreements to which the Company
is a party provide for a right (without payment of any penalty or
termination fee) of the Company to terminate such agreement upon 30-day
prior written notice and the Company shall deliver each such agreement
reasonably requested by Purchaser within 10 days after the date of such
request.
(u) Recommendations. The Board of Directors of the Company, at a
meeting duly called and held, has duly (i) determined that the Transaction
Documents and the transactions contemplated thereby, taken as a whole, are in
the best interests of the Company and its shareholders, (ii) resolved to
recommend that holders of shares of Common Stock and Series B Preferred Stock
approve the Transaction Documents and the transactions contemplated thereby
(collectively, the "RECOMMENDATIONS") and (iii) approved the Transaction
Documents and the transactions contemplated thereby.
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(v) Shareholder Approval. The affirmative vote of a majority of the
shares of the Common Stock and the Series B Preferred Stock, voting together as
a single class, voted at the duly convened shareholders meeting of the Company
(or any other duly convened meeting of the holders of the Common Stock and the
Series B Preferred Stock) is the only vote of the holders of any class or series
of the equity securities of the Company necessary to approve the Transaction
Documents and the transactions contemplated thereby.
(w) No Restrictions on Shares. As of the Closing Date, subject to
satisfaction of Section 4.1(l), no provision of the Charter or Bylaws of the
Company, any other agreement, indenture or other instrument to which the Company
or its properties are subject, or any Law applicable to the Company (i), except
as provided in the Excepted Holder Agreement, directly or indirectly restricts
or impairs the right or ability of Purchaser to vote, or otherwise to exercise
the rights and receive the benefits of a shareholder with respect to the Shares,
including, without limitation, restrictions based upon the size of the security
holdings of Purchaser, the business in which it is engaged or other
considerations applicable to it and not to security holders generally, or (ii)
provides any other security holder of the Company with any preemptive rights.
(x) SEC Documents. The Company has filed with the Commission all
reports, schedules, forms, statements and other documents required by the
Exchange Act to be filed by the Company (collectively, and in each case
including all exhibits and schedules thereto and documents incorporated by
reference therein, the "SEC DOCUMENTS"). The Company has delivered or made
available to Purchaser all SEC Documents. As of their respective dates, except
to the extent revised or superseded by a subsequent filing with the Commission,
the SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of the SEC
Documents (including any and all financial statements included therein) as of
such dates contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company and its
Subsidiaries included in all SEC Documents, including any amendments thereto
(the "SEC FINANCIAL STATEMENTS"), comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the Commission with respect thereto.
(y) No Merger Agreements. As of the date hereof, except as set forth
in Schedule 3.1(y), none of Company or its Subsidiaries has entered into any
agreement with any Person which has not been terminated as of the date of this
Agreement and under which there remains any liability or obligation thereof with
respect to a merger or consolidation with any of the Company or its
Subsidiaries, or any other acquisition of a substantial amount of the assets of
the Company or its Subsidiaries.
Section 3.2 Representations and Warranties of Purchaser.
(a) Investment Intent. Purchaser represents and warrants to the
Company that the Shares to be acquired by it hereunder are being acquired for
its own account for investment and with no intention of distributing or
reselling such Shares or any part thereof or interest therein in any transaction
which would be in violation of the securities laws of the United States of
America or any State or any foreign country or jurisdiction.
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(b) Transfer Restrictions. If Purchaser should decide to dispose of
any of the Shares, Purchaser understands and agrees that it may do so only
pursuant to an effective registration statement under the Securities Act or
pursuant to an exemption from registration under the Securities Act. In
connection with any offer, resale, pledge or other transfer (individually and
collectively, a "TRANSFER") of any Shares other than pursuant to an effective
registration statement, the Company may require that the transferor of such
Shares provide to the Company an opinion of counsel which opinion shall be
reasonably satisfactory in form and substance to the Company, to the effect that
such Transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act and any
State or foreign securities laws. Purchaser agrees to the imprinting, so long as
appropriate, of substantially the following legend on certificates representing
the Shares:
THE SHARES OF COMMON STOCK (THE "SHARES") EVIDENCED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER
AGREES THAT IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER
(INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER") THE SHARES EVIDENCED HEREBY,
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT SUCH AS THE EXEMPTION SET FORTH IN RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE). IF THE PROPOSED TRANSFER IS TO BE MADE
OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AND THE TRANSFER AGENT SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAW.
The legend set forth above may be removed if and when the Shares
represented by such certificate are disposed of pursuant to an effective
registration statement under the Securities Act or the opinion of counsel
referred to above has been provided to the Company. The share certificates shall
also bear legends regarding permitted ownership levels of Shares and any
additional legends required by applicable Federal, State or foreign securities
Laws or necessary under applicable tax Laws, which legends may be removed when,
in the opinion of counsel to the Company, the same are no longer required under
the Charter or the applicable requirements of such securities or tax Laws.
Purchaser agrees that, in connection with any Transfer of Shares by it pursuant
to an effective registration statement under the Securities Act, Purchaser will
comply with all prospectus delivery requirements of the Securities Act. The
Company makes no representation, warranty or agreement as to the availability of
any exemption from registration under the Securities Act with respect to any
resale of Shares.
(c) Stop Transfer Instruction. Purchaser agrees that the Company
shall be entitled to make a notation on its records and give instructions to any
transfer agent for the Shares in order to implement the restrictions on transfer
set forth in this Agreement.
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(d) Purchaser Status. Purchaser represents and warrants to, and
covenants and agrees with, the Company that (i) at the time it was offered the
Shares, it was, (ii) at the date hereof, it is, and (iii) at the Closing Date,
it will be, a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act or an "accredited investor" as defined in Rule 501 under the
Securities Act, and has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the Company and
an investment in the Shares, and is able to bear the economic risk of such
investment.
(e) Authority. Purchaser represents and warrants to the Company
that, assuming the accuracy of the representation of the Company in Section
3.1(i) hereof, (i) as of the Closing Date, the purchase of the Shares to be
purchased by it has been duly and properly authorized and this Agreement has
been duly executed and delivered by it or on its behalf and constitutes the
valid and legally binding obligation of Purchaser, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity; (ii) the purchase of the Shares to be purchased by it does not
conflict with or violate (A) its charter or by-laws or (B) any Law applicable to
it in a manner that could materially hinder or impair the completion of the
transactions contemplated hereby; and (iii) the purchase of Shares to be
purchased by it does not impose any penalty or other onerous condition on
Purchaser that could materially hinder or impact the completion of the
transactions contemplated hereby.
(f) Access to Information. Purchaser acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Shares and the merits and risks of
investing in the Shares; (ii) access to information about the Company, the
Company's financial condition, pro forma results of operations, business
properties, management and prospects sufficient to enable it to evaluate its
investment in the Shares; and (iii) the opportunity to obtain such additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy and completeness of
the information contained in the SEC Documents.
(g) Reliance. Purchaser also understands and acknowledges that (i)
the Shares are being offered and sold without registration under the Securities
Act in a transaction that is exempt from the registration provisions of the
Securities Act and (ii) the availability of such exemption depends in part on,
and that the Company and, for purposes of the opinion to be delivered to
Purchaser pursuant to Section 4.1(a) hereof, Vinson & Elkins L.L.P. will rely
upon, the accuracy and truthfulness of the foregoing representations and
Purchaser hereby consents to such reliance.
(h) 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 any
Purchaser in connection with the negotiation, execution or performance of 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.
(i) Separate Account Investors. Purchaser represents that each
employee benefit plan, as
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defined in section 3(3) of ERISA, that has an interest in the single client
company separate account contained in Group Annuity Contract No. GA-9032 is set
forth in Schedule 3.2(i).
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1 Conditions Precedent to Obligations of Purchaser. The
obligations of Purchaser to purchase the Shares are subject, at the Closing
Date, to the prior or simultaneous satisfaction or waiver by it of the following
conditions:
(a) Purchaser shall have received an opinion of Vinson & Elkins
L.L.P., counsel for the Company; provided that the form of opinion shall be
negotiated to reasonable satisfaction of Purchaser and its counsel on or before
June 12, 1997. In rendering the foregoing opinion, such counsel may rely as to
factual matters upon certificates or other documents furnished by directors and
officers of the Company and by government officials, and upon such other
documents as such counsel deem appropriate as a basis for such opinion. Such
counsel may specify the jurisdictions in which they are admitted to practice and
that they are not admitted to practice in any other jurisdiction and are not
experts in the law of any other jurisdiction. To the extent such opinion
concerns the laws of any other such jurisdiction, such counsel may either
provide an opinion of counsel admitted to practice in such jurisdiction (which
counsel shall be reasonably acceptable to Purchaser) in lieu of its own opinion
or rely upon the opinion of such counsel. Purchaser hereby agrees that the firm
of Ballard Spahr Andrews & Ingersoll is acceptable to Purchaser for purposes of
providing such opinions involving the laws of the State of Maryland. To the
extent that any opinion rendered by counsel admitted to practice in another
jurisdiction or relied upon by Vinson & Elkins L.L.P., including any exception
or limitation thereto, is materially different from the opinion to be delivered
at Closing by Vinson & Elkins L.L.P. such opinion shall be reasonably
satisfactory to Purchaser and a copy of such opinion shall be delivered to
Purchaser at the Closing.
(b) The representations and warranties made by the Company herein
shall be true and correct in all material respects on the date hereof and on and
as of the Closing Date (except as otherwise limited by their terms to the date
hereof) with the same effect as though such representations and warranties had
been made on and as of the Closing Date and the Company shall have complied in
all material respects with all agreements required to be performed by it
hereunder at or prior to the Closing Date.
(c) There shall not have occurred any event which has had, or could
reasonably be expected to have, a Material Adverse Effect subsequent to March
31, 1997.
(d) At the Closing Date, Purchaser shall have received a
certificate, dated the Closing Date, signed by the Chief Executive Officer of
the Company in such capacity and not individually to the effect set forth in
Sections 4.1(b) and (c), and stating that the conditions specified in this
Section 4.1 have been satisfied at the Closing Date.
(e) At the Closing Date, Purchaser shall have received a
certificate, dated the Closing Date, signed by the Secretary or an Assistant
Secretary of the Company in such capacity and not individually and
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<PAGE> 21
certifying (i) that attached thereto is a true, correct and complete copy of (A)
the Charter, (B) Bylaws and (C) resolutions duly adopted by the Board of
Directors of the Company authorizing the execution and delivery of the
Transaction Documents and all other documents to be executed in connection
therewith and the issuance and sale of the Shares, (ii) the incumbency of
officers executing this Agreement and the other Transaction Documents, and (iii)
that attached thereto is a specimen of the share certificate for the Common
Stock.
(f) 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.
(g) The Company shall have entered into the Registration Rights
Agreement for the benefit of Purchaser, and Purchaser shall have received a copy
of such Registration Rights Agreement duly executed by the Company in favor of
Purchaser.
(h) The shareholders of the Company shall have duly approved the
issuance of the Shares as contemplated by the Transaction Documents at the
Shareholders' Meeting.
(i) All Approvals set forth in Schedule 3.1(d) and Schedule 3.1(i)
shall have been received or the applicable waiting periods shall have expired.
(j) The sale of Common Stock contemplated by the Amended and
Restated Stock Purchase Agreement by and between the Company and Prudential
dated as of June 12, 1997 shall have been consummated.
(k) Purchaser shall be reasonably satisfied that the Company is
qualified as a "real estate operating company" within the meaning of 29 C.F.R.
Section 2510.3-101(e).
(l) The Company shall have taken all actions necessary to ensure
that Purchaser shall have full voting rights with respect to each of the Shares
(including, without limitation, obtaining approvals of the Board of Directors of
the Company and amending the Charter or By Laws of the Company, as applicable).
Section 4.2 Conditions Precedent to Obligations of the Company. The
obligation of the Company to issue and sell the Shares hereunder is subject, at
the Closing Date, to the prior or simultaneous satisfaction or waiver by it of
the following conditions:
(a) The representations and warranties made by Purchaser herein
shall be true and correct in all material respects on the date hereof and on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except as otherwise
limited by their terms to the date hereof) and Purchaser shall have complied in
all material respects with all agreements
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<PAGE> 22
required to be performed by it hereunder at or prior to the Closing Date and
Purchaser shall have provided such evidence thereof as the Company may
reasonably request.
(b) 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.
(c) The shareholders of the Company shall have duly approved the
issuance of the Shares as contemplated by the Transaction Documents at the
Shareholders' Meeting.
(d) All Approvals set forth in Schedule 3.1(d) and Schedule 3.1(i)
shall have been received or the applicable waiting periods shall have expired.
(e) The sale of Common Stock contemplated by the Amended and
Restated Stock Purchase Agreement by and between the Company and Prudential
dated as of June 12, 1997 shall have been consummated.
(f) [Reserved]
(g) At the Closing Date, the Company shall have received a
certificate, dated the Closing Date, signed by an officer of Purchaser in such
capacity and not individually to the effect set forth in 4.2(a) and certifying
that the purchase of Shares by Purchaser has been duly authorized.
ARTICLE V
COVENANTS
Section 5.1 Furnishing of Information. (a) As long as Purchaser owns
Shares representing at least the Minimum Ownership Level, from and after the
Closing Date the Company will promptly furnish to Purchaser all reports filed by
it pursuant to Section 13(a) or 15(d) of the Exchange Act (or if the Company is
not at the time required to file reports pursuant to said Section 13(a) or
15(d), annual and quarterly reports comparable to those required by Sections
13(a) or 15(d) of the Exchange Act) and all material non-confidential filings or
notifications made with any Governmental Entity. As long as the Company is
required to deliver to Purchaser the reports described in the first sentence of
this Section 5.1, upon request of Purchaser, the Company shall deliver to
Purchaser, the executive summary and all other documents delivered to the Board
of Directors of the Company in connection with any prior meeting of the Board of
Directors of the Company.
(b) Purchaser shall limit access to any confidential information received
by it pursuant to this Section 5.1 ("Confidential Information") to its
executives and employees assigned to review and analyze the
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Confidential Information. Purchaser shall not disseminate, or in any way
disclose, directly or indirectly, to any other person, firm or corporation any
Confidential Information without receiving prior written permission from the
Company; provided, however, that Purchaser may divulge such information to its
accountants, attorneys, investment advisors and other advisors in connection
with evaluation of the investment in the Shares or for other legitimate business
purposes, and Purchaser may divulge the Confidential Information to the extent
that it is legally obligated to do so. If Purchaser is legally obligated to
disclose any of the Confidential Information, Purchaser shall use best efforts
to provide the Company with prompt notice so that the Company may seek a
protective order or other appropriate remedy. In the event that the Company is
not able to obtain such protective order or other remedy within a reasonable
time from the giving of notice to the Company as aforesaid, Purchaser will
furnish only that portion of the Confidential Information which it is legally
required to disclose.
Section 5.2 Real Estate Investment Trust. The Company shall use its best
efforts to continue to qualify as a REIT and so long as Purchaser holds Shares
representing, in the aggregate, at least the Minimum Ownership Level, the
Company shall not, without Purchaser's written consent, take any action that
could reasonably be expected to disqualify the Company as a REIT.
Section 5.3 Sale of Shares by Purchaser. Purchaser hereby agrees that
during the ninety (90) day period commencing on the Closing Date it will not
sell, assign, transfer or otherwise in any manner dispose of any of the Shares,
other than sales, assignments, transfers or dispositions: (i) in connection with
any merger or consolidation of the Company; (ii) pursuant to a tender or
exchange offer for shares of Common Stock; (iii) to an Affiliate of Purchaser,
provided that such Person agrees to be bound by the terms and conditions of this
Agreement and the Registration Rights Agreement, including, without limitation,
Section 6 of the Registration Rights Agreement; (iv) as a result of any pledge
by Purchaser of the Shares as security for any indebtedness or guaranty of
Purchaser, provided that such pledgee agrees to be bound by the terms and
conditions of this Agreement and the Registration Rights Agreement, including,
without limitation, Section 6 of the Registration Rights Agreement, upon the
exercise of its rights under such pledge; or (v) in private transactions
pursuant to one or more exemptions from registration under the Securities Act.
Section 5.4 Approvals. The Company and Purchaser each agree to cooperate
and use their reasonable best efforts to obtain (and will immediately prepare
all registrations, filings and applications, requests and notices preliminary
to) all approvals that may be necessary or which may be reasonably requested by
the Company or Purchaser to consummate the transactions contemplated by this
Agreement. The Company shall, prior to the Closing Date, take all actions
necessary to ensure that Purchaser shall have full voting rights with respect to
each of the Shares (including, without limitation, obtaining approvals of the
Board of Directors of the Company and amending the Charter or Bylaws of the
Company, as applicable).
Section 5.5 Registration Rights Agreement. On or before the Closing Date,
the Company and Purchaser shall enter into an Registration Rights Agreement
substantially in the form of Exhibit A.
Section 5.6 [Reserved].
Section 5.7 Notification of Certain Matters. The Company shall give prompt
notice to Purchaser, and Purchaser shall give prompt notice to the Company, of
(a) the occurrence, or failure to occur, of any event
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that causes any representation or warranty contained in any Transaction Document
to be untrue or inaccurate in any material respect at any time from the date of
this Agreement to the Closing Date and (b) any failure of the Company, on the
one hand, or Purchaser, on the other hand, to comply with or satisfy, in any
material respect, any covenant, condition or agreement to be complied with or
satisfied by it under any Transaction Document.
Section 5.8 [Reserved].
Section 5.9 Shareholders' Meeting; Preparation of Proxy Statement. The
Company shall, in accordance with applicable law, as soon as practicable
following the execution and delivery of this Agreement, prepare and file with
the Commission a proxy statement in form and substance reasonably satisfactory
to Purchaser (such proxy statement, including the form of proxy and all such
other materials distributed in connection therewith, as amended or supplemented
from time to time, the "PROXY STATEMENT"). Purchaser will cooperate with the
Company in the preparation of the Proxy Statement and will provide the Company
with material and information required to be included therein. The Company shall
use its commercially reasonable efforts to cause the Proxy Statement to be
mailed to its shareholders at the earliest practicable date. The Company shall
call a meeting of its shareholders (the "SHAREHOLDERS MEETING") to be held as
promptly as practicable after the date hereof (but not before July 9, 1997) for
the purpose, among other things, of considering and taking action upon the
issuance of the shares of Common Stock to Purchaser, as contemplated hereunder
and shall use its commercially reasonable efforts to obtain and furnish the
information required to be included by it in the Proxy Statement and, after
consultation with Purchaser, respond promptly to any comments made by the
Commission with respect to the Proxy Statement and any preliminary version
thereof. The Company will, through its Board of Directors, include the
Recommendations in the Proxy Statement and shall solicit and use its reasonable
best efforts to obtain proxies in favor of the issuance of the shares of Common
Stock to Purchaser as contemplated hereunder. The Company shall cause the Proxy
Statement and the distribution thereof to comply in all material respects with
the Exchange Act and ensure that the Proxy Statement will not, at the date the
Proxy Statement (or any amendment thereof or supplement thereto) is first mailed
to shareholders and at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Shareholders' Meeting which
has become false or misleading. None of the information relating solely to
Purchaser as a shareholder of the Company that is supplied by Purchaser in
writing specifically for inclusion or incorporation by reference in the Proxy
Statement will, at the time the Proxy Statement is filed with the Commission and
at the time of the Shareholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements made therein not misleading, in the light of
the circumstances under which they were made. The obligations of the Company to
distribute the Proxy Statement and convene the Shareholders Meeting pursuant to
this Section 5.9 shall not be affected by the withdrawal or modification of the
Recommendations.
Section 5.10 Publicity and Reports. Except as may be required by
applicable Law, or by obligations pursuant to any listing agreement with a
national securities exchange, neither the Company nor Purchaser shall, without
the approval of the other party, issue any press release or make any public
statement with respect to the transactions contemplated hereby or that refer to
such other party.
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Section 5.11 Conduct of Business. The Company covenants and agrees that
until the earlier of the Closing Date or the termination of this Agreement, the
Company shall, and shall cause its Subsidiaries to, continue to engage in an
efficient and economical manner solely in a business of the same general type as
conducted by it on the date of this Agreement in the ordinary course, consistent
with past practices; and use its reasonable best efforts to preserve the
business of the Company and its Subsidiaries and to preserve the goodwill of
customers and others having business relations with the Company and its
Subsidiaries.
Section 5.12 Negative Covenants of the Company. The Company covenants and
agrees as follows, and shall not enter into any agreement or take any other
action inconsistent with the following, in each case until the earlier of the
Closing Date or the termination of this Agreement, except as specifically
contemplated by this Agreement or to the extent such action shall not reasonably
be expected to result in a Material Adverse Effect.
(a) Charter documents. The Company shall not amend the Charter
or Bylaws and shall not permit any of its Subsidiaries to amend its
organizational documents.
(b) Mergers, Etc. Except as shall have been previously agreed
in writing by the parties, the Company shall not, and shall not permit any of
its Subsidiaries to, merge or consolidate with any Person, sell, lease, license
or otherwise dispose of all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person or acquire all or substantially all
of the assets or the business of any Person, in each case whether in one
transaction or in a series of transactions pursuant to which Company or such
Subsidiary shall not be the surviving entity.
Section 5.13 [Reserved.]
Section 5.14 Party in Interest. The Company shall not enter into any
agreement or take any action that would cause the Company to be a party in
interest, as defined in section 3(14) of ERISA, with respect to any employee
benefit plan set forth in Schedule 3.2(i) for so long as Purchaser holds any
Shares.
Section 5.15 Real Estate Operating Company. The Company shall continue to
operate as a REOC for so long as Purchaser holds Shares representing in the
aggregate at least the Minimum Ownership Level.
Section 5.16 Amendment to Investor Rights Agreement. The Company shall use
its best efforts in order to obtain all necessary consents in order (i) to
provide Purchaser rights that are pari passu with those of each of the Company's
shareholders party to the Investor Rights Agreement under the penultimate
paragraph of Section 2(b) and Section 2(c)(i) and (ii) of the Investor Rights
Agreement and (ii) to provide that such shareholders shall not have any right to
be included in the shelf registration to be filed by the Company for the benefit
of the Purchaser.
Section 5.17 Delivery of Certain Documents. The Company shall deliver at
least ten days prior to the scheduled date of the Shareholders Meeting, all
agreements, contracts, promissory notes, letters of intent and similar documents
that (i) have been entered into by the Company or any of its Subsidiaries
between March 31, 1997 and the date that is no more than 15 days prior to the
scheduled date for the Shareholders Meeting, (ii) have not been terminated and
(iii) relate to an acquisition or sale of assets, stock or other equity interest
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<PAGE> 26
or the incurrence or guarantee of indebtedness by the Company or such
Subsidiary, involving a maximum purchase price or obligation of more than
$75,000,000.
Section 5.18 Further Assurances. Promptly upon request by the other party,
each party shall, and shall cause its Subsidiaries to, take, execute,
acknowledge, deliver, file, re-file, register and re-register, any and all such
further acts, certificates, assurances and other instruments as the requesting
party may require from time to time in order to carry out more effectively the
purposes of each Transaction Document and to better transfer, preserve, protect
and confirm to the requesting party the rights granted or now or hereafter
intended to be granted to the requesting party under each Transaction Document.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Survival of Provisions. The representations, warranties and
covenants of the Company and Purchaser made herein shall remain operative and in
full force and effect pursuant to their terms (a) regardless of (i) any
investigation made by or on behalf of Purchaser or the Company, as the case may
be, or (ii) acceptance of any of the Shares and payment by Purchaser therefor
and (b) except as specifically provided otherwise, after the Closing Date.
Section 6.2 Termination. This Agreement and the transactions contemplated
by this Agreement may be terminated at any time prior to the Closing Date as
follows and in no other manner:
(a) By either the Company or Purchaser if the Closing has not
occurred on or prior to the Termination Date;
(b) By mutual consent of Purchaser and the Company;
(c) By either the Company or Purchaser if the Amended and Restated
Stock Purchase Agreement by and between the Company and Prudential dated as of
June 12, 1997 has been terminated.
(d) [Reserved];
(e) By Purchaser if (i) the Board of Directors of the Company shall
have withdrawn or modified the Recommendations in a manner adverse to Purchaser
or (ii) the shareholders shall have failed to approve the issuance of the Shares
pursuant to this Agreement at the Shareholders Meeting; and
(f) By either Purchaser, on the one hand, or the Company, on the
other hand, with written notice to the other party if there has been a
misrepresentation or material breach on the part of the Company or Purchaser,
respectively, in their respective representations, warranties and covenants set
forth herein.
In the event that this Agreement should be terminated pursuant to Section
6.2, all further obligations of the parties under this Agreement shall
terminate, provided, however, that a termination under Section 6.2(f) shall not
relieve any party of any liability for a breach of, or any misrepresentation
under, this Agreement or
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be deemed to constitute a waiver of any available remedy for any such breach of
misrepresentation; provided, further, that in the event of a termination
pursuant to Section 6.2(e) or the failure of the Company to obtain the consents
set forth in Schedule 3.1(d) and 3.1(i), Company shall pay Purchaser within five
business days after such termination, a fee equal to $700,000. Notwithstanding
anything in the foregoing to the contrary, no party that is in material breach
of this Agreement shall be entitled to terminate this Agreement except with the
consent of the other party.
Section 6.3 No Waiver; Modification in Writing.
(a) No failure or delay on the part of the Company or Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
Purchaser at law or in equity. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company, on the one hand, and Purchaser, on
the other hand, provided that notice of any such waiver shall be given to each
party hereto as set forth below. Any amendment, supplement or modification of or
to any provision of this Agreement, or any waiver of any provision of this
Agreement, shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement, no notice to or demand on any party hereto in any case shall
entitle the other party to any other or further notice or demand in similar or
other circumstances.
Section 6.4 Communications. All notices and demands provided for hereunder
shall be in writing, and shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
delivery, and, if to Purchaser, addressed to 8 Campus Drive, 4th Floor,
Parsippany, New Jersey 07054, Fax No.: (201) 683-1788, Attention: Roger Pratt
and Joseph D. Margolis, with copies to: O'Melveny & Myers LLP, 153 East 53rd
Street, New York, New York 10022, Fax No. (212) 326-2061, Attention: Robert S.
Insolia, Esq., or to the Company at: Meridian Industrial Trust, Inc., 50
California Street, Suite 1600, San Francisco, California 94111, Fax No.: (415)
344-8430, Attention: Chief Executive Officer, with a copy to Michael D. Wortley,
Esq., Vinson & Elkins L.L.P., 2001 Ross Avenue, Suite 3700, Dallas, Texas 75201,
Fax No.: (214) 999-7732 or to such other address as Purchaser and Company, as
the case may be, may designate in writing, and shall be deemed given when
received.
Section 6.5 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute one and the same agreement.
Section 6.6 Binding Effect; Assignment. Except as provided in Section 5.3
hereof, the rights and obligations of the parties under this Agreement may not
be assigned to any other person; provided, however, that after the Closing the
Company may assign its rights hereunder to any successor entity to the Company,
whether pursuant to a sale of substantially all of the Company's assets, or the
merger or consolidation of the Company, that agrees to be bound by the terms and
conditions hereof and the other Transactional Documents. Except as expressly
provided in this Agreement, this Agreement shall not be construed so as to
confer any right
V-26
<PAGE> 28
or benefit upon any Person other than the parties to this Agreement, and their
respective successors and permitted assigns. This Agreement shall be binding
upon the Company and Purchaser, and their respective successors and permitted
assigns.
Section 6.7 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF MARYLAND, AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
Section 6.8 Expenses. Each of the parties hereto shall pay its own
respective costs and expenses incurred in connection with the negotiation,
execution and performance of this Agreement. Notwithstanding the foregoing, the
costs and expenses of preparing and distributing the Proxy Statement and
obtaining and complying with the antitrust requirements of any Governmental
Entity shall be paid by the Company.
Section 6.9 Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 6.10 Headings. The Article and Section headings and Table of
Contents used or contained in this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement.
Section 6.11 Integration. This Agreement (including the exhibits hereto)
constitutes the entire agreement among the parties with respect to the purchase
and sale of the Shares and there are no promises or undertakings with respect
thereto relative to the subject matter hereof not expressly set forth or
referred to herein or in exhibits hereto.
Section 6.12 [Reserved].
Section 6.13 Waiver by Jury Trial. Each party waives any right to a trial
by jury in any action, suit or other proceeding to enforce or defend any right
under any Transaction Document or any amendment, instrument, document or
agreement delivered, or which in the future may be delivered, in connection with
any Transaction Document and agrees that any such action, suit or other
proceeding shall be tried before a court and not before a jury.
[Remainder of this page intentionally left blank]
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<PAGE> 29
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer as of the date first written
above.
MERIDIAN INDUSTRIAL
TRUST, INC.
By: /s/ Allen J. Anderson
______________________________________
Name: Allen J. Anderson
Title: Chief Executive Officer
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA, on behalf of a
single client insurance company
separate account contained in
Group Annuity Contract
No. GA - 9032
By: /s/ Roger S. Pratt
_________________________________
Name: Roger S. Pratt
Title: Vice President
V-28
<PAGE> 1
EXHIBIT VI
<PAGE> 2
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
MERIDIAN INDUSTRIAL TRUST, INC.,
AS SELLER
AND
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP,
AS PURCHASER
COMMON STOCK
(par value $.001 per share)
June 12, 1997
VI-1
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I DEFINITIONS................................................................ 1
Section 1.1 Definition................................................................. 1
ARTICLE II PURCHASE OF COMMON STOCK................................................... 5
Section 2.1 Purchase of Shares; Closing................................................ 5
Section 2.2 Dividend Adjustment........................................................ 6
ARTICLE III REPRESENTATIONS AND WARRANTIES............................................. 6
Section 3.1 Representations and Warranties of the Company.............................. 6
Section 3.2 Representations and Warranties of Purchaser................................ 13
ARTICLE IV CONDITIONS PRECEDENT TO CLOSING............................................ 16
Section 4.1 Conditions Precedent to Obligations of Purchaser........................... 16
Section 4.2 Conditions Precedent to Obligations of the Company......................... 18
ARTICLE V COVENANTS.................................................................. 19
Section 5.1 Furnishing of Information.................................................. 19
Section 5.2 Real Estate Investment Trust............................................... 19
Section 5.3 Sale of Shares by Purchaser................................................ 20
Section 5.4 Approvals.................................................................. 20
Section 5.5 Registration Rights Agreement.............................................. 20
Section 5.6 [Reserved]................................................................. 20
Section 5.7 Notification of Certain Matters............................................ 20
Section 5.8 [Reserved]................................................................. 20
Section 5.9 Shareholders' Meeting; Preparation of Proxy Statement...................... 21
Section 5.10 Publicity and Reports...................................................... 21
Section 5.11 Conduct of Business........................................................ 22
Section 5.12 Negative Covenants of the Company.......................................... 22
Section 5.13 [Reserved.]................................................................ 22
Section 5.14 [Reserved.]................................................................ 22
Section 5.15 [Reserved.]................................................................ 22
Section 5.16 Amendment to Investor Rights Agreement..................................... 22
Section 5.17 Delivery of Certain Documents.............................................. 22
</TABLE>
VI-2
<PAGE> 4
<TABLE>
<S> <C>
Section 5.18 Further Assurances......................................................... 23
ARTICLE VI MISCELLANEOUS.............................................................. 23
Section 6.1 Survival of Provisions..................................................... 23
Section 6.2 Termination................................................................ 23
Section 6.3 No Waiver; Modification in Writing......................................... 24
Section 6.4 Communications............................................................. 24
Section 6.5 Execution in Counterparts.................................................. 25
Section 6.6 Binding Effect; Assignment................................................. 25
Section 6.7 Governing Law.............................................................. 25
Section 6.8 Expenses................................................................... 25
Section 6.9 Severability of Provisions................................................. 25
Section 6.10 Headings................................................................... 25
Section 6.11 Integration................................................................ 25
Section 6.12 [Reserved]................................................................. 26
Section 6.13 Waiver by Jury Trial....................................................... 26
</TABLE>
VI-3
<PAGE> 5
EXHIBITS
Exhibit A Form of Registration Rights Agreement
SCHEDULES
Schedule 3.1(c) List of Rights to Acquire Equity Securities; Voting
Restrictions;Etc.
Schedule 3.1(d) List of Third Party Consents
Schedule 3.1(i) List of Governmental Consents, Etc.
Schedule 3.1(o) List of Certain Liabilities
Schedule 3.1(s) List of Ownership in Subsidiaries
Schedule 3.1(y) List of Merger, Sale of Equity and Sale of Assets
Schedule 4.2(f) List of Tenants
VI-4
<PAGE> 6
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of June 12, 1997, by and among Meridian
Industrial Trust, Inc., a Maryland corporation (the "COMPANY"), and The
Prudential Variable Contract Real Property Partnership, a New Jersey general
partnership (the "PURCHASER").
In consideration of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definition. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Accrued Dividends Per Share" means the product of (i) the dividends per
Share distributed by the Company for the quarter ending September 30, 1997
multiplied by (ii) the Dividend Adjustment.
"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 Stock Purchase Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"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.
"Benefit Plans" means all employee benefit plans and collective
bargaining, labor and employment agreements or other similar benefit
arrangements to which the Company or any Subsidiary of the Company will be a
party at the Closing or by which the Company or any Subsidiary of the Company
will be bound at the Closing, including (A) any profit-sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retainer,
consulting, retirement, severance, welfare or incentive plan, agreement or
arrangement, (B) any plan, agreement or arrangement providing for "fringe
benefits" or perquisites to employees, officers, directors 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, (C) any employment agreement not terminable on 30 days
(or less) written notice or (D) any other "employee benefit plan" within the
meaning of Section 3(3) of ERISA.
VI-5
<PAGE> 7
"Books and Records" means the books and records of the Company and each of
its Subsidiaries, including without limitation financial data (including
projections) and operating data covering each of such entities, their
businesses, operations and financial performance.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York generally are authorized or required by law or other government actions
to close.
"Bylaws" means the Company's Second Amended and Restated Bylaws dated as
of January 26, 1996, as amended from time to time.
"Charter" means the Company's Third Amended and Restated Articles of
Incorporation dated as of March 30, 1996, as amended from time to time.
"Closing" has the meaning provided therefor in Section 2.1(b) of this
Agreement.
"Closing Date" has the meaning provided therefor in Section 2.1(b) of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $.001 per
share.
"Company" means Meridian Industrial Trust, Inc., a Maryland corporation.
"Confidential Information" has the meaning provided therefor in Section
5.1(b) of this Agreement.
"Current SEC Reports" means the 1996 Form 10-K, the 1997 Form 10-Q and the
1997 Proxy Statement.
"Dividend Adjustment" means the quotient of (x) the number of calendar
days between July 1, 1997 (including such date) and the Closing Date (excluding
such date) divided by (y) 92 days.
"Employee and Director Stock Plan" means the Company's Amended and
Restated Employee and Director Stock Plan dated as of January 26, 1996, as
amended through the date hereof, a true, correct and complete copy of which has
been delivered to Purchaser prior to the date hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended (or, with respect to any provision thereof referred to herein, any
corresponding provision of any succeeding law).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
VI-6
<PAGE> 8
"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.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended and related rules, regulations and published
interpretations thereunder.
"Initial Purchase Price" means the aggregate purchase price for the Shares
based on the price per Share set forth in Section 2(a).
"Investor Rights Agreement" means that certain Amended and Restated
Investor Rights Agreement dated as of February 23, 1996 by and among the Company
and certain shareholders of the Company.
"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).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in or on such asset or the
revenues or income thereon or therefrom.
"Material Adverse Effect" shall have the meaning set forth in Section
3.1(a).
"Minimum Ownership Level" means, at any time, 10% of the outstanding
shares of Common Stock on a fully diluted basis.
"NYSE" means the New York Stock Exchange.
"Order" means any decree, injunction, judgment, order, ruling, assessment
or writ.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proxy Statement" shall have the meaning set forth in Section 5.9.
"Prudential" shall mean The Prudential Insurance Company of America.
"Purchaser" means The Prudential Variable Contract Real Property
Partnership and its successors and permitted assigns.
"Recommendations" shall have the meaning set forth in Section 3.1(u).
"REIT" shall have the meaning set forth in Section 3.1(q).
VI-7
<PAGE> 9
"Registration Rights Agreement" means the Registration Rights Agreement,
substantially in the form of Exhibit A hereto, as the same may be amended,
restated, supplemented or otherwise modified in accordance with its terms.
"Rule 144" means Rule 144 under the Securities Act of 1933, as amended,
and any successor rule thereto.
"SEC Documents" shall have the meaning set forth in Section 3.1(x).
"SEC Financial Statements" shall have the meaning set forth in Section
3.1(x).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Series B Preferred Stock" means the shares of Series B Preferred Stock,
par value $.001 per share, of the Company.
"Shareholders' Meeting" shall have the meaning set forth in Section 5.9.
"Shares" means the shares of Common Stock purchased by Purchaser pursuant
to this Agreement.
"Subsidiary" means, with respect to any Person, (a) a corporation, a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a Subsidiary of such Person or by such Person and a Subsidiary thereof or (b)
any other Person (other than a corporation) in which such Person, a Subsidiary
thereof or such Person and a Subsidiary thereof, directly or indirectly, at the
date of determination thereof has at least a majority ownership interest.
"Taxes" means all taxes, charges, fees, levies, duties, imposts,
withholdings, restrictions, fines, interest, penalties, additions to tax or
other assessments or charges, including, but not limited to, income, excise,
property, withholding, sales, use, gross receipts, value added and franchise
taxes, license recording, documentation and registration fees and custom duties
imposed by any Governmental Entity.
"Tax Return" means a report, return or other information required to be
filed by a Person with or submitted to a Governmental Entity with respect to
Taxes, including, where permitted or required, combined or consolidated returns
for any group of entities that includes the Person.
"Termination Date" means the earlier of (i) September 30, 1997 and (ii)
the record date established by the Board of Directors of the Company for the
distribution of dividends for the fiscal quarter of the Company ended September
30, 1997.
"Transaction Documents" means this Agreement, the Registration Rights
Agreement and all other documents executed in connection therewith.
"Transfer" shall have the meaning set forth in Section 3.2(b).
VI-8
<PAGE> 10
"1996 Form 10-K" means the Company's annual report on Form 10-K for the
year ended December 31, 1996 filed with the Commission.
"1997 Form 10-Q" means the Company's quarterly report on Form 10-Q for the
fiscal quarter ended March 31, 1997 filed with the Commission.
"1997 Proxy Statement" means that certain Proxy Statement dated April 14,
1997 in respect of the annual meeting of the shareholders of the Company held on
May 16, 1997.
ARTICLE II
PURCHASE OF COMMON STOCK
Section 2.1 Purchase of Shares; Closing.
(a) Subject to the terms and conditions herein set forth and the
Dividend Adjustment, the Company will sell to Purchaser, and Purchaser will
purchase from the Company, 506,894 shares of Common Stock at a purchase price of
$19.728 per Share (the "Initial Purchase Price").
(b) The purchase and sale of the Shares will take place at a closing
(the "CLOSING") to be held at the offices of O'Melveny & Myers LLP, 275 Battery
Street, San Francisco, California 94111 or such other location as may be
mutually agreed upon by the parties hereto on a date mutually agreed upon by the
parties hereto, provided that the Closing shall occur on or before the earlier
of (i) the fifth calendar day after all conditions set forth in Article IV have
been satisfied or waived by the appropriate party and (ii) the Termination Date.
The date and time at which the Closing is to be concluded is the "CLOSING DATE."
(c) Delivery of the Shares shall be made at the Closing by delivery
to Purchaser, against payment of the Initial Purchase Price therefor as provided
herein, of a share certificate representing the total number of Shares or, at
Purchaser's option, issuance of the Shares in book entry form.
(d) Payment of the Initial Purchase Price shall be made by or on
behalf of Purchaser by wire transfer of immediately available funds to an
account of the Company (the number for which account shall have been furnished
to Purchaser at least two Business Days prior to the Closing Date), or certified
or official bank check payable in immediately available funds to the order of
the Company.
Section 2.2 Dividend Adjustment. In addition to the Initial Purchase
Price, Purchaser shall pay to the Company, promptly after receipt of dividends
for the quarter ended September 30, 1997, an amount equal to the product of (x)
Accrued Dividends Per Share (x) multiplied by (y) 506,894 shares. Payment of
such Dividend Adjustment shall be made in the manner as set forth in Section
2.1(d) or as otherwise agreed to by Purchaser and the Company.
VI-9
<PAGE> 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company. The Company
represents and warrants as of the date hereof as follows.
(a) Organization and Good Standing. (i) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland. Each Subsidiary of the Company is a corporation or other
entity duly organized, validly existing and, with respect to each Subsidiary
that is a corporation, in good standing under the laws of its state of
incorporation or formation, as the case may be. The Company and each Subsidiary
of the Company is duly qualified or licensed and, with respect to each
Subsidiary that is a corporation, in good standing as a foreign corporation and
authorized to do business, in each jurisdiction in which the ownership or
leasing of its properties or the character of its operations makes such
qualification, licensing or authorization necessary, except where the failure to
obtain such qualification, license, authorization or good standing would not
individually or in the aggregate reasonably be expected to have a material
adverse effect upon the assets, liabilities, financial condition, earnings or
operations of the Company and its Subsidiaries taken as a whole or any
transaction contemplated by the Transaction Documents (any such material adverse
effect, whether individually or in the aggregate, a "MATERIAL ADVERSE EFFECT").
The Company and each Subsidiary of the Company has all requisite corporate power
and authority to own its assets and to carry on its business as presently
proposed to be conducted except where a lack of such corporate power or
authority could not reasonably be expected to have a Material Adverse Effect.
(ii) The Company has delivered to Purchaser true, correct and
complete copies of the Charter and the Bylaws of the Company.
(b) Authorizations. The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations under the
Transaction Documents. The execution and delivery by the Company of the
Transaction Documents and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the Company.
(c) Capitalization. As of the date hereof, the equity capitalization
of the Company is as set forth in the balance sheet of the Company included in
the 1997 Form 10-Q, except for any shares of Common Stock issued under the
Employee and Director Stock Plan since March 31, 1997. At the Closing Date, all
of the outstanding shares of stock of the Company will be duly and validly
issued, fully paid and non-assessable and not subject to any preemptive rights
of other shareholders. Except as set forth in the Current SEC Reports and in
Schedule 3.1(c), a certificate (certified by the Chief Executive Officer or
Chief Financial Officer of the Company) delivered to Purchaser on or prior to
the Closing Date or contemplated by the Employee and Director Stock Plan, (i)
there are no outstanding securities or indebtedness convertible into,
exchangeable for, or carrying the right to acquire, Common Stock or other equity
securities of the Company, or subscriptions, warrants, options, rights, or other
arrangements or commitments obligating the Company to issue or dispose of any
Common Stock or other equity securities or any ownership therein, (ii) there is
no agreement or arrangement restricting the voting or transfer of any equity
securities of the Company, and (iii) there are no
VI-10
<PAGE> 12
outstanding contractual obligations, commitments, understandings or arrangements
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire, require or make any payment in respect of any shares of equity
securities of the Company or such Subsidiary. Except with respect to statutory
restrictions of general application, as provided in the Charter with respect to
the Series B Preferred Stock and the terms of the Company's Second Amended and
Restated Revolving Credit Agreement with The First National Bank of Boston and
certain other Banks named therein, there are no legal, contractual or other
restrictions on the payment of dividends or other distributions or amounts on or
in respect of the Common Stock. As of the date hereof, except as contemplated by
the Registration Rights Agreement and the Investor Rights Agreement, there are
no agreements or arrangements to which any of the Company or its Subsidiaries is
a party pursuant to which the Company is or could be required to register shares
of Common Stock or other securities under the Securities Act.
(d) Conflicting Agreements and Other Matters. Neither the Company
nor any of its Subsidiaries is a party to any contract or agreement or subject
to any charter or other corporate restriction compliance with which could
reasonably be expected to have a Material Adverse Effect. Assuming the filing of
a Form D with the Commission, the listing of the Shares on the NYSE and the
accuracy of the representations and warranties of, and the performance of the
agreements of, Purchaser set forth in Section 3.2 and elsewhere herein, neither
the execution and delivery of the Transaction Documents nor fulfillment of nor
compliance with the terms and provisions thereof, nor the issuance of the Shares
will (i) violate any provision of any Law presently in effect or in effect at
the Closing Date having applicability to the Company or any Subsidiary or any of
their properties, except such violations as could not reasonably be expected to
have a Material Adverse Effect, (ii) conflict with or result in a breach of or
constitute a default under the Charter or Bylaws of the Company or any
organizational document of its Subsidiaries, (iii) except as set forth in
Schedule 3.1(d), require any consent, approval or notice under, or conflict with
or result in a breach of, constitute a default or accelerate any right under,
any note, bond, mortgage, license, indenture or loan or credit agreement, or any
other agreement or instrument, to which the Company or any of its Subsidiaries
is a party or by which any of their respective properties is bound, except such
consents, approvals, notices, conflicts, breaches or defaults as could not
reasonably be expected to have a Material Adverse Effect or (iv) result in, or
require the creation or imposition of, any Lien upon or with respect to any of
the properties now owned or hereafter acquired by the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is bound by any
agreement which would impose upon Purchaser any personal obligation or personal
liability which is greater than the personal obligations and personal
liabilities imposed upon Purchaser under this Agreement and the Registration
Rights Agreement to be entered into by the Company and Purchaser pursuant to
Section 5.5 hereof. In addition, the Company is not aware of any facts or
circumstances that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(e) Due Execution, etc. This Agreement, constitutes, and when
executed and delivered by the Company at the Closing the Registration Rights
Agreement will constitute, a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity.
(f) Litigation, Proceeding, etc. There is no action, suit, notice of
violation, proceeding or investigation pending or, to the best knowledge of the
Company, threatened against or affecting the Company
VI-11
<PAGE> 13
or any of its Subsidiaries or any of their respective properties before or by
any Governmental Entity which (i) challenges the legality, validity or
enforceability of any of the Transaction Documents or the Shares or (ii) could
(individually or in the aggregate) reasonably be expected to have a Material
Adverse Effect or (iii) would (individually or in the aggregate) impair the
ability of the Company to perform fully on a timely basis any obligations which
it has under any of the Transaction Documents.
(g) No Default or Violation. Neither the Company nor any of its
Subsidiaries is (i) in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, except such defaults or
violations as could not reasonably be expected to have a Material Adverse
Effect, (ii) in violation of any Order of any Governmental Entity, except for
such violations as could not reasonably be expected to have a Material Adverse
Effect, or (iii) in violation of any Law which could reasonably be expected to
(A) adversely affect the legality, validity or enforceability of the Transaction
Documents, (B) have a Material Adverse Effect or (C) adversely impair the
Company's ability or obligation to perform fully on a timely basis any
obligation which it has under the Transaction Documents.
(h) Status of Shares. Subject to approval of the shareholders of the
Company, which approval shall be solicited pursuant to Section 5.9 prior to the
Closing, the issuance and sale of the Shares have been duly authorized by all
necessary corporate action on the part of the Company and such Shares, when
delivered to Purchaser at the Closing against payment therefor as provided
herein, will be validly issued, fully paid and non-assessable and the issuance
and sale of the Shares is not and will not be subject to preemptive rights of
any other shareholder of the Company.
(i) Governmental Consents, etc. Except as may be required under any
applicable securities law in connection with the performance by the Company of
its obligations under the Registration Rights Agreement, and except for the
filing of a Form D with the Commission and the listing of the Shares on the
NYSE, and assuming the accuracy of the representations and warranties of, and
the performance of the agreements of, Purchaser set forth in Section 3.2 and
elsewhere herein, no authorization, consent, approval, waiver, license,
qualification or formal exemption from, nor any filing, declaration,
qualification or registration with, any Governmental Entity or any securities
exchange is required in connection with the execution, delivery or performance
by the Company of this Agreement and the issuance, sale or delivery of the
Shares except for those that (i) have been made or obtained by the Company as of
the date hereof or (ii) are set forth in Schedule 3.1(i) and by the Closing
shall be made or received by the Company. At the Closing Date, the Company will
have made all filings and given all notices to Governmental Entities and
obtained all necessary ordinances, registrations, declarations, approvals,
orders, consents, qualifications, franchises, certificates, permits and
authorizations from any Governmental Entity, to own or lease its properties and
to conduct its facilities and businesses as currently conducted, except where
failure to do so could not reasonably be expected to have a Material Adverse
Effect. At the Closing Date, all such registrations, declarations, approvals,
orders, consents, qualifications, franchises, certificates, permits and
authorizations, the failure of which to file, give notice of or obtain could
reasonably be expected to have a Material Adverse Effect, will be in full force
and effect. The assets of the Company qualify as exempt assets for purposes of
the Hart-Scott-Rodino Act and no filing under the Hart-Scott-Rodino Act is
required in connection with the sale and issuance of the Shares hereunder.
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(j) Private Offering. Neither the Company nor any Person acting on
its behalf has taken or will take any action (including, without limitation, any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Shares under
the Securities Act) which might subject the offering, issuance or sale of the
Shares to the registration requirements of Section 5 of the Securities Act.
(k) ERISA. To the extent applicable, the Benefit Plans comply, in
all material respects, with the requirements of ERISA and the Code (including
reporting requirements). Neither any Benefit Plan nor the Company or any
Subsidiary of the Company has incurred any liability or penalty under Section
4975 of the Code or Section 502(i) of ERISA. Each 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. There are no
pending, or to the knowledge of the Company threatened, material claims (other
than claims for benefits pursuant to the terms of any such plan) against or
otherwise involving any of the Benefit Plans and no action has been brought
against or with respect to any Benefit Plan, and neither the Company nor any
Subsidiary of the Company incurred any material liability to any party with
respect to any Benefit Plan. All contributions required to be made to the
Benefit Plans have been made or provided for as of the date hereof. No Benefit
Plan is subject to Title IV of ERISA and neither the Company nor any Subsidiary
of the Company 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 3.1(k), (i) the term
"COMPANY" includes any entity required to be aggregated with the Company
pursuant to Code Section 414(b),(c),(m) or (o) and (ii) provisions of ERISA or
the Code include regulations prescribed under such provisions.
(l) Financial Statements. The consolidated balance sheets and
statements of operations of the Company and its consolidated Subsidiaries as of
the last day of its latest complete fiscal year and the related consolidated
statements of operations, shareholders' equity and cash flows for the fiscal
year then ended, reported on by the independent public accountants (and, with
respect to the Company, filed with the Commission on Form 10-K) for the years
ended December 31, 1995 and December 31, 1996 and the consolidated balance
sheets and statements of operations of the Company and its consolidated
Subsidiaries as of the fiscal quarter ended March 31, 1997 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the fiscal quarter then ended (and, with respect to the Company, included in the
1997 Form 10-Q), present fairly in all material respects the financial position
of the Company and its consolidated Subsidiaries as of the dates indicated and
the results of operations of the Company and its consolidated Subsidiaries, for
the periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis and all adjustments necessary for a fair presentation of results for such
periods have been made (subject, in the case of unaudited financial statements,
to normal year-end audit adjustments).
(m) Insurance. At Closing, the Company and its Subsidiaries will
have (i) "all risk" property insurance, including fire, flood, earthquake,
extended coverage and rental loss insurance and (ii) general commercial
liability insurance, under terms and in such amounts and covering such risks
that are customary for properties similar to those of the Company and its
Subsidiaries. There are currently no outstanding material losses for which the
Company or any of its Subsidiaries has failed to give or present notice or claim
under any
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<PAGE> 15
policy. Policies for all the insurance are in full force and effect and none of
the Company or its Subsidiaries is in default in any material respect under any
of the policies.
(n) Information Provided. Neither this Agreement, the schedules and
exhibits hereto, the Current SEC Reports nor any other written document
delivered to Purchaser in connection with the transactions contemplated hereby
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements herein or therein, as the case may be, in light
of the circumstances under which it was made, not misleading, and all material
information regarding the Company and its Subsidiaries is provided therein.
(o) No Other Liabilities. Except as set forth in Schedule 3.1(o),
neither the Company nor any Subsidiary of the Company will have any material
liability, whether absolute, accrued, contingent or otherwise, except
liabilities (i) reflected on the consolidated balance sheet of the Company and
its Subsidiaries as at March 31, 1997, or (ii) liabilities that (1) are incurred
by the Company and its Subsidiaries after March 31, 1997 in the ordinary course
of business and (2) could not reasonably be expected to have a Material Adverse
Effect.
(p) 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 the
Company in connection with the negotiation, execution or performance of 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 other than any such fees or
commissions that have been disclosed to Purchaser and as to which the Company
shall have full and sole responsibility.
(q) Taxes; REIT Status. Each of the Company and its Subsidiaries has
filed all Tax Returns that are required to be filed with any Governmental Entity
and has paid all Taxes due pursuant to the Tax Returns or any assessment
received by it or otherwise required to be paid, except Taxes being contested in
good faith by appropriate proceedings and for which adequate reserves or other
provisions are maintained, and except for the filing of Tax Returns as to which
the failure to file could not, individually or in the aggregate, have a Material
Adverse Effect. The Company (i) elected to be taxed as a "real estate investment
trust" as defined in Section 856 of the Code ("REIT") effective for each of the
taxable years since the Company has been incorporated, (ii) has not revoked such
election, (iii) qualifies for taxation as a REIT for each such taxable year and
for its current taxable year and (iv) has not sold or otherwise disposed of any
assets which could give rise to a material amount of tax pursuant to any
election made by the Company under Notice 88-19, 1988-1 C.B. 486 and does not
expect to effect any such sale or other disposition.
(r) Compliance with Laws. Neither the Company nor any of its
Subsidiaries has been in or is in, and none of them has received notice of,
violation of or default with respect to, any Law or any decision, ruling, order
or award of any arbitrator applicable to it or its business, properties or
operations, except for violations or defaults that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
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<PAGE> 16
(s) Subsidiaries.
(i) The 1996 Form 10-K sets forth a correct and complete list
of all of the Company's Subsidiaries as of the date hereof.
(ii) As of the date hereof, except as set forth on Schedule
3.1(s), all outstanding shares of capital stock or other evidences of
equity ownership of each Subsidiary of the Company are duly authorized,
validly issued, fully paid and nonassessable and are owned directly or
indirectly, beneficially and of record by the Company, free and clear of
all Liens.
(t) Material Contracts. (i) The 1997 Form 10-Q, the 1996 Form 10-K
and Schedule 3.1(c) includes a correct and complete list of the following with
respect to the Company and any of its Subsidiaries: (1) agreements with any
shareholder having beneficial ownership of 5% or more of the shares of common
stock of the Company or such Subsidiary then issued and outstanding, director or
officer of the Company or such Subsidiary and all shareholders' agreements and
voting trusts; and (2) agreements not made in the ordinary course of business
and which could reasonably by expected to result in a Material Adverse Effect.
(ii) All property management agreements to which the Company
is a party provide for a right (without payment of any penalty or
termination fee) of the Company to terminate such agreement upon 30-day
prior written notice and the Company shall deliver each such agreement
reasonably requested by Purchaser within 10 days after the date of such
request.
(u) Recommendations. The Board of Directors of the Company, at a
meeting duly called and held, has duly (i) determined that the Transaction
Documents and the transactions contemplated thereby, taken as a whole, are in
the best interests of the Company and its shareholders, (ii) resolved to
recommend that holders of shares of Common Stock and Series B Preferred Stock
approve the Transaction Documents and the transactions contemplated thereby
(collectively, the "RECOMMENDATIONS") and (iii) approved the Transaction
Documents and the transactions contemplated thereby.
(v) Shareholder Approval. The affirmative vote of a majority of the
shares of the Common Stock and the Series B Preferred Stock, voting together as
a single class, voted at the duly convened shareholders meeting of the Company
(or any other duly convened meeting of the holders of the Common Stock and the
Series B Preferred Stock) is the only vote of the holders of any class or series
of the equity securities of the Company necessary to approve the Transaction
Documents and the transactions contemplated thereby.
(w) No Restrictions on Shares. As of the Closing Date, subject to
satisfaction of Section 4.1(l), no provision of the Charter or Bylaws of the
Company, any other agreement, indenture or other instrument to which the Company
or its properties are subject, or any Law applicable to the Company (i) directly
or indirectly restricts or impairs the right or ability of Purchaser to vote, or
otherwise to exercise the rights and receive the benefits of a shareholder with
respect to the Shares, including, without limitation, restrictions based upon
the size of the security holdings of Purchaser, the business in which it is
engaged or other considerations applicable to it and not to security holders
generally, or (ii) provides any other security holder of the Company with any
preemptive rights.
VI-15
<PAGE> 17
(x) SEC Documents. The Company has filed with the Commission all
reports, schedules, forms, statements and other documents required by the
Exchange Act to be filed by the Company (collectively, and in each case
including all exhibits and schedules thereto and documents incorporated by
reference therein, the "SEC DOCUMENTS"). The Company has delivered or made
available to Purchaser all SEC Documents. As of their respective dates, except
to the extent revised or superseded by a subsequent filing with the Commission,
the SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of the SEC
Documents (including any and all financial statements included therein) as of
such dates contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company and its
Subsidiaries included in all SEC Documents, including any amendments thereto
(the "SEC FINANCIAL STATEMENTS"), comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the Commission with respect thereto.
(y) No Merger Agreements. As of the date hereof, except as set forth
in Schedule 3.1(y), none of Company or its Subsidiaries has entered into any
agreement with any Person which has not been terminated as of the date of this
Agreement and under which there remains any liability or obligation thereof with
respect to a merger or consolidation with any of the Company or its
Subsidiaries, or any other acquisition of a substantial amount of the assets of
the Company or its Subsidiaries.
Section 3.2 Representations and Warranties of Purchaser.
(a) Investment Intent. Purchaser represents and warrants to the
Company that the Shares to be acquired by it hereunder are being acquired for
its own account for investment and with no intention of distributing or
reselling such Shares or any part thereof or interest therein in any transaction
which would be in violation of the securities laws of the United States of
America or any State or any foreign country or jurisdiction.
(b) Transfer Restrictions. If Purchaser should decide to dispose of
any of the Shares, Purchaser understands and agrees that it may do so only
pursuant to an effective registration statement under the Securities Act or
pursuant to an exemption from registration under the Securities Act. In
connection with any offer, resale, pledge or other transfer (individually and
collectively, a "TRANSFER") of any Shares other than pursuant to an effective
registration statement, the Company may require that the transferor of such
Shares provide to the Company an opinion of counsel which opinion shall be
reasonably satisfactory in form and substance to the Company, to the effect that
such Transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act and any
State or foreign securities laws. Purchaser agrees to the imprinting, so long as
appropriate, of substantially the following legend on certificates representing
the Shares:
THE SHARES OF COMMON STOCK (THE "SHARES") EVIDENCED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER
AGREES THAT IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER
VI-16
<PAGE> 18
(INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER") THE SHARES EVIDENCED HEREBY,
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT SUCH AS THE EXEMPTION SET FORTH IN RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE). IF THE PROPOSED TRANSFER IS TO BE MADE
OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AND THE TRANSFER AGENT SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAW.
The legend set forth above may be removed if and when the Shares
represented by such certificate are disposed of pursuant to an effective
registration statement under the Securities Act or the opinion of counsel
referred to above has been provided to the Company. The share certificates shall
also bear legends regarding permitted ownership levels of Shares and any
additional legends required by applicable Federal, State or foreign securities
Laws or necessary under applicable tax Laws, which legends may be removed when,
in the opinion of counsel to the Company, the same are no longer required under
the Charter or the applicable requirements of such securities or tax Laws.
Purchaser agrees that, in connection with any Transfer of Shares by it pursuant
to an effective registration statement under the Securities Act, Purchaser will
comply with all prospectus delivery requirements of the Securities Act. The
Company makes no representation, warranty or agreement as to the availability of
any exemption from registration under the Securities Act with respect to any
resale of Shares.
(c) Stop Transfer Instruction. Purchaser agrees that the Company
shall be entitled to make a notation on its records and give instructions to any
transfer agent for the Shares in order to implement the restrictions on transfer
set forth in this Agreement.
(d) Purchaser Status. Purchaser represents and warrants to, and
covenants and agrees with, the Company that (i) at the time it was offered the
Shares, it was, (ii) at the date hereof, it is, and (iii) at the Closing Date,
it will be, a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act or an "accredited investor" as defined in Rule 501 under the
Securities Act, and has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the Company and
an investment in the Shares, and is able to bear the economic risk of such
investment.
(e) Authority. Purchaser represents and warrants to the Company
that, assuming the accuracy of the representation of the Company in Section
3.1(i) hereof, (i) as of the Closing Date, the purchase of the Shares to be
purchased by it has been duly and properly authorized and this Agreement has
been duly executed and delivered by it or on its behalf and constitutes the
valid and legally binding obligation of Purchaser, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity; (ii) the purchase of the Shares to be purchased by it does not
conflict with or violate (A) its charter or by-laws or (B) any Law applicable to
it in a manner that could materially hinder or impair the completion of the
transactions contemplated hereby; and (iii) the purchase of
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<PAGE> 19
Shares to be purchased by it does not impose any penalty or other onerous
condition on Purchaser that could materially hinder or impact the completion of
the transactions contemplated hereby.
(f) Access to Information. Purchaser acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Shares and the merits and risks of
investing in the Shares; (ii) access to information about the Company, the
Company's financial condition, pro forma results of operations, business
properties, management and prospects sufficient to enable it to evaluate its
investment in the Shares; and (iii) the opportunity to obtain such additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy and completeness of
the information contained in the SEC Documents.
(g) Reliance. Purchaser also understands and acknowledges that (i)
the Shares are being offered and sold without registration under the Securities
Act in a transaction that is exempt from the registration provisions of the
Securities Act and (ii) the availability of such exemption depends in part on,
and that the Company and, for purposes of the opinion to be delivered to
Purchaser pursuant to Section 4.1(a) hereof, Vinson & Elkins L.L.P. will rely
upon, the accuracy and truthfulness of the foregoing representations and
Purchaser hereby consents to such reliance.
(h) 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 any
Purchaser in connection with the negotiation, execution or performance of 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.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1 Conditions Precedent to Obligations of Purchaser. The
obligations of Purchaser to purchase the Shares are subject, at the Closing
Date, to the prior or simultaneous satisfaction or waiver by it of the following
conditions:
(a) Purchaser shall have received an opinion of Vinson & Elkins
L.L.P., counsel for the Company; provided that the form of opinion shall be
negotiated to reasonable satisfaction of Purchaser and its counsel on or before
June 12, 1997. In rendering the foregoing opinion, such counsel may rely as to
factual matters upon certificates or other documents furnished by directors and
officers of the Company and by government officials, and upon such other
documents as such counsel deem appropriate as a basis for such opinion. Such
counsel may specify the jurisdictions in which they are admitted to practice and
that they are not admitted to practice in any other jurisdiction and are not
experts in the law of any other jurisdiction. To the extent such opinion
concerns the laws of any other such jurisdiction, such counsel may either
provide an opinion of counsel admitted to practice in such jurisdiction (which
counsel shall be reasonably acceptable to Purchaser) in lieu of its own opinion
or rely upon the opinion of such counsel. Purchaser hereby agrees that the firm
of Ballard Spahr Andrews & Ingersoll is acceptable to Purchaser for purposes of
providing such
VI-18
<PAGE> 20
opinions involving the laws of the State of Maryland. To the extent that any
opinion rendered by counsel admitted to practice in another jurisdiction or
relied upon by Vinson & Elkins L.L.P., including any exception or limitation
thereto, is materially different from the opinion to be delivered at Closing by
Vinson & Elkins L.L.P. such opinion shall be reasonably satisfactory to
Purchaser and a copy of such opinion shall be delivered to Purchaser at the
Closing.
(b) The representations and warranties made by the Company herein
shall be true and correct in all material respects on the date hereof and on and
as of the Closing Date (except as otherwise limited by their terms to the date
hereof) with the same effect as though such representations and warranties had
been made on and as of the Closing Date and the Company shall have complied in
all material respects with all agreements required to be performed by it
hereunder at or prior to the Closing Date.
(c) There shall not have occurred any event which has had, or could
reasonably be expected to have, a Material Adverse Effect subsequent to March
31, 1997.
(d) At the Closing Date, Purchaser shall have received a
certificate, dated the Closing Date, signed by the Chief Executive Officer of
the Company in such capacity and not individually to the effect set forth in
Sections 4.1(b) and (c), and stating that the conditions specified in this
Section 4.1 have been satisfied at the Closing Date.
(e) At the Closing Date, Purchaser shall have received a
certificate, dated the Closing Date, signed by the Secretary or an Assistant
Secretary of the Company in such capacity and not individually and certifying
(i) that attached thereto is a true, correct and complete copy of (A) the
Charter, (B) Bylaws and (C) resolutions duly adopted by the Board of Directors
of the Company authorizing the execution and delivery of the Transaction
Documents and all other documents to be executed in connection therewith and the
issuance and sale of the Shares, (ii) the incumbency of officers executing this
Agreement and the other Transaction Documents, and (iii) that attached thereto
is a specimen of the share certificate for the Common Stock.
(f) 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.
(g) The Company shall have entered into the Registration Rights
Agreement for the benefit of Purchaser, and Purchaser shall have received a copy
of such Registration Rights Agreement duly executed by the Company in favor of
Purchaser.
(h) The shareholders of the Company shall have duly approved the
issuance of the Shares as contemplated by the Transaction Documents at the
Shareholders' Meeting.
VI-19
<PAGE> 21
(i) All Approvals set forth in Schedule 3.1(d) and Schedule 3.1(i)
shall have been received or the applicable waiting periods shall have expired.
(j) The sale of Common Stock contemplated by the Amended and
Restated Stock Purchase Agreement by and between the Company and Prudential
dated as of June 12, 1997 shall have been consummated.
(k) Purchaser shall be reasonably satisfied that the Company is
qualified as a "real estate operating company" within the meaning of 29 C.F.R.
Section 2510.3-101(e).
(l) The Company shall have taken all actions necessary to ensure
that Purchaser shall have full voting rights with respect to each of the Shares
(including, without limitation, obtaining approvals of the Board of Directors of
the Company and amending the Charter or By Laws of the Company, as applicable).
Section 4.2 Conditions Precedent to Obligations of the Company. The
obligation of the Company to issue and sell the Shares hereunder is subject, at
the Closing Date, to the prior or simultaneous satisfaction or waiver by it of
the following conditions:
(a) The representations and warranties made by Purchaser herein
shall be true and correct in all material respects on the date hereof and on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except as otherwise
limited by their terms to the date hereof) and Purchaser shall have complied in
all material respects with all agreements required to be performed by it
hereunder at or prior to the Closing Date and Purchaser shall have provided such
evidence thereof as the Company may reasonably request.
(b) 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.
(c) The shareholders of the Company shall have duly approved the
issuance of the Shares as contemplated by the Transaction Documents at the
Shareholders' Meeting.
(d) All Approvals set forth in Schedule 3.1(d) and Schedule 3.1(i)
shall have been received or the applicable waiting periods shall have expired.
VI-20
<PAGE> 22
(e) The sale of Common Stock contemplated by the Amended and
Restated Stock Purchase Agreement by and between the Company and Prudential
dated as of June 12, 1997 shall have been consummated.
(f) The Shares owned by Purchaser will not cause the Company to be
treated as the owner of a 9.8% or more interest in any tenant of the Company
listed on Schedule 4.2(f).
(g) At the Closing Date, the Company shall have received a
certificate, dated the Closing Date, signed by an authorized signatory of
Purchaser in such capacity and not individually to the effect set forth in
4.2(a) and certifying that the purchase of Shares by Purchaser has been duly
authorized.
ARTICLE V
COVENANTS
Section 5.1 Furnishing of Information. (a) As long as Purchaser owns
Shares representing at least the Minimum Ownership Level, from and after the
Closing Date the Company will promptly furnish to Purchaser all reports filed by
it pursuant to Section 13(a) or 15(d) of the Exchange Act (or if the Company is
not at the time required to file reports pursuant to said Section 13(a) or
15(d), annual and quarterly reports comparable to those required by Sections
13(a) or 15(d) of the Exchange Act) and all material non-confidential filings or
notifications made with any Governmental Entity. As long as the Company is
required to deliver to Purchaser the reports described in the first sentence of
this Section 5.1, upon request of Purchaser, the Company shall deliver to
Purchaser, the executive summary and all other documents delivered to the Board
of Directors of the Company in connection with any prior meeting of the Board of
Directors of the Company.
(b) Purchaser shall limit access to any confidential information received
by it pursuant to this Section 5.1 ("Confidential Information") to its
executives and employees assigned to review and analyze the Confidential
Information. Purchaser shall not disseminate, or in any way disclose, directly
or indirectly, to any other person, firm or corporation any Confidential
Information without receiving prior written permission from the Company;
provided, however, that Purchaser may divulge such information to its
accountants, attorneys, investment advisors and other advisors in connection
with evaluation of the investment in the Shares or for other legitimate business
purposes, and Purchaser may divulge the Confidential Information to the extent
that it is legally obligated to do so. If Purchaser is legally obligated to
disclose any of the Confidential Information, Purchaser shall use best efforts
to provide the Company with prompt notice so that the Company may seek a
protective order or other appropriate remedy. In the event that the Company is
not able to obtain such protective order or other remedy within a reasonable
time from the giving of notice to the Company as aforesaid, Purchaser will
furnish only that portion of the Confidential Information which it is legally
required to disclose.
Section 5.2 Real Estate Investment Trust. The Company shall use its best
efforts to continue to qualify as a REIT and so long as Purchaser holds Shares
representing, in the aggregate, at least the Minimum Ownership Level, the
Company shall not, without Purchaser's written consent, take any action that
could reasonably be expected to disqualify the Company as a REIT.
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<PAGE> 23
Section 5.3 Sale of Shares by Purchaser. Purchaser hereby agrees that
during the ninety (90) day period commencing on the Closing Date it will not
sell, assign, transfer or otherwise in any manner dispose of any of the Shares,
other than sales, assignments, transfers or dispositions: (i) in connection with
any merger or consolidation of the Company; (ii) pursuant to a tender or
exchange offer for shares of Common Stock; (iii) to an Affiliate of Purchaser,
provided that such Person agrees to be bound by the terms and conditions of this
Agreement and the Registration Rights Agreement, including, without limitation,
Section 6 of the Registration Rights Agreement; (iv) as a result of any pledge
by Purchaser of the Shares as security for any indebtedness or guaranty of
Purchaser, provided that such pledgee agrees to be bound by the terms and
conditions of this Agreement and the Registration Rights Agreement, including,
without limitation, Section 6 of the Registration Rights Agreement, upon the
exercise of its rights under such pledge; or (v) in private transactions
pursuant to one or more exemptions from registration under the Securities Act.
Section 5.4 Approvals. The Company and Purchaser each agree to cooperate
and use their reasonable best efforts to obtain (and will immediately prepare
all registrations, filings and applications, requests and notices preliminary
to) all approvals that may be necessary or which may be reasonably requested by
the Company or Purchaser to consummate the transactions contemplated by this
Agreement. The Company shall, prior to the Closing Date, take all actions
necessary to ensure that Purchaser shall have full voting rights with respect to
each of the Shares (including, without limitation, obtaining approvals of the
Board of Directors of the Company and amending the Charter or Bylaws of the
Company, as applicable).
Section 5.5 Registration Rights Agreement. On or before the Closing Date,
the Company and Purchaser shall enter into an Registration Rights Agreement
substantially in the form of Exhibit A.
Section 5.6 [Reserved].
Section 5.7 Notification of Certain Matters. The Company shall give prompt
notice to Purchaser, and Purchaser shall give prompt notice to the Company, of
(a) the occurrence, or failure to occur, of any event that causes any
representation or warranty contained in any Transaction Document to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
to the Closing Date and (b) any failure of the Company, on the one hand, or
Purchaser, on the other hand, to comply with or satisfy, in any material
respect, any covenant, condition or agreement to be complied with or satisfied
by it under any Transaction Document.
Section 5.8 [Reserved].
Section 5.9 Shareholders' Meeting; Preparation of Proxy Statement. The
Company shall, in accordance with applicable law, as soon as practicable
following the execution and delivery of this Agreement, prepare and file with
the Commission a proxy statement in form and substance reasonably satisfactory
to Purchaser (such proxy statement, including the form of proxy and all such
other materials distributed in connection therewith, as amended or supplemented
from time to time, the "PROXY STATEMENT"). Purchaser will cooperate with the
Company in the preparation of the Proxy Statement and will provide the Company
with material and information required to be included therein. The Company shall
use its commercially reasonable efforts to cause the Proxy Statement to be
mailed to its shareholders at the earliest practicable date. The Company shall
call a meeting of its shareholders (the "SHAREHOLDERS MEETING") to be held as
promptly as
VI-22
<PAGE> 24
practicable after the date hereof (but not before July 9, 1997) for the purpose,
among other things, of considering and taking action upon the issuance of the
shares of Common Stock to Purchaser, as contemplated hereunder and shall use its
commercially reasonable efforts to obtain and furnish the information required
to be included by it in the Proxy Statement and, after consultation with
Purchaser, respond promptly to any comments made by the Commission with respect
to the Proxy Statement and any preliminary version thereof. The Company will,
through its Board of Directors, include the Recommendations in the Proxy
Statement and shall solicit and use its reasonable best efforts to obtain
proxies in favor of the issuance of the shares of Common Stock to Purchaser as
contemplated hereunder. The Company shall cause the Proxy Statement and the
distribution thereof to comply in all material respects with the Exchange Act
and ensure that the Proxy Statement will not, at the date the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to shareholders
and at the time of the Shareholders' Meeting, be false or misleading with
respect to any material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Shareholders' Meeting which has become false
or misleading. None of the information relating solely to Purchaser as a
shareholder of the Company that is supplied by Purchaser in writing specifically
for inclusion or incorporation by reference in the Proxy Statement will, at the
time the Proxy Statement is filed with the Commission and at the time of the
Shareholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements made therein not misleading, in the light of the circumstances
under which they were made. The obligations of the Company to distribute the
Proxy Statement and convene the Shareholders Meeting pursuant to this Section
5.9 shall not be affected by the withdrawal or modification of the
Recommendations.
Section 5.10 Publicity and Reports. Except as may be required by
applicable Law, or by obligations pursuant to any listing agreement with a
national securities exchange, neither the Company nor Purchaser shall, without
the approval of the other party, issue any press release or make any public
statement with respect to the transactions contemplated hereby or that refer to
such other party.
Section 5.11 Conduct of Business. The Company covenants and agrees that
until the earlier of the Closing Date or the termination of this Agreement, the
Company shall, and shall cause its Subsidiaries to, continue to engage in an
efficient and economical manner solely in a business of the same general type as
conducted by it on the date of this Agreement in the ordinary course, consistent
with past practices; and use its reasonable best efforts to preserve the
business of the Company and its Subsidiaries and to preserve the goodwill of
customers and others having business relations with the Company and its
Subsidiaries.
Section 5.12 Negative Covenants of the Company. The Company covenants and
agrees as follows, and shall not enter into any agreement or take any other
action inconsistent with the following, in each case until the earlier of the
Closing Date or the termination of this Agreement, except as specifically
contemplated by this Agreement or to the extent such action shall not reasonably
be expected to result in a Material Adverse Effect.
(a) Charter documents. The Company shall not amend the Charter
or Bylaws and shall not permit any of its Subsidiaries to amend its
organizational documents.
VI-23
<PAGE> 25
(b) Mergers, Etc. Except as shall have been previously agreed
in writing by the parties, the Company shall not, and shall not permit any of
its Subsidiaries to, merge or consolidate with any Person, sell, lease, license
or otherwise dispose of all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person or acquire all or substantially all
of the assets or the business of any Person, in each case whether in one
transaction or in a series of transactions pursuant to which Company or such
Subsidiary shall not be the surviving entity.
Section 5.13 [Reserved.]
Section 5.14 [Reserved.]
Section 5.15 [Reserved.]
Section 5.16 Amendment to Investor Rights Agreement. The Company shall use
its best efforts in order to obtain all necessary consents in order (i) to
provide Purchaser rights that are pari passu with those of each of the Company's
shareholders party to the Investor Rights Agreement under the penultimate
paragraph of Section 2(b) and Section 2(c)(i) and (ii) of the Investor Rights
Agreement and (ii) to provide that such shareholders shall not have any right to
be included in the shelf registration to be filed by the Company for the benefit
of the Purchaser.
Section 5.17 Delivery of Certain Documents. The Company shall deliver at
least ten days prior to the scheduled date of the Shareholders Meeting, all
agreements, contracts, promissory notes, letters of intent and similar documents
that (i) have been entered into by the Company or any of its Subsidiaries
between March 31, 1997 and the date that is no more than 15 days prior to the
scheduled date for the Shareholders Meeting, (ii) have not been terminated and
(iii) relate to an acquisition or sale of assets, stock or other equity interest
or the incurrence or guarantee of indebtedness by the Company or such
Subsidiary, involving a maximum purchase price or obligation of more than
$75,000,000.
Section 5.18 Further Assurances. Promptly upon request by the other party,
each party shall, and shall cause its Subsidiaries to, take, execute,
acknowledge, deliver, file, re-file, register and re-register, any and all such
further acts, certificates, assurances and other instruments as the requesting
party may require from time to time in order to carry out more effectively the
purposes of each Transaction Document and to better transfer, preserve, protect
and confirm to the requesting party the rights granted or now or hereafter
intended to be granted to the requesting party under each Transaction Document.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Survival of Provisions. The representations, warranties and
covenants of the Company and Purchaser made herein shall remain operative and in
full force and effect pursuant to their terms (a) regardless of (i) any
investigation made by or on behalf of Purchaser or the Company, as the case may
be, or (ii) acceptance of any of the Shares and payment by Purchaser therefor
and (b) except as specifically provided otherwise, after the Closing Date.
VI-24
<PAGE> 26
Section 6.2 Termination. This Agreement and the transactions contemplated
by this Agreement may be terminated at any time prior to the Closing Date as
follows and in no other manner:
(a) By either the Company or Purchaser if the Closing has not
occurred on or prior to the Termination Date;
(b) By mutual consent of Purchaser and the Company;
(c) By either the Company or Purchaser if the Amended and Restated
Stock Purchase Agreement by and between the Company and Prudential dated as of
June 12, 1997 has been terminated.
(d) [Reserved];
(e) By Purchaser if (i) the Board of Directors of the Company shall
have withdrawn or modified the Recommendations in a manner adverse to Purchaser
or (ii) the shareholders shall have failed to approve the issuance of the Shares
pursuant to this Agreement at the Shareholders Meeting; and
(f) By either Purchaser, on the one hand, or the Company, on the
other hand, with written notice to the other party if there has been a
misrepresentation or material breach on the part of the Company or Purchaser,
respectively, in their respective representations, warranties and covenants set
forth herein.
In the event that this Agreement should be terminated pursuant to Section
6.2, all further obligations of the parties under this Agreement shall
terminate, provided, however, that a termination under Section 6.2(f) shall not
relieve any party of any liability for a breach of, or any misrepresentation
under, this Agreement or be deemed to constitute a waiver of any available
remedy for any such breach of misrepresentation; provided, further, that in the
event of a termination pursuant to Section 6.2(e) or the failure of the Company
to obtain the consents set forth in Schedule 3.1(d) and 3.1(i), Company shall
pay Purchaser within five business days after such termination, a fee equal to
$200,000. Notwithstanding anything in the foregoing to the contrary, no party
that is in material breach of this Agreement shall be entitled to terminate this
Agreement except with the consent of the other party.
Section 6.3 No Waiver; Modification in Writing.
(a) No failure or delay on the part of the Company or Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
Purchaser at law or in equity. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company, on the one hand, and Purchaser, on
the other hand, provided that notice of any such waiver shall be given to each
party hereto as set forth below. Any amendment, supplement or modification of or
to any provision of this Agreement, or any waiver of any provision of this
Agreement, shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically
VI-25
<PAGE> 27
required by this Agreement, no notice to or demand on any party hereto in any
case shall entitle the other party to any other or further notice or demand in
similar or other circumstances.
Section 6.4 Communications. All notices and demands provided for hereunder
shall be in writing, and shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
delivery, and, if to Purchaser, addressed to 8 Campus Drive, 4th Floor,
Parsippany, New Jersey 07054, Fax No.: (201) 683-1788, Attention: Terry McHugh
and Joseph D. Margolis, with copies to: O'Melveny & Myers LLP, 153 East 53rd
Street, New York, New York 10022, Fax No. (212) 326-2061, Attention: Robert S.
Insolia, Esq., or to the Company at: Meridian Industrial Trust, Inc., 50
California Street, Suite 1600, San Francisco, California 94111, Fax No.: (415)
344-8430, Attention: Chief Executive Officer, with a copy to Michael D. Wortley,
Esq., Vinson & Elkins L.L.P., 2001 Ross Avenue, Suite 3700, Dallas, Texas 75201,
Fax No.: (214) 999-7732 or to such other address as Purchaser and Company, as
the case may be, may designate in writing, and shall be deemed given when
received.
Section 6.5 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute one and the same agreement.
Section 6.6 Binding Effect; Assignment. Except as provided in Section 5.3
hereof, the rights and obligations of the parties under this Agreement may not
be assigned to any other person; provided, however, that after the Closing the
Company may assign its rights hereunder to any successor entity to the Company,
whether pursuant to a sale of substantially all of the Company's assets, or the
merger or consolidation of the Company, that agrees to be bound by the terms and
conditions hereof and the other Transactional Documents. Except as expressly
provided in this Agreement, this Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement, and their respective successors and permitted assigns. This Agreement
shall be binding upon the Company and Purchaser, and their respective successors
and permitted assigns.
Section 6.7 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF MARYLAND, AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
Section 6.8 Expenses. Each of the parties hereto shall pay its own
respective costs and expenses incurred in connection with the negotiation,
execution and performance of this Agreement. Notwithstanding the foregoing, the
costs and expenses of preparing and distributing the Proxy Statement and
obtaining and complying with the antitrust requirements of any Governmental
Entity shall be paid by the Company.
Section 6.9 Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
VI-26
<PAGE> 28
Section 6.10 Headings. The Article and Section headings and Table of
Contents used or contained in this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement.
Section 6.11 Integration. This Agreement (including the exhibits hereto)
constitutes the entire agreement among the parties with respect to the purchase
and sale of the Shares and there are no promises or undertakings with respect
thereto relative to the subject matter hereof not expressly set forth or
referred to herein or in exhibits hereto.
Section 6.12 [Reserved].
Section 6.13 Waiver by Jury Trial. Each party waives any right to a trial
by jury in any action, suit or other proceeding to enforce or defend any right
under any Transaction Document or any amendment, instrument, document or
agreement delivered, or which in the future may be delivered, in connection with
any Transaction Document and agrees that any such action, suit or other
proceeding shall be tried before a court and not before a jury.
[Remainder of this page intentionally left blank]
VI-27
<PAGE> 29
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer as of the date first written
above.
MERIDIAN INDUSTRIAL
TRUST, INC.
By: /s/ Allen J. Anderson
_____________________________________
Name: Allen J. Anderson
Title: Chief Executive Officer
THE PRUDENTIAL VARIABLE
CONTRACT REAL PROPERTY
PARTNERSHIP
By: THE PRUDENTIAL
INSURANCE COMPANY
OF AMERICA, a general
partner
By: /s/ Roger S. Pratt
_________________________________
Name: Roger S. Pratt
Title: Vice President
VI-28
<PAGE> 1
EXHIBIT VII
<PAGE> 2
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
MERIDIAN INDUSTRIAL TRUST, INC.,
AS SELLER
AND
STRATEGIC PERFORMANCE FUND - II, INC.,
AS PURCHASER
COMMON STOCK
(par value $.001 per share)
June 12, 1997
VII-1
<PAGE> 3
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.................................................. 1
Section 1.1 Definition................................................... 1
ARTICLE II PURCHASE OF COMMON STOCK..................................... 5
Section 2.1 Purchase of Shares; Closing.................................. 5
Section 2.2 Dividend Adjustment.......................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES............................... 6
Section 3.1 Representations and Warranties of the Company................ 6
Section 3.2 Representations and Warranties of Purchaser.................. 14
ARTICLE IV CONDITIONS PRECEDENT TO CLOSING.............................. 16
Section 4.1 Conditions Precedent to Obligations of Purchaser............. 16
Section 4.2 Conditions Precedent to Obligations of the Company........... 18
ARTICLE V COVENANTS.................................................... 19
Section 5.1 Furnishing of Information.................................... 19
Section 5.2 Real Estate Investment Trust................................. 20
Section 5.3 Sale of Shares by Purchaser.................................. 20
Section 5.4 Approvals.................................................... 20
Section 5.5 Registration Rights Agreement................................ 21
Section 5.6 [Reserved]................................................... 21
Section 5.7 Notification of Certain Matters.............................. 21
Section 5.8 [Reserved]................................................... 21
Section 5.9 Shareholders' Meeting; Preparation of Proxy Statement........ 21
Section 5.10 Publicity and Reports........................................ 22
Section 5.11 Conduct of Business.......................................... 22
Section 5.12 Negative Covenants of the Company............................ 22
Section 5.13 [Reserved.].................................................. 22
Section 5.14 Party in Interest............................................ 23
Section 5.15 Real Estate Operating Company................................ 23
Section 5.16 Amendment to Investor Rights Agreement....................... 23
Section 5.17 Delivery of Certain Documents................................ 23
Section 5.18 Further Assurances........................................... 23
VII-2
<PAGE> 4
ARTICLE VI MISCELLANEOUS................................................ 23
Section 6.1 Survival of Provisions....................................... 23
Section 6.2 Termination.................................................. 24
Section 6.3 No Waiver; Modification in Writing........................... 24
Section 6.4 Communications............................................... 25
Section 6.5 Execution in Counterparts.................................... 25
Section 6.6 Binding Effect; Assignment................................... 25
Section 6.7 Governing Law................................................ 26
Section 6.8 Expenses..................................................... 26
Section 6.9 Severability of Provisions................................... 26
Section 6.10 Headings..................................................... 26
Section 6.11 Integration.................................................. 26
Section 6.12 [Reserved]................................................... 26
Section 6.13 Waiver by Jury Trial......................................... 26
VII-3
<PAGE> 5
EXHIBITS
Exhibit A Form of Registration Rights Agreement
SCHEDULES
Schedule 3.1(c) List of Rights to Acquire Equity Securities; Voting
Restrictions;Etc.
Schedule 3.1(d) List of Third Party Consents
Schedule 3.1(i) List of Governmental Consents, Etc.
Schedule 3.1(o) List of Certain Liabilities
Schedule 3.1(s) List of Ownership in Subsidiaries
Schedule 3.1(y) List of Merger, Sale of Equity and Sale of Assets
Schedule 3.2(i) Separate Account Investors
Schedule 4.2(f) List of Tenants
VII-4
<PAGE> 6
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of June 12, 1997, by and among Meridian
Industrial Trust, Inc., a Maryland corporation (the "COMPANY"), and Strategic
Performance Fund - II, Inc., a Maryland corporation (the "PURCHASER").
In consideration of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definition. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Accrued Dividends Per Share" means the product of (i) the dividends per
Share distributed by the Company for the quarter ending September 30, 1997
multiplied by (ii) the Dividend Adjustment.
"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 Stock Purchase Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"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.
"Benefit Plans" means all employee benefit plans and collective
bargaining, labor and employment agreements or other similar benefit
arrangements to which the Company or any Subsidiary of the Company will be a
party at the Closing or by which the Company or any Subsidiary of the Company
will be bound at the Closing, including (A) any profit-sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retainer,
consulting, retirement, severance, welfare or incentive plan, agreement or
arrangement, (B) any plan, agreement or arrangement providing for "fringe
benefits" or perquisites to employees, officers, directors 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, (C) any employment agreement not terminable on 30 days
(or less) written notice or (D) any other "employee benefit plan" within the
meaning of Section 3(3) of ERISA.
VII-5
<PAGE> 7
"Books and Records" means the books and records of the Company and each of
its Subsidiaries, including without limitation financial data (including
projections) and operating data covering each of such entities, their
businesses, operations and financial performance.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York generally are authorized or required by law or other government actions
to close.
"Bylaws" means the Company's Second Amended and Restated Bylaws dated as
of January 26, 1996, as amended from time to time.
"Charter" means the Company's Third Amended and Restated Articles of
Incorporation dated as of March 30, 1996, as amended from time to time.
"Closing" has the meaning provided therefor in Section 2.1(b) of this
Agreement.
"Closing Date" has the meaning provided therefor in Section 2.1(b) of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $.001 per
share.
"Company" means Meridian Industrial Trust, Inc., a Maryland corporation.
"Confidential Information" has the meaning provided therefor in Section
5.1(b) of this Agreement.
"Current SEC Reports" means the 1996 Form 10-K, the 1997 Form 10-Q and the
1997 Proxy Statement.
"Dividend Adjustment" means the quotient of (x) the number of calendar
days between July 1, 1997 (including such date) and the Closing Date (excluding
such date) divided by (y) 92 days.
"Employee and Director Stock Plan" means the Company's Amended and
Restated Employee and Director Stock Plan dated as of January 26, 1996, as
amended through the date hereof, a true, correct and complete copy of which has
been delivered to Purchaser prior to the date hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended (or, with respect to any provision thereof referred to herein, any
corresponding provision of any succeeding law).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
VII-6
<PAGE> 8
"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.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended and related rules, regulations and published
interpretations thereunder.
"Initial Purchase Price" means the aggregate purchase price for the Shares
based on the price per Share set forth in Section 2(a).
"Investor Rights Agreement" means that certain Amended and Restated
Investor Rights Agreement dated as of February 23, 1996 by and among the Company
and certain shareholders of the Company.
"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).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in or on such asset or the
revenues or income thereon or therefrom.
"Material Adverse Effect" shall have the meaning set forth in Section
3.1(a).
"Minimum Ownership Level" means, at any time, 10% of the outstanding
shares of Common Stock on a fully diluted basis.
"NYSE" means the New York Stock Exchange.
"Order" means any decree, injunction, judgment, order, ruling, assessment
or writ.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proxy Statement" shall have the meaning set forth in Section 5.9.
"Prudential" shall mean The Prudential Insurance Company of America.
"Purchaser" means Strategic Performance Fund - II, Inc., and its
successors and permitted assigns.
"Recommendations" shall have the meaning set forth in Section 3.1(u).
"REIT" shall have the meaning set forth in Section 3.1(q).
VII-7
<PAGE> 9
"Registration Rights Agreement" means the Registration Rights Agreement,
substantially in the form of Exhibit A hereto, as the same may be amended,
restated, supplemented or otherwise modified in accordance with its terms.
"REOC" shall have the meaning set forth in Section 3.1(k).
"Rule 144" means Rule 144 under the Securities Act of 1933, as amended,
and any successor rule thereto.
"SEC Documents" shall have the meaning set forth in Section 3.1(x).
"SEC Financial Statements" shall have the meaning set forth in Section
3.1(x).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Series B Preferred Stock" means the shares of Series B Preferred Stock,
par value $.001 per share, of the Company.
"Shareholders' Meeting" shall have the meaning set forth in Section 5.9.
"Shares" means the shares of Common Stock purchased by Purchaser pursuant
to this Agreement.
"Subsidiary" means, with respect to any Person, (a) a corporation, a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a Subsidiary of such Person or by such Person and a Subsidiary thereof or (b)
any other Person (other than a corporation) in which such Person, a Subsidiary
thereof or such Person and a Subsidiary thereof, directly or indirectly, at the
date of determination thereof has at least a majority ownership interest.
"Taxes" means all taxes, charges, fees, levies, duties, imposts,
withholdings, restrictions, fines, interest, penalties, additions to tax or
other assessments or charges, including, but not limited to, income, excise,
property, withholding, sales, use, gross receipts, value added and franchise
taxes, license recording, documentation and registration fees and custom duties
imposed by any Governmental Entity.
"Tax Return" means a report, return or other information required to be
filed by a Person with or submitted to a Governmental Entity with respect to
Taxes, including, where permitted or required, combined or consolidated returns
for any group of entities that includes the Person.
"Termination Date" means the earlier of (i) September 30, 1997 and (ii)
the record date established by the Board of Directors of the Company for the
distribution of dividends for the fiscal quarter of the Company ended September
30, 1997.
"Transaction Documents" means this Agreement, the Registration Rights
Agreement and all other documents executed in connection therewith.
VII-8
<PAGE> 10
"Transfer" shall have the meaning set forth in Section 3.2(b).
"1996 Form 10-K" means the Company's annual report on Form 10-K for the
year ended December 31, 1996 filed with the Commission.
"1997 Form 10-Q" means the Company's quarterly report on Form 10-Q for the
fiscal quarter ended March 31, 1997 filed with the Commission.
"1997 Proxy Statement" means that certain Proxy Statement dated April 14,
1997 in respect of the annual meeting of the shareholders of the Company held on
May 16, 1997.
ARTICLE II
PURCHASE OF COMMON STOCK
Section 2.1 Purchase of Shares; Closing.
(a) Subject to the terms and conditions herein set forth and the
Dividend Adjustment, the Company will sell to Purchaser, and Purchaser will
purchase from the Company, 1,013,788 shares of Common Stock at a purchase price
of $19.728 per Share (the "Initial Purchase Price").
(b) The purchase and sale of the Shares will take place at a closing
(the "CLOSING") to be held at the offices of O'Melveny & Myers LLP, 275 Battery
Street, San Francisco, California 94111 or such other location as may be
mutually agreed upon by the parties hereto on a date mutually agreed upon by the
parties hereto, provided that the Closing shall occur on or before the earlier
of (i) the fifth calendar day after all conditions set forth in Article IV have
been satisfied or waived by the appropriate party and (ii) the Termination Date.
The date and time at which the Closing is to be concluded is the "CLOSING DATE."
(c) Delivery of the Shares shall be made at the Closing by delivery
to Purchaser, against payment of the Initial Purchase Price therefor as provided
herein, of a share certificate representing the total number of Shares or, at
Purchaser's option, issuance of the Shares in book entry form.
(d) Payment of the Initial Purchase Price shall be made by or on
behalf of Purchaser by wire transfer of immediately available funds to an
account of the Company (the number for which account shall have been furnished
to Purchaser at least two Business Days prior to the Closing Date), or certified
or official bank check payable in immediately available funds to the order of
the Company.
Section 2.2 Dividend Adjustment. In addition to the Initial Purchase
Price, Purchaser shall pay to the Company, promptly after receipt of dividends
for the quarter ended September 30, 1997, an amount equal to the product of (x)
Accrued Dividends Per Share (x) multiplied by (y) 1,013,788 shares. Payment of
such Dividend Adjustment shall be made in the manner as set forth in Section
2.1(d) or as otherwise agreed to by Purchaser and the Company.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company. The Company
represents and warrants as of the date hereof as follows.
(a) Organization and Good Standing. (i) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland. Each Subsidiary of the Company is a corporation or other
entity duly organized, validly existing and, with respect to each Subsidiary
that is a corporation, in good standing under the laws of its state of
incorporation or formation, as the case may be. The Company and each Subsidiary
of the Company is duly qualified or licensed and, with respect to each
Subsidiary that is a corporation, in good standing as a foreign corporation and
authorized to do business, in each jurisdiction in which the ownership or
leasing of its properties or the character of its operations makes such
qualification, licensing or authorization necessary, except where the failure to
obtain such qualification, license, authorization or good standing would not
individually or in the aggregate reasonably be expected to have a material
adverse effect upon the assets, liabilities, financial condition, earnings or
operations of the Company and its Subsidiaries taken as a whole or any
transaction contemplated by the Transaction Documents (any such material adverse
effect, whether individually or in the aggregate, a "MATERIAL ADVERSE EFFECT").
The Company and each Subsidiary of the Company has all requisite corporate power
and authority to own its assets and to carry on its business as presently
proposed to be conducted except where a lack of such corporate power or
authority could not reasonably be expected to have a Material Adverse Effect.
(ii) The Company has delivered to Purchaser true, correct and
complete copies of the Charter and the Bylaws of the Company.
(b) Authorizations. The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations under the
Transaction Documents. The execution and delivery by the Company of the
Transaction Documents and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the Company.
(c) Capitalization. As of the date hereof, the equity capitalization
of the Company is as set forth in the balance sheet of the Company included in
the 1997 Form 10-Q, except for any shares of Common Stock issued under the
Employee and Director Stock Plan since March 31, 1997. At the Closing Date, all
of the outstanding shares of stock of the Company will be duly and validly
issued, fully paid and non-assessable and not subject to any preemptive rights
of other shareholders. Except as set forth in the Current SEC Reports and in
Schedule 3.1(c), a certificate (certified by the Chief Executive Officer or
Chief Financial Officer of the Company) delivered to Purchaser on or prior to
the Closing Date or contemplated by the Employee and Director Stock Plan, (i)
there are no outstanding securities or indebtedness convertible into,
exchangeable for, or carrying the right to acquire, Common Stock or other equity
securities of the Company, or subscriptions, warrants, options, rights, or other
arrangements or commitments obligating the Company to issue or dispose of any
Common Stock or other equity securities or any ownership therein, (ii) there is
no agreement or arrangement restricting the voting or transfer of any equity
securities of the Company, and (iii) there are no
VII-10
<PAGE> 12
outstanding contractual obligations, commitments, understandings or arrangements
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire, require or make any payment in respect of any shares of equity
securities of the Company or such Subsidiary. Except with respect to statutory
restrictions of general application, as provided in the Charter with respect to
the Series B Preferred Stock and the terms of the Company's Second Amended and
Restated Revolving Credit Agreement with The First National Bank of Boston and
certain other Banks named therein, there are no legal, contractual or other
restrictions on the payment of dividends or other distributions or amounts on or
in respect of the Common Stock. As of the date hereof, except as contemplated by
the Registration Rights Agreement and the Investor Rights Agreement, there are
no agreements or arrangements to which any of the Company or its Subsidiaries is
a party pursuant to which the Company is or could be required to register shares
of Common Stock or other securities under the Securities Act.
(d) Conflicting Agreements and Other Matters. Neither the Company
nor any of its Subsidiaries is a party to any contract or agreement or subject
to any charter or other corporate restriction compliance with which could
reasonably be expected to have a Material Adverse Effect. Assuming the filing of
a Form D with the Commission, the listing of the Shares on the NYSE and the
accuracy of the representations and warranties of, and the performance of the
agreements of, Purchaser set forth in Section 3.2 and elsewhere herein, neither
the execution and delivery of the Transaction Documents nor fulfillment of nor
compliance with the terms and provisions thereof, nor the issuance of the Shares
will (i) violate any provision of any Law presently in effect or in effect at
the Closing Date having applicability to the Company or any Subsidiary or any of
their properties, except such violations as could not reasonably be expected to
have a Material Adverse Effect, (ii) conflict with or result in a breach of or
constitute a default under the Charter or Bylaws of the Company or any
organizational document of its Subsidiaries, (iii) except as set forth in
Schedule 3.1(d), require any consent, approval or notice under, or conflict with
or result in a breach of, constitute a default or accelerate any right under,
any note, bond, mortgage, license, indenture or loan or credit agreement, or any
other agreement or instrument, to which the Company or any of its Subsidiaries
is a party or by which any of their respective properties is bound, except such
consents, approvals, notices, conflicts, breaches or defaults as could not
reasonably be expected to have a Material Adverse Effect or (iv) result in, or
require the creation or imposition of, any Lien upon or with respect to any of
the properties now owned or hereafter acquired by the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is bound by any
agreement which would impose upon Purchaser any personal obligation or personal
liability which is greater than the personal obligations and personal
liabilities imposed upon Purchaser under this Agreement and the Registration
Rights Agreement to be entered into by the Company and Purchaser pursuant to
Section 5.5 hereof. In addition, the Company is not aware of any facts or
circumstances that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(e) Due Execution, etc. This Agreement, constitutes, and when
executed and delivered by the Company at the Closing the Registration Rights
Agreement will constitute, a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity.
(f) Litigation, Proceeding, etc. There is no action, suit, notice of
violation, proceeding or investigation pending or, to the best knowledge of the
Company, threatened against or affecting the Company
VII-11
<PAGE> 13
or any of its Subsidiaries or any of their respective properties before or by
any Governmental Entity which (i) challenges the legality, validity or
enforceability of any of the Transaction Documents or the Shares or (ii) could
(individually or in the aggregate) reasonably be expected to have a Material
Adverse Effect or (iii) would (individually or in the aggregate) impair the
ability of the Company to perform fully on a timely basis any obligations which
it has under any of the Transaction Documents.
(g) No Default or Violation. Neither the Company nor any of its
Subsidiaries is (i) in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, except such defaults or
violations as could not reasonably be expected to have a Material Adverse
Effect, (ii) in violation of any Order of any Governmental Entity, except for
such violations as could not reasonably be expected to have a Material Adverse
Effect, or (iii) in violation of any Law which could reasonably be expected to
(A) adversely affect the legality, validity or enforceability of the Transaction
Documents, (B) have a Material Adverse Effect or (C) adversely impair the
Company's ability or obligation to perform fully on a timely basis any
obligation which it has under the Transaction Documents.
(h) Status of Shares. Subject to approval of the shareholders of the
Company, which approval shall be solicited pursuant to Section 5.9 prior to the
Closing, the issuance and sale of the Shares have been duly authorized by all
necessary corporate action on the part of the Company and such Shares, when
delivered to Purchaser at the Closing against payment therefor as provided
herein, will be validly issued, fully paid and non-assessable and the issuance
and sale of the Shares is not and will not be subject to preemptive rights of
any other shareholder of the Company.
(i) Governmental Consents, etc. Except as may be required under any
applicable securities law in connection with the performance by the Company of
its obligations under the Registration Rights Agreement, and except for the
filing of a Form D with the Commission and the listing of the Shares on the
NYSE, and assuming the accuracy of the representations and warranties of, and
the performance of the agreements of, Purchaser set forth in Section 3.2 and
elsewhere herein, no authorization, consent, approval, waiver, license,
qualification or formal exemption from, nor any filing, declaration,
qualification or registration with, any Governmental Entity or any securities
exchange is required in connection with the execution, delivery or performance
by the Company of this Agreement and the issuance, sale or delivery of the
Shares except for those that (i) have been made or obtained by the Company as of
the date hereof or (ii) are set forth in Schedule 3.1(i) and by the Closing
shall be made or received by the Company. At the Closing Date, the Company will
have made all filings and given all notices to Governmental Entities and
obtained all necessary ordinances, registrations, declarations, approvals,
orders, consents, qualifications, franchises, certificates, permits and
authorizations from any Governmental Entity, to own or lease its properties and
to conduct its facilities and businesses as currently conducted, except where
failure to do so could not reasonably be expected to have a Material Adverse
Effect. At the Closing Date, all such registrations, declarations, approvals,
orders, consents, qualifications, franchises, certificates, permits and
authorizations, the failure of which to file, give notice of or obtain could
reasonably be expected to have a Material Adverse Effect, will be in full force
and effect. The assets of the Company qualify as exempt assets for purposes of
the Hart-Scott-Rodino Act and no filing under the Hart-Scott-Rodino Act is
required in connection with the sale and issuance of the Shares hereunder.
VII-12
<PAGE> 14
(j) Private Offering. Neither the Company nor any Person acting on
its behalf has taken or will take any action (including, without limitation, any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Shares under
the Securities Act) which might subject the offering, issuance or sale of the
Shares to the registration requirements of Section 5 of the Securities Act.
(k) ERISA.
(i) Company Status. The Company currently qualifies as a "real
estate operating company" ("REOC") within the meaning of 29 C.F.R. Section
2510.3-101(e), and has qualified as a REOC during all valuation periods
within the meaning of 29 C.F.R. Section 2510.3-101(d)(5).
(ii) Benefit Plans. To the extent applicable, the Benefit
Plans comply, in all material respects, with the requirements of ERISA and
the Code (including reporting requirements). Neither any Benefit Plan nor
the Company or any Subsidiary of the Company has incurred any liability or
penalty under Section 4975 of the Code or Section 502(i) of ERISA. Each
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. There are no pending, or to the knowledge of the
Company threatened, material claims (other than claims for benefits
pursuant to the terms of any such plan) against or otherwise involving any
of the Benefit Plans and no action has been brought against or with
respect to any Benefit Plan, and neither the Company nor any Subsidiary of
the Company incurred any material liability to any party with respect to
any Benefit Plan. All contributions required to be made to the Benefit
Plans have been made or provided for as of the date hereof. No Benefit
Plan is subject to Title IV of ERISA and neither the Company nor any
Subsidiary of the Company 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 3.1(k), (i) the term "COMPANY" includes any entity required to be
aggregated with the Company pursuant to Code Section 414(b),(c),(m) or (o)
and (ii) provisions of ERISA or the Code include regulations prescribed
under such provisions.
(iii) The terms of this transaction are not less favorable to
Purchaser than the terms that would be available generally in an
arms'-length transaction between unrelated parties.
(iv) The Company is not a party in interest, as defined in
Section 3(14) of ERISA, with respect to any employee benefit plan listed
on Schedule 3.2(i).
(l) Financial Statements. The consolidated balance sheets and
statements of operations of the Company and its consolidated Subsidiaries as of
the last day of its latest complete fiscal year and the related consolidated
statements of operations, shareholders' equity and cash flows for the fiscal
year then ended, reported on by the independent public accountants (and, with
respect to the Company, filed with the Commission on Form 10-K) for the years
ended December 31, 1995 and December 31, 1996 and the consolidated balance
sheets and statements of operations of the Company and its consolidated
Subsidiaries as of the fiscal quarter ended March 31, 1997 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the fiscal quarter then ended (and, with respect to the Company, included in the
1997
VII-13
<PAGE> 15
Form 10-Q), present fairly in all material respects the financial position of
the Company and its consolidated Subsidiaries as of the dates indicated and the
results of operations of the Company and its consolidated Subsidiaries, for the
periods specified. Such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis and
all adjustments necessary for a fair presentation of results for such periods
have been made (subject, in the case of unaudited financial statements, to
normal year-end audit adjustments).
(m) Insurance. At Closing, the Company and its Subsidiaries will
have (i) "all risk" property insurance, including fire, flood, earthquake,
extended coverage and rental loss insurance and (ii) general commercial
liability insurance, under terms and in such amounts and covering such risks
that are customary for properties similar to those of the Company and its
Subsidiaries. There are currently no outstanding material losses for which the
Company or any of its Subsidiaries has failed to give or present notice or claim
under any policy. Policies for all the insurance are in full force and effect
and none of the Company or its Subsidiaries is in default in any material
respect under any of the policies.
(n) Information Provided. Neither this Agreement, the schedules and
exhibits hereto, the Current SEC Reports nor any other written document
delivered to Purchaser in connection with the transactions contemplated hereby
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements herein or therein, as the case may be, in light
of the circumstances under which it was made, not misleading, and all material
information regarding the Company and its Subsidiaries is provided therein.
(o) No Other Liabilities. Except as set forth in Schedule 3.1(o),
neither the Company nor any Subsidiary of the Company will have any material
liability, whether absolute, accrued, contingent or otherwise, except
liabilities (i) reflected on the consolidated balance sheet of the Company and
its Subsidiaries as at March 31, 1997, or (ii) liabilities that (1) are incurred
by the Company and its Subsidiaries after March 31, 1997 in the ordinary course
of business and (2) could not reasonably be expected to have a Material Adverse
Effect.
(p) 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 the
Company in connection with the negotiation, execution or performance of 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 other than any such fees or
commissions that have been disclosed to Purchaser and as to which the Company
shall have full and sole responsibility.
(q) Taxes; REIT Status. Each of the Company and its Subsidiaries has
filed all Tax Returns that are required to be filed with any Governmental Entity
and has paid all Taxes due pursuant to the Tax Returns or any assessment
received by it or otherwise required to be paid, except Taxes being contested in
good faith by appropriate proceedings and for which adequate reserves or other
provisions are maintained, and except for the filing of Tax Returns as to which
the failure to file could not, individually or in the aggregate, have a Material
Adverse Effect. The Company (i) elected to be taxed as a "real estate investment
trust" as defined in Section 856 of the Code ("REIT") effective for each of the
taxable years since the Company has been incorporated, (ii) has not revoked such
election, (iii) qualifies for taxation as a REIT for each such taxable year and
for its current taxable year and (iv) has not sold or otherwise disposed of any
assets which could give rise
VII-14
<PAGE> 16
to a material amount of tax pursuant to any election made by the Company under
Notice 88-19, 1988-1 C.B. 486 and does not expect to effect any such sale or
other disposition.
(r) Compliance with Laws. Neither the Company nor any of its
Subsidiaries has been in or is in, and none of them has received notice of,
violation of or default with respect to, any Law or any decision, ruling, order
or award of any arbitrator applicable to it or its business, properties or
operations, except for violations or defaults that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
(s) Subsidiaries.
(i) The 1996 Form 10-K sets forth a correct and complete list
of all of the Company's Subsidiaries as of the date hereof.
(ii) As of the date hereof, except as set forth on Schedule
3.1(s), all outstanding shares of capital stock or other evidences of
equity ownership of each Subsidiary of the Company are duly authorized,
validly issued, fully paid and nonassessable and are owned directly or
indirectly, beneficially and of record by the Company, free and clear of
all Liens.
(t) Material Contracts. (i) The 1997 Form 10-Q, the 1996 Form 10-K
and Schedule 3.1(c) includes a correct and complete list of the following with
respect to the Company and any of its Subsidiaries: (1) agreements with any
shareholder having beneficial ownership of 5% or more of the shares of common
stock of the Company or such Subsidiary then issued and outstanding, director or
officer of the Company or such Subsidiary and all shareholders' agreements and
voting trusts; and (2) agreements not made in the ordinary course of business
and which could reasonably by expected to result in a Material Adverse Effect.
(ii) All property management agreements to which the Company
is a party provide for a right (without payment of any penalty or
termination fee) of the Company to terminate such agreement upon 30-day
prior written notice and the Company shall deliver each such agreement
reasonably requested by Purchaser within 10 days after the date of such
request.
(u) Recommendations. The Board of Directors of the Company, at a
meeting duly called and held, has duly (i) determined that the Transaction
Documents and the transactions contemplated thereby, taken as a whole, are in
the best interests of the Company and its shareholders, (ii) resolved to
recommend that holders of shares of Common Stock and Series B Preferred Stock
approve the Transaction Documents and the transactions contemplated thereby
(collectively, the "RECOMMENDATIONS") and (iii) approved the Transaction
Documents and the transactions contemplated thereby.
(v) Shareholder Approval. The affirmative vote of a majority of the
shares of the Common Stock and the Series B Preferred Stock, voting together as
a single class, voted at the duly convened shareholders meeting of the Company
(or any other duly convened meeting of the holders of the Common Stock and the
Series B Preferred Stock) is the only vote of the holders of any class or series
of the equity securities of the Company necessary to approve the Transaction
Documents and the transactions contemplated thereby.
VII-15
<PAGE> 17
(w) No Restrictions on Shares. As of the Closing Date, subject to
satisfaction of Section 4.1(l), no provision of the Charter or Bylaws of the
Company, any other agreement, indenture or other instrument to which the Company
or its properties are subject, or any Law applicable to the Company (i) directly
or indirectly restricts or impairs the right or ability of Purchaser to vote, or
otherwise to exercise the rights and receive the benefits of a shareholder with
respect to the Shares, including, without limitation, restrictions based upon
the size of the security holdings of Purchaser, the business in which it is
engaged or other considerations applicable to it and not to security holders
generally, or (ii) provides any other security holder of the Company with any
preemptive rights.
(x) SEC Documents. The Company has filed with the Commission all
reports, schedules, forms, statements and other documents required by the
Exchange Act to be filed by the Company (collectively, and in each case
including all exhibits and schedules thereto and documents incorporated by
reference therein, the "SEC DOCUMENTS"). The Company has delivered or made
available to Purchaser all SEC Documents. As of their respective dates, except
to the extent revised or superseded by a subsequent filing with the Commission,
the SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of the SEC
Documents (including any and all financial statements included therein) as of
such dates contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company and its
Subsidiaries included in all SEC Documents, including any amendments thereto
(the "SEC FINANCIAL STATEMENTS"), comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the Commission with respect thereto.
(y) No Merger Agreements. As of the date hereof, except as set forth
in Schedule 3.1(y), none of Company or its Subsidiaries has entered into any
agreement with any Person which has not been terminated as of the date of this
Agreement and under which there remains any liability or obligation thereof with
respect to a merger or consolidation with any of the Company or its
Subsidiaries, or any other acquisition of a substantial amount of the assets of
the Company or its Subsidiaries.
Section 3.2 Representations and Warranties of Purchaser.
(a) Investment Intent. Purchaser represents and warrants to the
Company that the Shares to be acquired by it hereunder are being acquired for
its own account for investment and with no intention of distributing or
reselling such Shares or any part thereof or interest therein in any transaction
which would be in violation of the securities laws of the United States of
America or any State or any foreign country or jurisdiction.
(b) Transfer Restrictions. If Purchaser should decide to dispose of
any of the Shares, Purchaser understands and agrees that it may do so only
pursuant to an effective registration statement under the Securities Act or
pursuant to an exemption from registration under the Securities Act. In
connection with any offer, resale, pledge or other transfer (individually and
collectively, a "TRANSFER") of any Shares other than pursuant to an effective
registration statement, the Company may require that the transferor of such
Shares provide to the Company an opinion of counsel which opinion shall be
reasonably satisfactory in form and substance to the Company, to the effect that
such Transfer is being made pursuant to an exemption from, or
VII-16
<PAGE> 18
in a transaction not subject to, the registration requirements of the Securities
Act and any State or foreign securities laws. Purchaser agrees to the
imprinting, so long as appropriate, of substantially the following legend on
certificates representing the Shares:
THE SHARES OF COMMON STOCK (THE "SHARES") EVIDENCED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER
AGREES THAT IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER
(INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER") THE SHARES EVIDENCED HEREBY,
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT SUCH AS THE EXEMPTION SET FORTH IN RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE). IF THE PROPOSED TRANSFER IS TO BE MADE
OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AND THE TRANSFER AGENT SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAW.
The legend set forth above may be removed if and when the Shares
represented by such certificate are disposed of pursuant to an effective
registration statement under the Securities Act or the opinion of counsel
referred to above has been provided to the Company. The share certificates shall
also bear legends regarding permitted ownership levels of Shares and any
additional legends required by applicable Federal, State or foreign securities
Laws or necessary under applicable tax Laws, which legends may be removed when,
in the opinion of counsel to the Company, the same are no longer required under
the Charter or the applicable requirements of such securities or tax Laws.
Purchaser agrees that, in connection with any Transfer of Shares by it pursuant
to an effective registration statement under the Securities Act, Purchaser will
comply with all prospectus delivery requirements of the Securities Act. The
Company makes no representation, warranty or agreement as to the availability of
any exemption from registration under the Securities Act with respect to any
resale of Shares.
(c) Stop Transfer Instruction. Purchaser agrees that the Company
shall be entitled to make a notation on its records and give instructions to any
transfer agent for the Shares in order to implement the restrictions on transfer
set forth in this Agreement.
(d) Purchaser Status. Purchaser represents and warrants to, and
covenants and agrees with, the Company that (i) at the time it was offered the
Shares, it was, (ii) at the date hereof, it is, and (iii) at the Closing Date,
it will be, a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act or an "accredited investor" as defined in Rule 501 under the
Securities Act, and has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the Company and
an investment in the Shares, and is able to bear the economic risk of such
investment.
VII-17
<PAGE> 19
(e) Authority. Purchaser represents and warrants to the Company
that, assuming the accuracy of the representation of the Company in Section
3.1(i) hereof, (i) as of the Closing Date, the purchase of the Shares to be
purchased by it has been duly and properly authorized and this Agreement has
been duly executed and delivered by it or on its behalf and constitutes the
valid and legally binding obligation of Purchaser, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity; (ii) the purchase of the Shares to be purchased by it does not
conflict with or violate (A) its charter or by-laws or (B) any Law applicable to
it in a manner that could materially hinder or impair the completion of the
transactions contemplated hereby; and (iii) the purchase of Shares to be
purchased by it does not impose any penalty or other onerous condition on
Purchaser that could materially hinder or impact the completion of the
transactions contemplated hereby.
(f) Access to Information. Purchaser acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Shares and the merits and risks of
investing in the Shares; (ii) access to information about the Company, the
Company's financial condition, pro forma results of operations, business
properties, management and prospects sufficient to enable it to evaluate its
investment in the Shares; and (iii) the opportunity to obtain such additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy and completeness of
the information contained in the SEC Documents.
(g) Reliance. Purchaser also understands and acknowledges that (i)
the Shares are being offered and sold without registration under the Securities
Act in a transaction that is exempt from the registration provisions of the
Securities Act and (ii) the availability of such exemption depends in part on,
and that the Company and, for purposes of the opinion to be delivered to
Purchaser pursuant to Section 4.1(a) hereof, Vinson & Elkins L.L.P. will rely
upon, the accuracy and truthfulness of the foregoing representations and
Purchaser hereby consents to such reliance.
(h) 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 any
Purchaser in connection with the negotiation, execution or performance of 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.
(i) Separate Account Investors. Purchaser represents that each
employee benefit plan, as defined in Section 3(3) of ERISA, that has interest in
the Purchaser is set forth in Schedule 3.2(i). ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1 Conditions Precedent to Obligations of Purchaser. The
obligations of Purchaser to purchase the Shares are subject, at the Closing
Date, to the prior or simultaneous satisfaction or waiver by it of the following
conditions:
VII-18
<PAGE> 20
(a) Purchaser shall have received an opinion of Vinson & Elkins
L.L.P., counsel for the Company; provided that the form of opinion shall be
negotiated to reasonable satisfaction of Purchaser and its counsel on or before
June 12, 1997. In rendering the foregoing opinion, such counsel may rely as to
factual matters upon certificates or other documents furnished by directors and
officers of the Company and by government officials, and upon such other
documents as such counsel deem appropriate as a basis for such opinion. Such
counsel may specify the jurisdictions in which they are admitted to practice and
that they are not admitted to practice in any other jurisdiction and are not
experts in the law of any other jurisdiction. To the extent such opinion
concerns the laws of any other such jurisdiction, such counsel may either
provide an opinion of counsel admitted to practice in such jurisdiction (which
counsel shall be reasonably acceptable to Purchaser) in lieu of its own opinion
or rely upon the opinion of such counsel. Purchaser hereby agrees that the firm
of Ballard Spahr Andrews & Ingersoll is acceptable to Purchaser for purposes of
providing such opinions involving the laws of the State of Maryland. To the
extent that any opinion rendered by counsel admitted to practice in another
jurisdiction or relied upon by Vinson & Elkins L.L.P., including any exception
or limitation thereto, is materially different from the opinion to be delivered
at Closing by Vinson & Elkins L.L.P. such opinion shall be reasonably
satisfactory to Purchaser and a copy of such opinion shall be delivered to
Purchaser at the Closing.
(b) The representations and warranties made by the Company herein
shall be true and correct in all material respects on the date hereof and on and
as of the Closing Date (except as otherwise limited by their terms to the date
hereof) with the same effect as though such representations and warranties had
been made on and as of the Closing Date and the Company shall have complied in
all material respects with all agreements required to be performed by it
hereunder at or prior to the Closing Date.
(c) There shall not have occurred any event which has had, or could
reasonably be expected to have, a Material Adverse Effect subsequent to March
31, 1997.
(d) At the Closing Date, Purchaser shall have received a
certificate, dated the Closing Date, signed by the Chief Executive Officer of
the Company in such capacity and not individually to the effect set forth in
Sections 4.1(b) and (c), and stating that the conditions specified in this
Section 4.1 have been satisfied at the Closing Date.
(e) At the Closing Date, Purchaser shall have received a
certificate, dated the Closing Date, signed by the Secretary or an Assistant
Secretary of the Company in such capacity and not individually and certifying
(i) that attached thereto is a true, correct and complete copy of (A) the
Charter, (B) Bylaws and (C) resolutions duly adopted by the Board of Directors
of the Company authorizing the execution and delivery of the Transaction
Documents and all other documents to be executed in connection therewith and the
issuance and sale of the Shares, (ii) the incumbency of officers executing this
Agreement and the other Transaction Documents, and (iii) that attached thereto
is a specimen of the share certificate for the Common Stock.
(f) 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
VII-19
<PAGE> 21
Governmental Entity shall have withdrawn such notice and abandoned any such
proceedings prior to the time which otherwise would have been the Closing Date.
(g) The Company shall have entered into the Registration Rights
Agreement for the benefit of Purchaser, and Purchaser shall have received a copy
of such Registration Rights Agreement duly executed by the Company in favor of
Purchaser.
(h) The shareholders of the Company shall have duly approved the
issuance of the Shares as contemplated by the Transaction Documents at the
Shareholders' Meeting.
(i) All Approvals set forth in Schedule 3.1(d) and Schedule 3.1(i)
shall have been received or the applicable waiting periods shall have expired.
(j) The sale of Common Stock contemplated by the Amended and
Restated Stock Purchase Agreement by and between the Company and Prudential
dated as of June 12, 1997 shall have been consummated.
(k) Purchaser shall be reasonably satisfied that the Company is
qualified as a "real estate operating company" within the meaning of 29 C.F.R.
Section 2510.3-101(e).
(l) The Company shall have taken all actions necessary to ensure
that Purchaser shall have full voting rights with respect to each of the Shares
(including, without limitation, obtaining approvals of the Board of Directors of
the Company and amending the Charter or By Laws of the Company, as applicable).
Section 4.2 Conditions Precedent to Obligations of the Company. The
obligation of the Company to issue and sell the Shares hereunder is subject, at
the Closing Date, to the prior or simultaneous satisfaction or waiver by it of
the following conditions:
(a) The representations and warranties made by Purchaser herein
shall be true and correct in all material respects on the date hereof and on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except as otherwise
limited by their terms to the date hereof) and Purchaser shall have complied in
all material respects with all agreements required to be performed by it
hereunder at or prior to the Closing Date and Purchaser shall have provided such
evidence thereof as the Company may reasonably request.
(b) 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.
VII-20
<PAGE> 22
(c) The shareholders of the Company shall have duly approved the
issuance of the Shares as contemplated by the Transaction Documents at the
Shareholders' Meeting.
(d) All Approvals set forth in Schedule 3.1(d) and Schedule 3.1(i)
shall have been received or the applicable waiting periods shall have expired.
(e) The sale of Common Stock contemplated by the Amended and
Restated Stock Purchase Agreement by and between the Company and Prudential
dated as of June 12, 1997 shall have been consummated.
(f) The Shares owned by Purchaser will not cause the Company to be
treated as the owner of a 9.8% or more interest in any tenant of the Company
listed on Schedule 4.2(f).
(g) At the Closing Date, the Company shall have received a
certificate, dated the Closing Date, signed by an officer of Purchaser in such
capacity and not individually to the effect set forth in 4.2(a) and certifying
that attached thereto is a true, correct and complete copy of resolutions duly
adopted by the Board of Directors of Purchaser authorizing the purchase of the
Shares.
ARTICLE V
COVENANTS
Section 5.1 Furnishing of Information. (a) As long as Purchaser owns
Shares representing at least the Minimum Ownership Level, from and after the
Closing Date the Company will promptly furnish to Purchaser all reports filed by
it pursuant to Section 13(a) or 15(d) of the Exchange Act (or if the Company is
not at the time required to file reports pursuant to said Section 13(a) or
15(d), annual and quarterly reports comparable to those required by Sections
13(a) or 15(d) of the Exchange Act) and all material non-confidential filings or
notifications made with any Governmental Entity. As long as the Company is
required to deliver to Purchaser the reports described in the first sentence of
this Section 5.1, upon request of Purchaser, the Company shall deliver to
Purchaser, the executive summary and all other documents delivered to the Board
of Directors of the Company in connection with any prior meeting of the Board of
Directors of the Company.
(b) Purchaser shall limit access to any confidential information received
by it pursuant to this Section 5.1 ("Confidential Information") to its
executives and employees assigned to review and analyze the Confidential
Information. Purchaser shall not disseminate, or in any way disclose, directly
or indirectly, to any other person, firm or corporation any Confidential
Information without receiving prior written permission from the Company;
provided, however, that Purchaser may divulge such information to its
accountants, attorneys, investment advisors and other advisors in connection
with evaluation of the investment in the Shares or for other legitimate business
purposes, and Purchaser may divulge the Confidential Information to the extent
that it is legally obligated to do so. If Purchaser is legally obligated to
disclose any of the Confidential Information, Purchaser shall use best efforts
to provide the Company with prompt notice so that the Company may seek a
protective order or other appropriate remedy. In the event that the Company is
not able to obtain such protective order or other remedy within a reasonable
time from the giving of notice to the Company as
VII-21
<PAGE> 23
aforesaid, Purchaser will furnish only that portion of the Confidential
Information which it is legally required to disclose.
Section 5.2 Real Estate Investment Trust. The Company shall use its best
efforts to continue to qualify as a REIT and so long as Purchaser holds Shares
representing, in the aggregate, at least the Minimum Ownership Level, the
Company shall not, without Purchaser's written consent, take any action that
could reasonably be expected to disqualify the Company as a REIT.
Section 5.3 Sale of Shares by Purchaser. Purchaser hereby agrees that
during the ninety (90) day period commencing on the Closing Date it will not
sell, assign, transfer or otherwise in any manner dispose of any of the Shares,
other than sales, assignments, transfers or dispositions: (i) in connection with
any merger or consolidation of the Company; (ii) pursuant to a tender or
exchange offer for shares of Common Stock; (iii) to an Affiliate of Purchaser,
provided that such Person agrees to be bound by the terms and conditions of this
Agreement and the Registration Rights Agreement, including, without limitation,
Section 6 of the Registration Rights Agreement; (iv) as a result of any pledge
by Purchaser of the Shares as security for any indebtedness or guaranty of
Purchaser, provided that such pledgee agrees to be bound by the terms and
conditions of this Agreement and the Registration Rights Agreement, including,
without limitation, Section 6 of the Registration Rights Agreement, upon the
exercise of its rights under such pledge; or (v) in private transactions
pursuant to one or more exemptions from registration under the Securities Act.
Section 5.4 Approvals. The Company and Purchaser each agree to cooperate
and use their reasonable best efforts to obtain (and will immediately prepare
all registrations, filings and applications, requests and notices preliminary
to) all approvals that may be necessary or which may be reasonably requested by
the Company or Purchaser to consummate the transactions contemplated by this
Agreement. The Company shall, prior to the Closing Date, take all actions
necessary to ensure that Purchaser shall have full voting rights with respect to
each of the Shares (including, without limitation, obtaining approvals of the
Board of Directors of the Company and amending the Charter or Bylaws of the
Company, as applicable).
Section 5.5 Registration Rights Agreement. On or before the Closing Date,
the Company and Purchaser shall enter into an Registration Rights Agreement
substantially in the form of Exhibit A.
Section 5.6 [Reserved].
Section 5.7 Notification of Certain Matters. The Company shall give prompt
notice to Purchaser, and Purchaser shall give prompt notice to the Company, of
(a) the occurrence, or failure to occur, of any event that causes any
representation or warranty contained in any Transaction Document to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
to the Closing Date and (b) any failure of the Company, on the one hand, or
Purchaser, on the other hand, to comply with or satisfy, in any material
respect, any covenant, condition or agreement to be complied with or satisfied
by it under any Transaction Document.
Section 5.8 [Reserved].
VII-22
<PAGE> 24
Section 5.9 Shareholders' Meeting; Preparation of Proxy Statement. The
Company shall, in accordance with applicable law, as soon as practicable
following the execution and delivery of this Agreement, prepare and file with
the Commission a proxy statement in form and substance reasonably satisfactory
to Purchaser (such proxy statement, including the form of proxy and all such
other materials distributed in connection therewith, as amended or supplemented
from time to time, the "PROXY STATEMENT"). Purchaser will cooperate with the
Company in the preparation of the Proxy Statement and will provide the Company
with material and information required to be included therein. The Company shall
use its commercially reasonable efforts to cause the Proxy Statement to be
mailed to its shareholders at the earliest practicable date. The Company shall
call a meeting of its shareholders (the "SHAREHOLDERS MEETING") to be held as
promptly as practicable after the date hereof (but not before July 9, 1997) for
the purpose, among other things, of considering and taking action upon the
issuance of the shares of Common Stock to Purchaser, as contemplated hereunder
and shall use its commercially reasonable efforts to obtain and furnish the
information required to be included by it in the Proxy Statement and, after
consultation with Purchaser, respond promptly to any comments made by the
Commission with respect to the Proxy Statement and any preliminary version
thereof. The Company will, through its Board of Directors, include the
Recommendations in the Proxy Statement and shall solicit and use its reasonable
best efforts to obtain proxies in favor of the issuance of the shares of Common
Stock to Purchaser as contemplated hereunder. The Company shall cause the Proxy
Statement and the distribution thereof to comply in all material respects with
the Exchange Act and ensure that the Proxy Statement will not, at the date the
Proxy Statement (or any amendment thereof or supplement thereto) is first mailed
to shareholders and at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Shareholders' Meeting which
has become false or misleading. None of the information relating solely to
Purchaser as a shareholder of the Company that is supplied by Purchaser in
writing specifically for inclusion or incorporation by reference in the Proxy
Statement will, at the time the Proxy Statement is filed with the Commission and
at the time of the Shareholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements made therein not misleading, in the light of
the circumstances under which they were made. The obligations of the Company to
distribute the Proxy Statement and convene the Shareholders Meeting pursuant to
this Section 5.9 shall not be affected by the withdrawal or modification of the
Recommendations.
Section 5.10 Publicity and Reports. Except as may be required by
applicable Law, or by obligations pursuant to any listing agreement with a
national securities exchange, neither the Company nor Purchaser shall, without
the approval of the other party, issue any press release or make any public
statement with respect to the transactions contemplated hereby or that refer to
such other party.
Section 5.11 Conduct of Business. The Company covenants and agrees that
until the earlier of the Closing Date or the termination of this Agreement, the
Company shall, and shall cause its Subsidiaries to, continue to engage in an
efficient and economical manner solely in a business of the same general type as
conducted by it on the date of this Agreement in the ordinary course, consistent
with past practices; and use its reasonable best efforts to preserve the
business of the Company and its Subsidiaries and to preserve the goodwill of
customers and others having business relations with the Company and its
Subsidiaries.
VII-23
<PAGE> 25
Section 5.12 Negative Covenants of the Company. The Company covenants and
agrees as follows, and shall not enter into any agreement or take any other
action inconsistent with the following, in each case until the earlier of the
Closing Date or the termination of this Agreement, except as specifically
contemplated by this Agreement or to the extent such action shall not reasonably
be expected to result in a Material Adverse Effect.
(a) Charter documents. The Company shall not amend the Charter
or Bylaws and shall not permit any of its Subsidiaries to amend its
organizational documents.
(b) Mergers, Etc. Except as shall have been previously agreed
in writing by the parties, the Company shall not, and shall not permit any of
its Subsidiaries to, merge or consolidate with any Person, sell, lease, license
or otherwise dispose of all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person or acquire all or substantially all
of the assets or the business of any Person, in each case whether in one
transaction or in a series of transactions pursuant to which Company or such
Subsidiary shall not be the surviving entity.
Section 5.13 [Reserved.]
Section 5.14 Party in Interest. The Company shall not enter into any
agreement or take any action that would cause the Company to be a party in
interest, as defined in Section 3(14) of ERISA, with respect to any employee
benefit plan set forth in Schedule 3.2(i) for so long as Purchaser holds any
Shares.
Section 5.15 Real Estate Operating Company. The Company shall continue to
operate as a REOC for so long as Purchaser holds Shares representing in the
aggregate at least the Minimum Ownership Level.
Section 5.16 Amendment to Investor Rights Agreement. The Company shall use
its best efforts in order to obtain all necessary consents in order (i) to
provide Purchaser rights that are pari passu with those of each of the Company's
shareholders party to the Investor Rights Agreement under the penultimate
paragraph of Section 2(b) and Section 2(c)(i) and (ii) of the Investor Rights
Agreement and (ii) to provide that such shareholders shall not have any right to
be included in the shelf registration to be filed by the Company for the benefit
of the Purchaser.
Section 5.17 Delivery of Certain Documents. The Company shall deliver at
least ten days prior to the scheduled date of the Shareholders Meeting, all
agreements, contracts, promissory notes, letters of intent and similar documents
that (i) have been entered into by the Company or any of its Subsidiaries
between March 31, 1997 and the date that is no more than 15 days prior to the
scheduled date for the Shareholders Meeting, (ii) have not been terminated and
(iii) relate to an acquisition or sale of assets, stock or other equity interest
or the incurrence or guarantee of indebtedness by the Company or such
Subsidiary, involving a maximum purchase price or obligation of more than
$75,000,000.
Section 5.18 Further Assurances. Promptly upon request by the other party,
each party shall, and shall cause its Subsidiaries to, take, execute,
acknowledge, deliver, file, re-file, register and re-register, any and all such
further acts, certificates, assurances and other instruments as the requesting
party may require from time to time in order to carry out more effectively the
purposes of each Transaction Document and to better transfer,
VII-24
<PAGE> 26
preserve, protect and confirm to the requesting party the rights granted or now
or hereafter intended to be granted to the requesting party under each
Transaction Document.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Survival of Provisions. The representations, warranties and
covenants of the Company and Purchaser made herein shall remain operative and in
full force and effect pursuant to their terms (a) regardless of (i) any
investigation made by or on behalf of Purchaser or the Company, as the case may
be, or (ii) acceptance of any of the Shares and payment by Purchaser therefor
and (b) except as specifically provided otherwise, after the Closing Date.
Section 6.2 Termination. This Agreement and the transactions contemplated
by this Agreement may be terminated at any time prior to the Closing Date as
follows and in no other manner:
(a) By either the Company or Purchaser if the Closing has not
occurred on or prior to the Termination Date;
(b) By mutual consent of Purchaser and the Company;
(c) By either the Company or Purchaser if the Amended and Restated
Stock Purchase Agreement by and between the Company and Prudential dated as of
June 12, 1997 has been terminated.
(d) [Reserved];
(e) By Purchaser if (i) the Board of Directors of the Company shall
have withdrawn or modified the Recommendations in a manner adverse to Purchaser
or (ii) the shareholders shall have failed to approve the issuance of the Shares
pursuant to this Agreement at the Shareholders Meeting; and
(f) By either Purchaser, on the one hand, or the Company, on the
other hand, with written notice to the other party if there has been a
misrepresentation or material breach on the part of the Company or Purchaser,
respectively, in their respective representations, warranties and covenants set
forth herein.
In the event that this Agreement should be terminated pursuant to Section
6.2, all further obligations of the parties under this Agreement shall
terminate, provided, however, that a termination under Section 6.2(f) shall not
relieve any party of any liability for a breach of, or any misrepresentation
under, this Agreement or be deemed to constitute a waiver of any available
remedy for any such breach of misrepresentation; provided, further, that in the
event of a termination pursuant to Section 6.2(e) or the failure of the Company
to obtain the consents set forth in Schedule 3.1(d) and 3.1(i), Company shall
pay Purchaser within five business days after such termination, a fee equal to
$400,000. Notwithstanding anything in the foregoing to the contrary, no party
that is in material breach of this Agreement shall be entitled to terminate this
Agreement except with the consent of the other party.
VII-25
<PAGE> 27
Section 6.3 No Waiver; Modification in Writing.
(a) No failure or delay on the part of the Company or Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
Purchaser at law or in equity. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company, on the one hand, and Purchaser, on
the other hand, provided that notice of any such waiver shall be given to each
party hereto as set forth below. Any amendment, supplement or modification of or
to any provision of this Agreement, or any waiver of any provision of this
Agreement, shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement, no notice to or demand on any party hereto in any case shall
entitle the other party to any other or further notice or demand in similar or
other circumstances.
Section 6.4 Communications. All notices and demands provided for hereunder
shall be in writing, and shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
delivery, and, if to Purchaser, addressed to c/o Prudential Real Estate
Investors, 8 Campus Drive, 4th Floor, Parsippany, New Jersey 07054, Fax No.:
(201) 683-1788, Attention: Joel W. Stoesser and Joseph D. Margolis, with copies
to: O'Melveny & Myers LLP, 153 East 53rd Street, New York, New York 10022, Fax
No. (212) 326-2061, Attention: Robert S. Insolia, Esq., or to the Company at:
Meridian Industrial Trust, Inc., 50 California Street, Suite 1600, San
Francisco, California 94111, Fax No.: (415) 344-8430, Attention: Chief Executive
Officer, with a copy to Michael D. Wortley, Esq., Vinson & Elkins L.L.P., 2001
Ross Avenue, Suite 3700, Dallas, Texas 75201, Fax No.: (214) 999-7732 or to such
other address as Purchaser and Company, as the case may be, may designate in
writing, and shall be deemed given when received.
Section 6.5 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute one and the same agreement.
Section 6.6 Binding Effect; Assignment. Except as provided in Section 5.3
hereof, the rights and obligations of the parties under this Agreement may not
be assigned to any other person; provided, however, that after the Closing the
Company may assign its rights hereunder to any successor entity to the Company,
whether pursuant to a sale of substantially all of the Company's assets, or the
merger or consolidation of the Company, that agrees to be bound by the terms and
conditions hereof and the other Transactional Documents. Except as expressly
provided in this Agreement, this Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement, and their respective successors and permitted assigns. This Agreement
shall be binding upon the Company and Purchaser, and their respective successors
and permitted assigns.
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<PAGE> 28
Section 6.7 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF MARYLAND, AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
Section 6.8 Expenses. Each of the parties hereto shall pay its own
respective costs and expenses incurred in connection with the negotiation,
execution and performance of this Agreement. Notwithstanding the foregoing, the
costs and expenses of preparing and distributing the Proxy Statement and
obtaining and complying with the antitrust requirements of any Governmental
Entity shall be paid by the Company.
Section 6.9 Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 6.10 Headings. The Article and Section headings and Table of
Contents used or contained in this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement.
Section 6.11 Integration. This Agreement (including the exhibits hereto)
constitutes the entire agreement among the parties with respect to the purchase
and sale of the Shares and there are no promises or undertakings with respect
thereto relative to the subject matter hereof not expressly set forth or
referred to herein or in exhibits hereto.
Section 6.12 [Reserved].
Section 6.13 Waiver by Jury Trial. Each party waives any right to a trial
by jury in any action, suit or other proceeding to enforce or defend any right
under any Transaction Document or any amendment, instrument, document or
agreement delivered, or which in the future may be delivered, in connection with
any Transaction Document and agrees that any such action, suit or other
proceeding shall be tried before a court and not before a jury.
[Remainder of this page intentionally left blank]
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<PAGE> 29
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer as of the date first written
above.
MERIDIAN INDUSTRIAL
TRUST, INC.
By: /s/ Allen J. Anderson
___________________________________
Name: Allen J. Anderson
Title: Chief Executive Officer
STRATEGIC PERFORMANCE
FUND-II, INC.
By: /s/ Joel W. Stoesser
___________________________________
Name: Joel W. Stoesser
Title: President
VII-28
<PAGE> 1
EXHIBIT VIII
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and
entered into as of September 24, 1997, by and between Meridian Industrial Trust,
Inc., a Maryland corporation (the "COMPANY"), and The Prudential Insurance
Company of America ("PRUDENTIAL"), and EACH OF THE OTHER STOCKHOLDERS OF THE
COMPANY SIGNATORY HERETO (collectively, the "INVESTORS").
RECITALS:
6.14 Pursuant to the terms of certain agreements among the Company and
each of the Investors (the "PURCHASE AGREEMENTS"), it is a condition to the
obligations of the Investors thereunder that the Company grant certain
registration rights to the Investors with respect to the shares of common stock,
par value $.001 per share ("COMMON STOCK"), of the Company to be received by the
Investors.
6.15 Pursuant to the terms of the Purchase Agreements it is a condition to
the obligations of the Company thereunder that the Investors each agree to
certain restrictions set forth herein with respect to the disposition of the
Common Stock to be received by the Investors pursuant to the Purchase
Agreements.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENTS:
1. Definitions.
As used in this Agreement, the following capitalized terms shall
have the following meanings:
Affiliate: A Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with a
specified Person. Ameritech: Ameritech Pension Trust.
Ameritech Purchase Agreement: The Agreement of Purchase and Sale and
Joint Escrow Instructions dated May 29, 1997 by and between State Street Bank
and Trust Company, as Trustee for Ameritech, and the Company.
Ameritech Shares: The shares of Common Stock received by State
Street Bank and Trust Company, as Trustee for Ameritech, pursuant to the
Ameritech Purchase Agreement.
Common Stock: The common stock, par value $.001 per share, of the
Company.
VIII-1
<PAGE> 3
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
Investors: See the first paragraph of this Agreement.
Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Priority Securities: Shares of Common Stock subject to the terms of
the 1996 Investor Rights Agreement.
Prospectus: The prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
Purchase Agreements: See the recitals to this Agreement.
Registrable Securities: (a) (i) The shares of Common Stock received
by an Investor pursuant to the terms of the applicable Purchase Agreement, (ii)
for purposes of the Shelf Registration provided under Section 2(a) only, the
Ameritech Shares, and (iii) notwithstanding the provisions of the 1996 Investor
Rights Agreement, any other shares of Common Stock acquired by an Investor (or,
for purposes of the Shelf Registration provided under Section 2(a) only,
Ameritech) subsequent to the date hereof (except for any shares of Common Stock
issued upon the conversion of Series B Preferred Stock of the Company) and (b)
any securities issued or issuable with respect to the shares of Common Stock
referred to in the foregoing clause (a) by way of stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. Any Registrable Security
will cease to be a Registrable Security when (i) a registration statement
covering such Registrable Security has been declared effective by the SEC and
the Registrable Security has been disposed of pursuant to such effective
registration statement, (ii) the Registrable Security is sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met, or (iii) the
Registrable Security has been otherwise transferred, the Company has delivered a
new certificate or other evidence of ownership for it not bearing a legend
restricting further transfer, and it may be resold without subsequent
registration under the Securities Act.
Registration Expenses: See Section 5 hereof.
Registration Statement: The Registration Statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included therein, all amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission.
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<PAGE> 4
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
1996 Investor Rights Agreement: That certain Amended and Restated
Investor Rights Agreement dated February 23, 1996, among the Company and the
stockholders of the Company named therein.
2. Registration Rights.
(a) Shelf Registration. At any time prior to ninety (90) days after
the date hereof, the Company shall file with the SEC, and shall use its best
efforts to cause to become effective by the ninety first (91st) day after the
date hereof, a dedicated "shelf" registration statement on any appropriate form
pursuant to Rule 415 (or similar rule that may be adopted by the SEC) under the
Securities Act (a "SHELF REGISTRATION") for all of the then Registrable
Securities of each Investor.
The Company shall use its best efforts to keep the Shelf
Registration continuously effective, and to prevent the happening of any event
of the kind described in Sections 4(c)(3), (4) or (5) hereof that requires the
Company to give notice pursuant to the last paragraph of Section 4 hereof, for a
period terminating the earlier of (i) the fifth anniversary of the date on which
the SEC declares the Shelf Registration effective and (ii) on the date on which
all the Registrable Securities covered by the Shelf Registration have been sold
pursuant to such Shelf Registration. The Company shall only be obligated to file
one Shelf Registration pursuant to the terms hereof.
The Company further agrees to supplement or make amendments to the
Shelf Registration, if required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by the Securities
Act or requested by the holders of a majority of the Registrable Securities
covered by such registration or any underwriter of the Registrable Securities.
One or more offerings of Registrable Securities pursuant to the
Shelf Registration may be in the form of Underwritten Offerings at the election
of the holders of Registrable Securities being offered, provided that the
Registerable Securities to be included in any such Underwritten Offering shall
have a fair market value (as defined in Section 2(b)) of at least $20 million.
If the Company receives notice from an Investor or Ameritech of such an
Underwritten Offering, it shall notify the other Investors and/or Ameritech
thereof, and such other Investors and/or Ameritech shall have the right to
participate in such Underwritten Offering by promptly notifying the Company of
their election to do so. If the managing underwriter or underwriters of such
offering advise the Company and the holders of Registrable Securities in writing
that in their opinion the number of shares of Registrable Securities requested
to be included in any such offering is sufficiently large to materially and
adversely affect the success of such offering, the Company will include in any
offering the aggregate number of Registrable Securities which in the opinion of
such managing underwriter or underwriters can be sold without any such material
adverse effect and the amount to be offered for the accounts of all of such
holders shall be reduced pro rata (according to the Registrable Securities
beneficially owned by such holders) to the extent necessary to reduce the total
amount of securities to be included in such offering to the
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<PAGE> 5
amount recommended by such managing underwriter or underwriters. The Company
shall use its best efforts to amend the 1996 Investor Rights Agreement to
provide that no other party, including the Company, shall be permitted to offer
securities in any such offering. No election that an offering under this Section
2(a) shall be an Underwritten Offering shall be made within 120 days after the
closing date of an Underwritten Offering; provided that with respect to
Ameritech, no election that an offering under this Section 2(a) shall be an
Underwritten Offering shall be made within 30 days after the closing date of an
Underwritten Offering occurring prior to the earlier of (i) the date that is 210
days following the closing date of the Group B or Group C properties under the
Ameritech Purchase Agreement, or (ii) June 1, 1998.
Until the termination of the Shelf Registration, each Investor shall
be permitted to offer and sell a maximum of 30% of its Registrable Securities
held on the date hereof pursuant to the Shelf Registration during any 180 day
period; provided that such limitation shall not apply to any Registrable
Securities offered or sold by such Investor pursuant to one or more Underwritten
Offerings, block trades made by such Investor from time to time involving 25,000
shares or more, or any offer or sale not involving the Shelf Registration.
(b) Demand Registration.
At any time after ninety (90) days from the date hereof, each
Investor may make one written request (each a "DEMAND NOTICE") for registration
under the Securities Act (a "DEMAND REGISTRATION") of all or a portion of the
Registrable Securities held by such Investor, subject to the right to reinstate
a Demand Registration set forth herein; provided, however, that the number of
shares of Registrable Securities requested to be registered (i) shall be greater
than 1% of the shares of Common Stock outstanding and (ii) shall have a "fair
market value" (determined pursuant to the next sentence) in excess of
$1,000,000. For purposes of this Agreement, fair market value of the Registrable
Securities shall be determined as follows: (i) if the security is listed on any
established stock exchange or a national market system, including, without
limitation, the National Market System of the National Association of Securities
Dealers Automated Quotation System, its fair market value shall be the closing
sales price or the closing bid if no sales were reported, as quoted on such
system or exchange (or the largest such exchange) on the date of the Demand
Notice (or if there are no sales or bids for such date, then for the last
preceding business day for such sales or bids), as reported in The Wall Street
Journal or similar publication; (ii) if the security is regularly quoted by a
recognized securities dealer but selling prices are not reported, its fair
market value shall be the mean between the high bid and low asked prices for the
security on the date of the Demand Notice (or if there are no quoted prices for
such date, then for the last preceding business day on which there were quoted
prices); or (iii) in the absence of an established market for the security, the
fair market value shall be determined in good faith by the Company's Board of
Directors, with reference to the Company's net worth, prospective earning power,
dividend-paying capacity and other relevant factors, including the goodwill of
the Company, the economic outlook in the Company's industry, the Company's
position in the industry and its management and the values of stock of other
corporations in the same or a similar line of business (all of such factors
determined as of the date of the Demand Notice).
Within ten days after receipt of each Demand Notice, the Company
shall give written notice of such registration request to all non-requesting
holders of Registrable Securities and shall, subject to the provisions of the
following paragraph, include in such registration all Registrable Securities
with respect to which the Company received written requests for inclusion
therein within 15 days after the receipt of the notice
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<PAGE> 6
of such Demand Registration request by the applicable holder. Both the Demand
Notice and any request to have Registrable Securities included in a Demand
Registration shall specify the number of shares of Registrable Securities
proposed to be sold and shall also specify the intended method of disposition
thereof. A registration requested pursuant to this Section 2(b) will not be
deemed to have been effected unless the Registration Statement relating thereto
has become effective under the Securities Act; provided, however, that if, after
such Registration Statement has become effective, the offering of the
Registrable Securities pursuant to such registration is interfered with by any
stop order, injunction or other order or requirement of the SEC or other
governmental agency or court, such registration will be deemed not to have been
effected and the demanding Investor's right to request a Demand Registration
hereunder shall be reinstated. An Investor requesting a registration pursuant to
this Section 2(b) may, at any time prior to the effective date of the
Registration Statement relating to such registration, revoke such request with
respect to their Registrable Securities by providing a written notice to the
Company revoking such request and the Investor's right to request a Demand
Registration hereunder shall be reinstated.
If the Investor making such demand so elects, the offering of
Registrable Securities pursuant to a Demand Registration shall be in the form of
an Underwritten Offering and such Investor shall have the right to designate the
underwriters and the managing underwriter, subject to approval of the Company,
which approval shall not be unreasonably withheld or delayed. If the managing
underwriter or underwriters of such offering advise the Company and the holders
of Registrable Securities in writing that in their opinion the number of shares
of Registrable Securities requested to be included in such offering is
sufficiently large to materially and adversely affect the success of such
offering, the Company will include in such registration the aggregate number of
Registrable Securities which in the opinion of such managing underwriter or
underwriters can be sold without any such material adverse effect and the
Registrable Securities to be included in such registration shall be allocated,
(i) first to the Investor making such demand, (ii) second among the holders of
the Priority Securities (that have requested inclusion of the Priority
Securities beneficially owned by such holders) to the extent necessary to reduce
the total amount of securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters, (iii) third among the
other holders of Registrable Securities (that have requested inclusion of their
Registrable Securities in such registration), and any other holders of
registration rights in respect of securities of the Company in accordance with
the terms of the agreements granting such rights, pro rata (according to the
Registrable Securities or other securities, as applicable, beneficially owned by
such holders) to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount recommended by such managing
underwriter or underwriters, and (iv) fourth, among the Company and any other
holders of registration rights in respect of securities of the Company that by
their terms are subordinate to the rights of the security holders referred to in
clause (iii) above in accordance with the terms of the agreements granting such
rights. No Investor shall be entitled to effect a Demand Notice under this
Section 2(b) within 120 days after the closing date of an Underwritten Offering.
No registration pursuant to a request or requests referred to in
this subsection 2(b) shall be deemed to be a Shelf Registration.
VIII-5
<PAGE> 7
(c) Incidental Registration. If the Company proposes to file a
registration statement under the Securities Act (other than in connection with
the Shelf Registration, a Demand Registration, a Registration Statement on Form
S-4 or S-8 or any form substituting therefor, or a shelf registration statement
on Form S-3 or any form substituting therefor relating to (i) issuances of
securities other than Common Stock (or securities convertible into Common Stock)
by the Company for cash, or (ii) so long as the Shelf Registration remains
effective, resales of equity securities of the Company by one or more security
holders of the Company pursuant to Rule 415 under the Securities Act) with
respect to an offering of any class of security by the Company for its own
account or for the account of any of its security holders, then the Company
shall give written notice of such proposed filing to the holders of the
Registrable Securities as soon as practicable (but in no event less than thirty
(30) days before the anticipated filing date), and such notice shall offer such
holders the opportunity to register such number of Registrable Securities as
each such holder may request. Each holder of Registrable Securities desiring to
have its Registrable Securities registered under this Section 2(c) shall so
advise the Company in writing within fifteen (15) days after the date of receipt
of such notice from the Company (which request shall set forth the number of
Registrable Securities for which registration is requested). The Company shall
include in such Registration Statement all such Registrable Securities so
requested to be included therein, and, if such registration is an Underwritten
Registration, the Company shall use its best efforts to cause the managing
underwriter or underwriters to permit the Registrable Securities requested to be
included in the Registration Statement for such offering to be included (on the
same terms and conditions as similar securities of the Company included therein
to the extent appropriate); provided, however, that if the managing underwriter
or underwriters of such offering deliver a written opinion to the holders of
such Registrable Securities that the total number of securities that the
Company, the holders of Registrable Securities, or such other persons propose to
include in such offering is such that the success of the offering would be
materially and adversely affected by inclusion of the securities requested to be
included, then the amount of securities to be offered for the accounts of the
Company, the holders of Registrable Securities and other holders registering
securities pursuant to registration rights shall be allocated as follows:
(i) if such registration has been initiated by the Company as a
primary offering, first to the securities sought to be
included by the Company, second to the Priority Securities
sought to be included by the holders thereof, and third to the
Registrable Securities sought to be included by the holders
thereof and the securities sought to be included by other
holders of registration rights, pro rata, on the basis of the
number of securities owned by each such holder, and fourth the
securities sought to be included by other holders of
registration rights that by their terms are subordinate to the
registration rights of the security holders referred to in the
immediately preceding clause, pro rata, on the basis of the
number of securities owned by each such holder; and
(ii) if such registration has been initiated by another holder of
registration rights (other than pursuant to Section 2(b)
hereof), first to the securities sought to be included by such
demanding holder, second to the Priority Securities sought to
be included by the holders thereof, third to the Registrable
Securities sought to be included by the holders thereof and to
all other securities sought to be included by other holders of
registration rights, pro rata, on the basis of the number of
securities owned by each such holder, and fourth to the
securities sought to be included by the Company among the
Company and any other holders of registration rights in
respect of securities of the Company that by their
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<PAGE> 8
terms are subordinate to the rights of the security holders
referred to in priority third above in accordance with the
terms of the agreements granting such rights.
If the number of Registrable Securities sought to be registered
pursuant to this Section 2(c) by a holder of Registrable Securities is reduced
as provided above, such holder shall have the right to withdraw such holder's
request for registration with respect to all of the Registrable Securities
initially sought to be registered.
No registration pursuant to a request or requests referred to in
this Section 2(c) shall be deemed to be a Shelf Registration or a Demand
Registration.
3. Hold-Back Agreements.
(a) Restrictions on Public Sale by Holder of Registrable Securities.
Each holder of Registrable Securities agrees, if requested in writing by the
managing underwriters in an Underwritten Offering, not to effect any public sale
or distribution of Registrable Securities of the Company of the same class as
the securities included in the applicable registration statement, including a
sale pursuant to Rule 144 under the Securities Act (except as part of such
Underwritten Offering or if, prior to receiving such request, such holder has
given a Demand Notice or a notice of commencement of a public sale or
distribution pursuant to the Shelf Registration), during the ten (10) day period
prior to the filing of the registration statement with respect to such
Underwritten Offering, and during the ninety (90) day period beginning on the
effective date of the registration statement with respect to such Underwritten
Offering, to the extent timely notified in writing by the Company or the
managing underwriters, or, in the case of a shelf offering, the date of
commencement of a public distribution of Registrable Securities pursuant to such
registration statement, as applicable.
(b) Restrictions on Sale of Securities by the Company. The Company
agrees not to effect any public sale or distribution of any securities similar
to those being registered, or any securities convertible into or exchangeable or
exercisable for such securities (except pursuant to a registration statement on
Form S-4 or S-8, or any substitute form that may be adopted by the SEC) during
the ten (10) days prior to the filing of a registration statement with respect
to an Underwritten Offering, and during the ninety (90) day period beginning on
the effective date of the applicable Registration Statement (except as part of
such registration statement (x) where the holders of a majority of the shares of
Registrable Securities to be included in such Registration Statement consent or
(y) where holders of Registrable Securities are participating in such
registration statement pursuant to Section 2(c) hereof, such registration
statement was filed by the Company with respect to the sale of securities by the
Company, and no holder is simultaneously participating in a distribution
pursuant to a Registration Statement filed by the Company pursuant to Section
2(b) hereof) or, in the case of a shelf offering, the date of commencement of a
public distribution of Registrable Securities pursuant to such registration
statement, as applicable.
4. Registration Procedures. In connection with the Company's
registration obligations pursuant to Section 2 hereof, the Company will use its
best efforts to effect such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of distribution
thereof, and pursuant thereto the Company will as expeditiously as possible:
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<PAGE> 9
(a) prepare and file with the SEC, as soon as practicable, a
Registration Statement relating to the applicable registration on any
appropriate form under the Securities Act, which forms shall be available for
the sale of the Registrable Securities in accordance with the intended method or
methods of distribution thereof and shall include all financial statements of
the Company, and use its best efforts to cause such Registration Statement to
become effective; provided that before filing a Registration Statement or
Prospectus or any amendments or supplements thereto, including documents
incorporated by reference after the initial filing of the Registration
Statement, the Company will furnish to (i) one counsel selected by the holders
of a majority of the shares of Registrable Securities covered by such
Registration Statement, and (ii) the underwriters, if any, copies of all such
documents proposed to be filed, which documents will be subject to the review of
such counsel and underwriters, and the Company will not file any Registration
Statement or amendment thereto or any Prospectus or any supplement thereto
(including such documents incorporated by reference) to which such counsel or
the underwriters, if any, shall reasonably object; and provided further that the
Company shall have the right to delay filing or effectiveness of a Registration
Statement filed pursuant to Section 2(b) hereto or the commencement of a public
distribution of Registrable Securities, as applicable, for up to 120 days if the
Company's Board of Directors determines, in good faith, that the filing or
effectiveness thereof or the commencement of such public distribution could
materially interfere with a pending extraordinary transaction involving the
Company or bona fide financing plans of the Company or would require disclosure
of information, the premature disclosure of which would not be in the best
interests of the Company, but no further delays will be permitted;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for the period set forth in Section 2(a) with
respect to the Shelf Registration or nine months with respect to a Demand
Registration, or such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act and all securities covered by
such Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the holders thereof set forth in
such Registration Statement or supplement to the Prospectus; the Company shall
not be deemed to have used its best efforts to keep a Registration Statement
effective during the applicable period if it voluntarily takes or knowingly
omits to take any action that would result in selling holders of the Registrable
Securities covered thereby not being able to sell such Registrable Securities
during that period unless such action is required under applicable law; provided
that the foregoing shall not apply to actions or omissions taken by the Company
in good faith and for valid business reasons, including without limitation the
acquisition or divestiture of assets, so long as the Company promptly thereafter
complies with the requirements of Section 4(l) hereof, if applicable;
(c) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing, (1) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective, (2) of any request by the SEC for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (3) of
the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
(4) if at any time the representations and warranties of the
VIII-8
<PAGE> 10
Company contemplated by paragraph (n) below cease to be true and correct, (5) of
the receipt by the Company of any notification with respect to the suspension of
the qualification of the Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose and (6) of the
happening of any event which makes any statement made in the Registration
Statement, the Prospectus or any document incorporated therein by reference
untrue or which requires the making of any changes in the Registration
Statement, the Prospectus or any document incorporated therein by reference in
order to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) if reasonably requested by the managing underwriter or
underwriters or a holder of Registrable Securities being sold in connection with
an Underwritten Offering, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters and the
holders of a majority in number of the Registrable Securities being sold agree
should be included therein relating to the sale of the Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being sold to such underwriters, the purchase price being
paid therefor by such underwriters and with respect to any other terms of the
Underwritten Offering of the Registrable Securities to be sold in such offering;
and make all required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(f) promptly prior to the filing of any document which is to be
incorporated by reference into the Registration Statement or the Prospectus
(after initial filing of the Registration Statement), make available
representatives of the Company for discussion of such document and make such
changes in such document prior to the filing thereof as counsel for selling
holders of Registrable Securities or underwriters may reasonably request;
(g) furnish to each selling holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(h) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request; the Company consents to the use of the
Prospectus or any amendment or supplement thereto by each of the selling holders
of Registrable Securities and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(i) prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any such selling
holder or underwriter reasonably requests in writing and do
VIII-9
<PAGE> 11
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
Registration Statement;
(j) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(k) cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Securities;
(l) upon the occurrence of any event contemplated by Section 4(c)
(6) above, prepare a supplement or post-effective amendment to the Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, the Prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(m) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(n) enter into and perform its obligations under such agreements
(including an underwriting agreement) and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of such
Registrable Securities and in connection therewith, whether or not an
underwriting agreement is entered into and whether or not the registration is an
Underwritten Registration, (1) make such representations and warranties to the
holders of such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters in
primary underwritten offerings; (2) obtain opinions of counsel to the Company
and updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and the
holders of a majority of the Registrable Securities included in such
registration, covering the matters customarily covered in opinions requested in
Underwritten Offerings and such other matters as may be reasonably requested by
such holders and underwriters); (3) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public accountants addressed to
the selling holders of Registrable Securities and the underwriters, if any, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters by underwriters in connection with primary
Underwritten Offerings; (4) if an underwriting agreement is entered into, the
same shall set forth in full the indemnification provisions and procedures of
Section 6 hereof with respect to all parties to be indemnified pursuant to said
Section; and (5) the Company shall deliver such documents and certificates as
may be requested by the holders of a majority of the Registrable Securities
being sold and the managing underwriters, if any, to evidence compliance with
clause (1) above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company. The above shall be
done at each closing under such underwriting or similar agreement or as and to
the extent required thereunder;
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(o) make available for inspection by representatives of the holders
of the Registrable Securities, any underwriter participating in any disposition
pursuant to such registration, and any attorney or accountant retained by the
sellers or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's officers,
directors, employees, counsel and accountants to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such registration; provided that any records,
information or documents that are designated by the Company in writing as
confidential shall be kept confidential by such Persons unless disclosure of
such records, information or documents is required by court or administrative
order;
(p) comply with all applicable rules and regulations of the SEC and
make available to its security holders, as soon as reasonably practicable,
earning statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act), covering any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Securities are sold to underwriters in a
firm commitment or reasonable efforts underwritten offering and (ii) if not sold
to underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement;
(q) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD"); and
(r) exempt any underwriter from the prohibition on owning more than
a specified percentage of the Company's Common Stock set forth in the Company's
articles of incorporation.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing and to enter into agreements
related to the distribution of the Registrable Securities that are designed to
insure compliance with the Exchange Act.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(c)(6) hereof, such
holder will forthwith discontinue disposition of Registrable Securities until
such holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4(c)(6) hereof, or until it is advised in writing (the
"ADVICE") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings which are incorporated
by reference in the Prospectus, and, if so directed by the Company such holder
will deliver to the Company (at the Company's expense), all copies, other than
permanent file copies then in such holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the time periods
regarding the effectiveness of Registration Statements set forth in Section 2
hereof and Section 4(b) hereof shall be extended by the number of days during
the period from and including the date of the giving of such notice pursuant to
Section 4(c)(6) hereof to the date when the selling holders of Registrable
Securities covered by such registration statement shall receive copies of the
supplemented or amended prospectus contemplated by Section 4(l) hereof or the
Advice.
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<PAGE> 13
5. Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation:
all registration and filing fees; all fees associated with a required listing of
the Registrable Securities on any securities exchange; fees and expenses with
respect to filings required to be made with the NASD; fees and expenses of
compliance with securities or blue sky laws (including fees and disbursements of
counsel for the underwriters or holders of Registrable Securities in connection
with blue sky qualifications of the Registrable Securities and determination of
their eligibility for investment under the laws of such jurisdictions as the
managing underwriters or holders of a majority of the Registrable Securities
being sold may designate); printing expenses, messenger, telephone and delivery
expenses; fees and disbursements of counsel for the Company and customary fees
and expenses for independent certified public accountants retained by the
Company (including the expenses of any comfort letters or costs associated with
the delivery by independent certified public accountants of a comfort letter or
comfort letters requested pursuant to Section 4(n) hereof); securities acts
liability insurance, if the Company so desires; all internal expenses of the
Company (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties); the expense of
any annual audit; and the fees and expenses of any Person, including special
experts, retained by the Company (all such expenses being herein called
"REGISTRATION EXPENSES") will be borne by the Company regardless of whether the
Registration Statement becomes effective. The Company shall not have any
obligation to pay any underwriting fees, discounts, or commissions attributable
to the sale of Registrable Securities, or any legal fees and expenses of counsel
to the holders of Registrable Securities.
6. Indemnification; Contribution.
(a) Indemnification by Company. The Company agrees to indemnify and
hold harmless each holder of Registrable Securities and each Person who controls
such Person (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and their respective partners, officers, directors,
employees, agents, and Affiliates, against all losses, claims, damages,
liabilities and expenses (including without limitation the reasonable fees and
disbursements of counsel for such Person in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any other
Person (including without limitation, the Company or its Affiliates)) arising
out of or based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus, preliminary prospectus or
any post-effective amendments or supplements thereto or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by the holders of Registrable Securities expressly for use therein. The
Company will also indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) to the same extent as provided above with respect to the indemnification of
the holders of Registrable Securities, if requested.
(b) Indemnification by Holder of Registrable Securities. Each holder
of Registrable Securities agrees severally and not jointly to indemnify and hold
harmless the Company, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act), each
other holder and their respective partners, directors, officers, employees,
agents, and Affiliates against any losses, claims, damages, liabilities and
expenses (including without limitation the reasonable fees and
VIII-12
<PAGE> 14
disbursements of counsel for such Person in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any other
Person) resulting from any untrue statement of a material fact or any omission
of a material fact required to be stated in the Registration Statement,
Prospectus, preliminary prospectus or any post-effective amendment or supplement
thereto or necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such holder
to the Company specifically for inclusion therein. In no event shall the
liability of any selling holder of Registrable Securities hereunder be greater
in amount than the dollar amount of the proceeds received by such holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above with respect to information so furnished in writing by such Persons
specifically for inclusion in any Registration Statement, Prospectus,
preliminary prospectus or any post-effective amendment or supplement thereto.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, (b) the indemnifying
party shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such Person or (c) based upon advice of counsel of
such Person, a conflict of interest may exist between such Person and the
indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person), in each of which events the fees and expenses of such counsel
shall be at the expense of the indemnifying party. The indemnifying party will
not be subject to any liability for any settlement made without its consent (but
such consent will not be unreasonably withheld), but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party shall indemnify and hold harmless the
indemnified parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. No indemnified party will be
required to consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for
in the preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by the preceding clauses (a)
and (b), then each indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and each such indemnifying party, but
also the relative fault of the indemnified party and each such indemnifying
party, as well as any other relevant equitable considerations, provided, that no
holder of Registrable Securities shall be required to contribute an amount
greater than the dollar amount of the proceeds received by such holder with
respect to the sale of the Registrable Securities giving rise to such
indemnification obligation. The relative fault of the
VIII-13
<PAGE> 15
Company on the one hand and of the selling holders on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentations.
7. Rule 144. The Company hereby agrees that, at any time and from
time to time, it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
SEC thereunder (or, if the Company is not required to file such reports, it
will, upon the request of any holder of Registrable Securities made ninety (90)
days after the date hereof, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 under the Securities Act), and it
will take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of any
holder of Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such information and
requirements.
8. Participation in Underwritten Registrations.
(a) If any of the Registrable Securities covered by the Shelf
Registration are to be sold in an Underwritten Offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the holders of a majority of the Registrable Securities
included in such offering; provided, that such investment bankers and managers
must be reasonably satisfactory to the Company.
(b) No Person may participate in any Underwritten Registration
hereunder unless such Person (i) agrees to sell such Person's securities on the
basis provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Nothing in this Section 8 shall be construed to create any additional rights
regarding the registration of Registrable Securities in any Person otherwise
than as set forth herein.
9. [Reserved.]
10. Miscellaneous.
(a) Remedies. Each party hereto, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement to the extent available under applicable law. Each party hereto agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate. In any proceeding brought to enforce any provision of
this
VIII-14
<PAGE> 16
Agreement, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to its costs and expenses and any other available
remedy.
(b) Additional Registration Rights. The Company will not on or after
the date of this Agreement enter into any agreement granting registration rights
to any other Person with respect to the securities of the Company that are not
pari passu or subordinate to the rights granted to the holders of Registrable
Securities hereunder with respect to any incidental registration rights of the
type described in Section 2(c) hereof without the written consent of the holders
of a majority of the then outstanding Registrable Securities. Any agreement
entered into pursuant to such consent shall not be amended without a further
written consent of the holders of a majority of the then outstanding Registrable
Securities.
(c) Preemptive Rights. At any time the Company grants any preemptive
rights with respect to its securities to any of its shareholders it shall grant
to each Investor preemptive rights that are no less favorable than those granted
to such shareholder.
(d) Amendments and Waivers. No amendment, modification or supplement
to this Agreement or any provision hereof, and no waiver or consent to departure
from the provisions hereof, shall affect or be binding upon any party who has
not consented in writing to such amendment, modification, supplement, waiver or
consent to departure.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air courier guaranteeing overnight delivery:
(i) if to The Prudential Insurance Company of America, at the
most current address given by The Prudential Insurance Company of America
to the Company, in accordance with the provisions of this subsection,
which address initially is c/o The Prudential Realty Group, 8 Campus
Drive, 4th Floor, Parsippany, New Jersey 07054, Fax No.: (201) 734-1472,
Attention: Jeffrey L. Danker;
(ii) if to Prudential, on behalf of a single client insurance
company separate account contained in Group Annuity Contract No. GA-9032,
at the most current address given by such Investor to the Company, in
accordance with the provisions of this subsection, which address initially
is c/o The Prudential Realty Group, 8 Campus Drive, 4th Floor, Parsippany,
New Jersey 07054, Fax No.: (201) 683-1794, Attention: Roger S. Pratt;
(iii) if to The Prudential Variable Contract Real Property
Partnership, at the most current address given by such Investor to the
Company, in accordance with the provisions of this subsection, which
address initially is c/o The Prudential Realty Group, 8 Campus Drive, 4th
Floor, Parsippany, New Jersey 07054, Fax No.: (201) 683-1788, Attention:
Joel W. Stoesser;
(iv) if to Strategic Performance Fund-II, Inc., at the most
current address given by such Investor to the Company, in accordance with
the provisions of this subsection, which address
VIII-15
<PAGE> 17
initially is c/o The Prudential Realty Group, 8 Campus Drive, 4th Floor,
Parsippany, New Jersey 07054, Fax No.: (201) 683-1794, Attention: Roger S.
Pratt;
(v) if to the Company, initially at 455 Market Street, 17th
Floor, San Francisco, California 94105, Fax No.: (415) 284-2840,
Attention: Chief Executive Officer, and thereafter at such other address
as may be designated from time to time by notice given in accordance with
the provisions of this Section 11(d), with a copy to Vinson & Elkins
L.L.P., 2001 Ross Avenue, Suite 3700, Dallas, Texas 75201, Attention:
Michael D. Wortley, Esq.; and
(vi) if to any transferee, at the address given by such
transferee to the Company.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent holders of Registrable Securities; provided that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms hereof;
provided, further, that holders of Registrable Securities may not assign their
rights under this Agreement except in connection with the permitted transfer of
Registrable Securities and then only insofar as relates to such Registrable
Securities; and provided further that with respect to any transfers of
Registered Securities subsequent to the filing or effectiveness of the Shelf
Registration the Company shall exert its best efforts to amend the Shelf
Registration to provide that any such transferee shall have the rights of an
Investor with respect thereto. The rights to request a Demand Registration under
Section 2(b) hereof reserved to an Investor under this Agreement shall not be
transferable by any Investor, except to a purchaser of all of the Registrable
Securities of such Investor. If any transferee shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MARYLAND.
(j) 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 provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
VIII-16
<PAGE> 18
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
VIII-17
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights
Agreement as of the date first written above.
MERIDIAN INDUSTRIAL TRUST, INC.
By: /s/ Robert A. Dobbin
_____________________________________
Name: Robert A. Dubbin
Title: Secretary
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Robert W. Gadsden
_____________________________________
Name: Robert W. Gadsden
Title: Vice President
VIII-18
<PAGE> 20
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of a single client insurance
company separate account contained in Group
Annuity Contract No. GA-9032
By: /s/ Gary H. Picone
______________________________________
Name: Gary H. Picone
Title: Vice President
STRATEGIC PERFORMANCE FUND - II, INC.
By: /s/ Joel W. Stoesser
______________________________________
Name: Joel W. Stoesser
Title: President
THE PRUDENTIAL VARIABLE CONTRACT REAL
PROPERTY PARTNERSHIP
By: THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, a general
partner
By: /s/ Jerry McHugh
__________________________________
Name: Jerry McHugh
Title: Vice President
VIII-19
<PAGE> 1
EXHIBIT IX
<PAGE> 2
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the
"AGREEMENT") is made and entered into as of September 24, 1997, by and between
Meridian Industrial Trust, Inc., a Maryland corporation (the "COMPANY"), and The
Prudential Insurance Company of America, a New Jersey corporation ("PRUDENTIAL")
acting for the benefit of the Chevron Separate Account, including its successors
and assigns (Prudential, in such capacity, the "CHEVRON SEPARATE ACCOUNT"), and
Prudential acting for the benefit of the Strategic Performance Fund I Separate
Account, including its successors and assigns (Prudential, in such capacity, the
"SPFI SEPARATE ACCOUNT"), (the Chevron Separate Account and the SPFI Separate
Account are each individually referred to herein as an "INVESTOR" and
collectively, as the "INVESTORS").
RECITALS:
A. Pursuant to the terms of (i) that certain Contribution Agreement dated
as of August 27, 1997 by and between the Company and the Chevron Separate
Account, and (ii) that certain Contribution Agreement dated as of September __,
1997 by and between the Company and the SPFI Separate Account (each individually
referred to as a "CONTRIBUTION AGREEMENT" and collectively, as the "CONTRIBUTION
AGREEMENTS") it is a condition to the obligations of the Investors under their
respective Contribution Agreements that the Company grant certain registration
rights to the Investors with respect to the shares of common stock, par value
$.001 per share ("COMMON STOCK"), of the Company to be received by the
Investors.
B. Pursuant to the terms of the Contribution Agreements it is a condition
to the obligations of the Company thereunder that the Investors each agree to
certain restrictions set forth herein with respect to the disposition of the
Common Stock to be received by the Investors pursuant to the Contribution
Agreements.
C. The Company and the Chevron Separate Account have previously entered
into that certain Registration Rights Agreement dated as of August 29, 1997 (the
"EXISTING REGISTRATION RIGHTS AGREEMENT") with respect to the Common Stock owned
by the Chevron Separate Account.
D. The Company, the Chevron Separate Account and the SPFI Separate Account
wish to amend and restate the Existing Registration Rights Agreement as set
forth herein so as to provide for a single registration rights agreement with
respect to the disposition of the Common Stock to be received by the Investors
pursuant to the Contribution Agreements.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree that the Existing
Registration Rights Agreement is hereby amended and restated in its entirety as
follows:
AGREEMENTS:
1. Definitions.
IX-1
<PAGE> 3
As used in this Agreement, the following capitalized terms shall
have the following meanings:
Affiliate: A Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with a
specified Person.
Chevron Separate Account: See the first paragraph of this Agreement.
Common Stock: The common stock, par value $.001 per share, of the
Company.
Contribution Agreements: See the recitals to this Agreement.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
Investors: See the first paragraph of this Agreement
Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Priority Securities: Shares of Common Stock subject to the terms of
the 1996 Investor Rights Agreement.
Prospectus: The prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
Prudential: See the first paragraph of this Agreement.
Registrable Securities: (a) The shares of Common Stock received by
an Investor pursuant to the terms of a Contribution Agreement and any other
shares of Common Stock acquired by an Investor subsequent to the date hereof
(except for any shares of Common Stock acquired by Prudential on behalf of its
general account or on behalf of any Separate Account client of Prudential other
than the Investors) and (b) any securities issued or issuable with respect to
the shares of Common Stock referred to in the foregoing clause (a) by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise.
Any Registrable Security will cease to be a Registrable Security when (i) a
registration statement covering such Registrable Security has been declared
effective by the SEC and the Registrable Security has been disposed of pursuant
to such effective registration statement, (ii) the Registrable Security is sold
under circumstances in which all of the applicable conditions of Rule 144 (or
any similar provisions then in force) under the Securities Act are met, or (iii)
the Registrable Security has been otherwise transferred, the Company has
delivered a new certificate or other evidence of ownership for it not bearing a
legend restricting further transfer, and it may be resold without subsequent
registration under the Securities Act.
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<PAGE> 4
Registration Expenses: See Section 5 hereof.
Registration Statement: The Registration Statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included therein, all amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
SPFI Separate Account: See the first paragraph of this Agreement.
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
1996 Investor Rights Agreement: That certain Amended and Restated
Investor Rights Agreement dated February 23, 1996, among the Company and the
stockholders of the Company named therein.
2. Registration Rights.
(a) Shelf Registration. At any time prior to ninety (90) days after
the date hereof, the Company shall file with the SEC, and shall use its best
efforts to cause to become effective by the ninety first (91st) day after the
date hereof, a dedicated "shelf" registration statement on any appropriate form
pursuant to Rule 415 (or similar rule that may be adopted by the SEC) under the
Securities Act (a "SHELF REGISTRATION") for all of the then Registrable
Securities of each Investor.
The Company shall use its best efforts to keep the Shelf
Registration continuously effective, and to prevent the happening of any event
of the kind described in Sections 4(c)(3), (4) or (5) hereof that requires the
Company to give notice pursuant to the last paragraph of Section 4 hereof, for a
period terminating the earlier of (i) the fifth anniversary of the date on which
the SEC declares the Shelf Registration effective and (ii) on the date on which
all the Registrable Securities covered by the Shelf Registration have been sold
pursuant to such Shelf Registration. The Company shall only be obligated to file
one Shelf Registration pursuant to the terms hereof.
The Company further agrees to supplement or make amendments to the
Shelf Registration, if required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by the Securities
Act or requested by the holders of a majority of the Registrable Securities
covered by such registration or any underwriter of the Registrable Securities.
One or more offerings of Registrable Securities pursuant to the
Shelf Registration may be in the form of Underwritten Offerings at the election
of the holders of Registrable Securities being offered, provided that the
Registerable Securities to be included in any such Underwritten Offering shall
have a fair market value
IX-3
<PAGE> 5
(as defined in Section 2(b)) of at least $9 million. If the Company receives
notice from a holder of Registrable Securities of such an Underwritten Offering,
it shall notify any other holders of Registrable Securities thereof, and such
other holders shall have the right to participate in such Underwritten Offering
by promptly notifying the Company of their election to do so. If the managing
underwriter or underwriters of such offering advise the Company and the holders
of Registrable Securities in writing that in their opinion the number of shares
of Registrable Securities requested to be included in any such offering is
sufficiently large to materially and adversely affect the success of such
offering, the Company will include in any offering the aggregate number of
Registrable Securities which in the opinion of such managing underwriter or
underwriters can be sold without any such material adverse effect and the amount
to be offered for the accounts of all of such holders shall be reduced pro rata
(according to the Registrable Securities beneficially owned by such holders) to
the extent necessary to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing underwriter or
underwriters. The Company shall use its best efforts to amend the Investor
Rights Agreement to provide that no other party, including the Company, shall be
permitted to offer securities in any such offering. No election that an offering
under this Section 2(a) shall be an Underwritten Offering shall be made within
120 days after the closing date of an Underwritten Offering.
Until the termination of the Shelf Registration, each Investor shall be
permitted to offer and sell a maximum of 30% of its Registrable Securities held
on the date hereof pursuant to the Shelf Registration during any 180 day period;
provided that such limitation shall not apply to any Registrable Securities
offered or sold by such Investor pursuant to one or more Underwritten Offerings,
block trades made by such Investor from time to time involving 25,000 shares or
more, or any offer or sale not involving the Shelf Registration.
(b) Demand Registration.
At any time after ninety (90) days from the date hereof, each
Investor may make one written request (a "DEMAND NOTICE") for registration under
the Securities Act (a "DEMAND REGISTRATION") of all or a portion of the
Registrable Securities held by such Investor, subject to the right to reinstate
a Demand Registration set forth herein; provided, however, that the number of
shares of Registrable Securities requested to be registered (i) shall be greater
than 1% of the shares of Common Stock outstanding and (ii) shall have a "fair
market value" (determined pursuant to the next sentence) in excess of
$1,000,000. For purposes of this Agreement, fair market value of the Registrable
Securities shall be determined as follows: (i) if the security is listed on any
established stock exchange or a national market system, including, without
limitation, the New York Stock Exchange (the "NYSE") and the National Market
System of the National Association of Securities Dealers Automated Quotation
System, its fair market value shall be the closing sales price or the closing
bid if no sales were reported, as quoted on such system or exchange (or the
largest such exchange) on the date of the Demand Notice (or if there are no
sales or bids for such date, then for the last preceding business day for such
sales or bids), as reported in The Wall Street Journal or similar publication;
(ii) if the security is regularly quoted by a recognized securities dealer but
selling prices are not reported, its fair market value shall be the mean between
the high bid and low asked prices for the security on the date of the Demand
Notice (or if there are no quoted prices for such date, then for the last
preceding business day on which there were quoted prices); or (iii) in the
absence of an established market for the security, the fair market value shall
be determined in good faith by the Company's Board of Directors, with reference
to the Company's net worth, prospective earning power, dividend-paying capacity
and other relevant factors, including the goodwill of the Company, the economic
outlook in the Company's industry, the Company's position in the industry and
its management
IX-4
<PAGE> 6
and the values of stock of other corporations in the same or a similar line of
business (all of such factors determined as of the date of the Demand Notice).
Within ten days after receipt of each Demand Notice, the Company
shall give written notice of such registration request to all non-requesting
holders of Registrable Securities and shall, subject to the provisions of the
following paragraph, include in such registration all Registrable Securities
with respect to which the Company received written requests for inclusion
therein within 15 days after the receipt of the notice of such Demand
Registration request by the applicable holder. Both the Demand Notice and any
request to have Registrable Securities included in a Demand Registration shall
specify the number of shares of Registrable Securities proposed to be sold and
shall also specify the intended method of disposition thereof. A registration
requested pursuant to this Section 2(b) will not be deemed to have been effected
unless the Registration Statement relating thereto has become effective under
the Securities Act; provided, however, that if, after such Registration
Statement has become effective, the offering of the Registrable Securities
pursuant to such registration is interfered with by any stop order, injunction
or other order or requirement of the SEC or other governmental agency or court,
such registration will be deemed not to have been effected and the demanding
Investor's right to request a Demand Registration hereunder shall be reinstated.
The Investor requesting a registration pursuant to this Section 2(b) may, at any
time prior to the effective date of the Registration Statement relating to such
registration, revoke such request with respect to its Registrable Securities by
providing a written notice to the Company revoking such request and such
Investor's right to request a Demand Registration hereunder shall be reinstated.
If the Investor making such demand so elects, the offering of
Registrable Securities pursuant to a Demand Registration shall be in the form of
an Underwritten Offering and such Investor shall have the right to designate the
underwriters and the managing underwriter, subject to approval of the Company,
which approval shall not be unreasonably withheld or delayed. If the managing
underwriter or underwriters of such offering advise the Company and the holders
of Registrable Securities in writing that in their opinion the number of shares
of Registrable Securities requested to be included in such offering is
sufficiently large to materially and adversely affect the success of such
offering, the Company will include in such registration the aggregate number of
Registrable Securities which in the opinion of such managing underwriter or
underwriters can be sold without any such material adverse effect and the
Registrable Securities to be included in such registration shall be allocated,
(i) first to the Investor making such demand, (ii) second among the holders of
the Priority Securities (that have requested inclusion of the Priority
Securities beneficially owned by such holders) to the extent necessary to reduce
the total amount of securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters, (iii) third among the
other holders of Registrable Securities (that have requested inclusion of their
Registrable Securities in such registration), and any other holders of
registration rights in respect of securities of the Company in accordance with
the terms of the agreements granting such rights, pro rata (according to the
Registrable Securities or other securities, as applicable, beneficially owned by
such holders) to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount recommended by such managing
underwriter or underwriters, and (iv) fourth, among the Company and any other
holders of registration rights in respect of securities of the Company that by
their terms are subordinate to the rights of the security holders referred to in
clause (iii) above in accordance with the terms of the agreements granting such
rights. No Investor shall be entitled to effect a Demand Notice under this
Section 2(b) within 120 days after the closing date of an Underwritten Offering.
IX-5
<PAGE> 7
No registration pursuant to a request or requests referred to in
this subsection 2(b) shall be deemed to be a Shelf Registration.
(c) Incidental Registration. If the Company proposes to file a
registration statement under the Securities Act (other than in connection with
the Shelf Registration, a Demand Registration, a Registration Statement on Form
S-4 or S-8 or any form substituting therefor, or a shelf registration statement
on Form S-3 or any form substituting therefor relating to (i) issuances of
securities other than Common Stock (or securities convertible into Common Stock)
by the Company for cash, or (ii) so long as the Shelf Registration remains
effective, resales of equity securities of the Company by one or more security
holders of the Company pursuant to Rule 415 under the Securities Act) with
respect to an offering of any class of security by the Company for its own
account or for the account of any of its security holders, then the Company
shall give written notice of such proposed filing to the holders of the
Registrable Securities as soon as practicable (but in no event less than thirty
(30) days before the anticipated filing date), and such notice shall offer such
holders the opportunity to register such number of Registrable Securities as
each such holder may request. Each holder of Registrable Securities desiring to
have its Registrable Securities registered under this Section 2(c) shall so
advise the Company in writing within fifteen (15) days after the date of receipt
of such notice from the Company (which request shall set forth the number of
Registrable Securities for which registration is requested). The Company shall
include in such Registration Statement all such Registrable Securities so
requested to be included therein, and, if such registration is an Underwritten
Registration, the Company shall use its best efforts to cause the managing
underwriter or underwriters to permit the Registrable Securities requested to be
included in the Registration Statement for such offering to be included (on the
same terms and conditions as similar securities of the Company included therein
to the extent appropriate); provided, however, that if the managing underwriter
or underwriters of such offering deliver a written opinion to the holders of
such Registrable Securities that the total number of securities that the
Company, the holders of Registrable Securities, or such other persons propose to
include in such offering is such that the success of the offering would be
materially and adversely affected by inclusion of the securities requested to be
included, then the amount of securities to be offered for the accounts of the
Company, the holders of Registrable Securities and other holders registering
securities pursuant to registration rights shall be allocated as follows:
(i) if such registration has been initiated by the Company as a
primary offering, first to the securities sought to be
included by the Company, second to the Priority Securities
sought to be included by the holders thereof, and third to the
Registrable Securities sought to be included by the holders
thereof and the securities sought to be included by other
holders of registration rights, pro rata, on the basis of the
number of securities owned by each such holder, and fourth the
securities sought to be included by other holders of
registration rights that by their terms are subordinate to the
registration rights of the security holders referred to in the
immediately preceding clause, pro rata, on the basis of the
number of securities owned by each such holder; and
(ii) if such registration has been initiated by another holder of
registration rights (other than pursuant to Section 2(b)
hereof), first to the securities sought to be included by such
demanding holder, second to the Priority Securities sought to
be included by the holders thereof, third to the Registrable
Securities sought to be included by the holders thereof and to
all other securities sought to be included by other holders of
registration rights,
IX-6
<PAGE> 8
pro rata, on the basis of the number of securities owned by
each such holder, and fourth to the securities sought to be
included by the Company among the Company and any other
holders of registration rights in respect of securities of the
Company that by their terms are subordinate to the rights of
the security holders referred to in priority Third above in
accordance with the terms of the agreements granting such
rights.
If the number of Registrable Securities sought to be registered
pursuant to this Section 2(c) by a holder of Registrable Securities is reduced
as provided above, such holder shall have the right to withdraw such holder's
request for registration with respect to all of the Registrable Securities
initially sought to be registered.
No registration pursuant to a request or requests referred to in
this Section 2(c) shall be deemed to be a Shelf Registration or a Demand
Registration.
3. Hold-Back Agreements.
(a) Restrictions on Public Sale by Holder of Registrable Securities.
Each holder of Registrable Securities agrees, if requested in writing by the
managing underwriters in an Underwritten Offering, not to effect any public sale
or distribution of Registrable Securities of the Company of the same class as
the securities included in the applicable registration statement, including a
sale pursuant to Rule 144 under the Securities Act (except as part of such
Underwritten Offering or if, prior to receiving such request, such holder has
given a Demand Notice or a notice of commencement of a public sale or
distribution pursuant to the Shelf Registration), during the ten (10) day period
prior to the filing of the registration statement with respect to such
Underwritten Offering, and during the ninety (90) day period beginning on the
effective date of the registration statement with respect to such Underwritten
Offering, to the extent timely notified in writing by the Company or the
managing underwriters, or, in the case of a shelf offering, the date of
commencement of a public distribution of Registrable Securities pursuant to such
registration statement, as applicable.
(b) Restrictions on Sale of Securities by the Company. The Company
agrees not to effect any public sale or distribution of any securities similar
to those being registered, or any securities convertible into or exchangeable or
exercisable for such securities (except pursuant to a registration statement on
Form S-4 or S-8, or any substitute form that may be adopted by the SEC) during
the ten (10) days prior to the filing of a registration statement with respect
to an Underwritten Offering, and during the ninety (90) day period beginning on
the effective date of the applicable Registration Statement (except as part of
such registration statement (x) where the holders of a majority of the shares of
Registrable Securities to be included in such Registration Statement consent or
(y) where holders of Registrable Securities are participating in such
registration statement pursuant to Section 2(c) hereof, such registration
statement was filed by the Company with respect to the sale of securities by the
Company, and no holder is simultaneously participating in a distribution
pursuant to a Registration Statement filed by the Company pursuant to Section
2(b) hereof) or, in the case of a shelf offering, the date of commencement of a
public distribution of Registrable Securities pursuant to such registration
statement, as applicable.
4. Registration Procedures. In connection with the Company's
registration obligations pursuant to Section 2 hereof, the Company will use its
best efforts to effect such registration to permit the sale
IX-7
<PAGE> 9
of such Registrable Securities in accordance with the intended method or methods
of distribution thereof, and pursuant thereto the Company will as expeditiously
as possible:
(a) prepare and file with the SEC, as soon as practicable, a
Registration Statement relating to the applicable registration on any
appropriate form under the Securities Act, which forms shall be available for
the sale of the Registrable Securities in accordance with the intended method or
methods of distribution thereof and shall include all financial statements of
the Company, and use its best efforts to cause such Registration Statement to
become effective; provided that before filing a Registration Statement or
Prospectus or any amendments or supplements thereto, including documents
incorporated by reference after the initial filing of the Registration
Statement, the Company will furnish to (i) one counsel selected by the holders
of a majority of the shares of Registrable Securities covered by such
Registration Statement, and (ii) the underwriters, if any, copies of all such
documents proposed to be filed, which documents will be subject to the review of
such counsel and underwriters, and the Company will not file any Registration
Statement or amendment thereto or any Prospectus or any supplement thereto
(including such documents incorporated by reference) to which such counsel or
the underwriters, if any, shall reasonably object; and provided further that the
Company shall have the right to delay filing or effectiveness of a Registration
Statement filed pursuant to Section 2(b) hereto or the commencement of a public
distribution of Registrable Securities, as applicable, for up to 120 days if the
Company's Board of Directors determines, in good faith, that the filing or
effectiveness thereof or the commencement of such public distribution could
materially interfere with a pending extraordinary transaction involving the
Company or bona fide financing plans of the Company or would require disclosure
of information, the premature disclosure of which would not be in the best
interests of the Company, but no further delays will be permitted;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for the period set forth in Section 2(a) with
respect to the Shelf Registration or nine months with respect to a Demand
Registration, or such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act and all securities covered by
such Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the holders thereof set forth in
such Registration Statement or supplement to the Prospectus; the Company shall
not be deemed to have used its best efforts to keep a Registration Statement
effective during the applicable period if it voluntarily takes or knowingly
omits to take any action that would result in selling holders of the Registrable
Securities covered thereby not being able to sell such Registrable Securities
during that period unless such action is required under applicable law; provided
that the foregoing shall not apply to actions or omissions taken by the Company
in good faith and for valid business reasons, including without limitation the
acquisition or divestiture of assets, so long as the Company promptly thereafter
complies with the requirements of Section 4(l) hereof, if applicable;
(c) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing, (1) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective, (2) of any request by the SEC
IX-8
<PAGE> 10
for amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose, (4) if at any time the representations and
warranties of the Company contemplated by paragraph (n) below cease to be true
and correct, (5) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (6) of the happening of any event which makes any statement made in
the Registration Statement, the Prospectus or any document incorporated therein
by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus or any document incorporated therein by
reference in order to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) if reasonably requested by the managing underwriter or
underwriters or a holder of Registrable Securities being sold in connection with
an Underwritten Offering, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters and the
holders of a majority in number of the Registrable Securities being sold agree
should be included therein relating to the sale of the Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being sold to such underwriters, the purchase price being
paid therefor by such underwriters and with respect to any other terms of the
Underwritten Offering of the Registrable Securities to be sold in such offering;
and make all required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(f) promptly prior to the filing of any document which is to be
incorporated by reference into the Registration Statement or the Prospectus
(after initial filing of the Registration Statement), make available
representatives of the Company for discussion of such document and make such
changes in such document prior to the filing thereof as counsel for selling
holders of Registrable Securities or underwriters may reasonably request;
(g) furnish to each selling holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(h) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request; the Company consents to the use of the
Prospectus or any amendment or supplement thereto by each of the selling holders
of Registrable Securities and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
IX-9
<PAGE> 11
(i) prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any such selling
holder or underwriter reasonably requests in writing and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement;
(j) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(k) cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Securities;
(l) upon the occurrence of any event contemplated by Section 4(c)
(6) above, prepare a supplement or post-effective amendment to the Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, the Prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(m) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(n) enter into and perform its obligations under such agreements
(including an underwriting agreement) and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of such
Registrable Securities and in connection therewith, whether or not an
underwriting agreement is entered into and whether or not the registration is an
Underwritten Registration, (1) make such representations and warranties to the
holders of such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters in
primary underwritten offerings; (2) obtain opinions of counsel to the Company
and updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and the
holders of a majority of the Registrable Securities included in such
registration, covering the matters customarily covered in opinions requested in
Underwritten Offerings and such other matters as may be reasonably requested by
such holders and underwriters); (3) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public accountants addressed to
the selling holders of Registrable Securities and the underwriters, if any, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters by underwriters in connection with primary
Underwritten Offerings; (4) if an underwriting agreement is entered into, the
same shall set forth in full the indemnification provisions and procedures of
Section 6 hereof with respect to all parties to be indemnified pursuant to said
Section; and (5) the Company shall deliver such documents and certificates as
may be requested by the holders
IX-10
<PAGE> 12
of a majority of the Registrable Securities being sold and the managing
underwriters, if any, to evidence compliance with clause (1) above and with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Company. The above shall be done at each closing under such
underwriting or similar agreement or as and to the extent required thereunder;
(o) make available for inspection by representatives of the holders
of the Registrable Securities, any underwriter participating in any disposition
pursuant to such registration, and any attorney or accountant retained by the
sellers or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's officers,
directors, employees, counsel and accountants to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such registration; provided that any records,
information or documents that are designated by the Company in writing as
confidential shall be kept confidential by such Persons unless disclosure of
such records, information or documents is required by court or administrative
order;
(p) comply with all applicable rules and regulations of the SEC and
make available to its security holders, as soon as reasonably practicable,
earning statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act), covering any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Securities are sold to underwriters in a
firm commitment or reasonable efforts underwritten offering and (ii) if not sold
to underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement;
(q) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the NYSE or the National Association of Securities Dealers, Inc. (the "NASD");
and
(r) exempt any underwriter from the prohibition on owning more than
a specified percentage of the Company's Common Stock set forth in the Company's
articles of incorporation.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing and to enter into agreements
related to the distribution of the Registrable Securities that are designed to
insure compliance with the Exchange Act.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(c)(6) hereof, such
holder will forthwith discontinue disposition of Registrable Securities until
such holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4(c)(6) hereof, or until it is advised in writing (the
"ADVICE") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings which are incorporated
by reference in the Prospectus, and, if so directed by the Company such holder
will deliver to the Company (at the Company's expense), all copies, other than
permanent file copies then in such holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company
IX-11
<PAGE> 13
shall give any such notice, the time periods regarding the effectiveness of
Registration Statements set forth in Section 2 hereof and Section 4(b) hereof
shall be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 4(c)(6) hereof to the date
when the selling holders of Registrable Securities covered by such registration
statement shall receive copies of the supplemented or amended prospectus
contemplated by Section 4(l) hereof or the Advice.
5. Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation:
all registration and filing fees; all fees associated with a required listing of
the Registrable Securities on any securities exchange; fees and expenses with
respect to filings required to be made with the NYSE or the NASD; fees and
expenses of compliance with securities or blue sky laws (including fees and
disbursements of counsel for the underwriters or holders of Registrable
Securities in connection with blue sky qualifications of the Registrable
Securities and determination of their eligibility for investment under the laws
of such jurisdictions as the managing underwriters or holders of a majority of
the Registrable Securities being sold may designate); printing expenses,
messenger, telephone and delivery expenses; fees and disbursements of counsel
for the Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to Section
4(n) hereof); securities acts liability insurance, if the Company so desires;
all internal expenses of the Company (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties); the expense of any annual audit; and the fees and expenses
of any Person, including special experts, retained by the Company (all such
expenses being herein called "REGISTRATION EXPENSES") will be borne by the
Company regardless of whether the Registration Statement becomes effective. The
Company shall not have any obligation to pay any underwriting fees, discounts,
or commissions attributable to the sale of Registrable Securities, or any legal
fees and expenses of counsel to the holders of Registrable Securities.
6. Indemnification; Contribution.
(a) Indemnification by Company. The Company agrees to indemnify and
hold harmless each holder of Registrable Securities and each Person who controls
such Person (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and their respective partners, officers, directors,
employees, agents, and Affiliates, against all losses, claims, damages,
liabilities and expenses (including without limitation the reasonable fees and
disbursements of counsel for such Person in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any other
Person (including without limitation, the Company or its Affiliates)) arising
out of or based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus, preliminary prospectus or
any post-effective amendments or supplements thereto or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by the holders of Registrable Securities expressly for use therein. The
Company will also indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) to the same extent as provided above with respect to the indemnification of
the holders of Registrable Securities, if requested.
IX-12
<PAGE> 14
(b) Indemnification by Holder of Registrable Securities. Each holder
of Registrable Securities agrees severally and not jointly to indemnify and hold
harmless the Company, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act), each
other holder and their respective partners, directors, officers, employees,
agents, and Affiliates against any losses, claims, damages, liabilities and
expenses (including without limitation the reasonable fees and disbursements of
counsel for such Person in connection with any investigative, administrative or
judicial proceeding commenced or threatened by any other Person) resulting from
any untrue statement of a material fact or any omission of a material fact
required to be stated in the Registration Statement, Prospectus, preliminary
prospectus or any post-effective amendment or supplement thereto or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
or affidavit so furnished in writing by such holder to the Company specifically
for inclusion therein. In no event shall the liability of any selling holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the proceeds received by such holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation. The Company shall be entitled to
receive indemnities from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution, to
the same extent as provided above with respect to information so furnished in
writing by such Persons specifically for inclusion in any Registration
Statement, Prospectus, preliminary prospectus or any post-effective amendment or
supplement thereto.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, (b) the indemnifying
party shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such Person or (c) based upon advice of counsel of
such Person, a conflict of interest may exist between such Person and the
indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person), in each of which events the fees and expenses of such counsel
shall be at the expense of the indemnifying party. The indemnifying party will
not be subject to any liability for any settlement made without its consent (but
such consent will not be unreasonably withheld), but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party shall indemnify and hold harmless the
indemnified parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. No indemnified party will be
required to consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for
in the preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by the preceding clauses (a)
and (b), then each indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate
IX-13
<PAGE> 15
to reflect not only the relative benefits received by the indemnified party and
each such indemnifying party, but also the relative fault of the indemnified
party and each such indemnifying party, as well as any other relevant equitable
considerations, provided, that no holder of Registrable Securities shall be
required to contribute an amount greater than the dollar amount of the proceeds
received by such holder with respect to the sale of the Registrable Securities
giving rise to such indemnification obligation. The relative fault of the
Company on the one hand and of the selling holders on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentations.
7. Rule 144. The Company hereby agrees that, at any time and from
time to time, it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
SEC thereunder (or, if the Company is not required to file such reports, it
will, upon the request of any holder of Registrable Securities made ninety (90)
days after the date hereof, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 under the Securities Act), and it
will take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of any
holder of Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such information and
requirements.
8. Participation in Underwritten Registrations.
(a) If any of the Registrable Securities covered by the Shelf
Registration are to be sold in an Underwritten Offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the holders of a majority of the Registrable Securities
included in such offering; provided, that such investment bankers and managers
must be reasonably satisfactory to the Company.
(b) No Person may participate in any Underwritten Registration
hereunder unless such Person (i) agrees to sell such Person's securities on the
basis provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Nothing in this Section 8 shall be construed to create any additional rights
regarding the registration of Registrable Securities in any Person otherwise
than as set forth herein.
9. [Reserved.]
IX-14
<PAGE> 16
10. Miscellaneous.
(a) Remedies. Each party hereto, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement to the extent available under applicable law. Each party hereto agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate. In any proceeding brought to enforce any provision of
this Agreement, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to its costs and expenses and any other available
remedy.
(b) Additional Registration Rights. The Company will not on or after
the date of this Agreement enter into any agreement granting registration rights
to any other Person with respect to the securities of the Company that are not
pari passu or subordinate to the rights granted to the holders of Registrable
Securities hereunder with respect to any incidental registration rights of the
type described in Section 2(c) hereof without the written consent of the holders
of a majority of the then outstanding Registrable Securities. Any agreement
entered into pursuant to such consent shall not be amended without a further
written consent of the holders of a majority of the then outstanding Registrable
Securities.
(c) Amendments and Waivers. No amendment, modification or supplement
to this Agreement or any provision hereof, and no waiver or consent to departure
from the provisions hereof, shall affect or be binding upon any party who has
not consented in writing to such amendment, modification, supplement, waiver or
consent to departure.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air courier guaranteeing overnight delivery:
(i) if to any Investors, at the most current address given by
such Investor to the Company, in accordance with the provisions of this
subsection, which address for each Investor initially is The Prudential
Insurance Company of America, Eight Campus Drive, 4th Floor, Parsippany,
New Jersey 07054, Attention: Mr. Joel W. Stoesser, with a copy to Goodwin,
Procter & Hoar LLP, 300 Park Avenue, 17th Floor, New York, New York 10022,
Attention: Robert S. Insolia, Esq.;
(ii) if to the Company, initially at 455 Market Street, 17th
Floor, San Francisco, California 94105, Attention: Chief Executive
Officer, and thereafter at such other address as may be designated from
time to time by notice given in accordance with the provisions of this
Section 11(d), with a copy to Vinson & Elkins L.L.P., 2001 Ross Avenue,
Suite 3700, Dallas, Texas 75201, Attention: Michael D. Wortley, Esq.; and
(iii) if to any transferee, at the address given by such
transferee to the Company.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need
IX-15
<PAGE> 17
for an express assignment, subsequent holders of Registrable Securities;
provided that nothing herein shall be deemed to permit any assignment, transfer
or other disposition of Registrable Securities in violation of the terms hereof;
provided, further, that holders of Registrable Securities may not assign their
rights under this Agreement except in connection with the permitted transfer of
Registrable Securities and then only insofar as relates to such Registrable
Securities; and provided further that with respect to any transfers of
Registered Securities subsequent to the filing or effectiveness of the Shelf
Registration the Company shall exert its best efforts to amend the Shelf
Registration to provide that any such transferee shall have the rights of the
transferor of such Registrable Securities. The rights to request a Demand
Registration under Section 2(b) hereof reserved to an Investor under this
Agreement shall not be transferable by such Investor except to a purchaser of
all of the Registrable Securities of such Investor. If any transferee shall
acquire Registrable Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the terms
of this Agreement, and by taking and holding such Registrable Securities, such
Person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the Contribution
Agreement, and such Person shall be entitled to receive the benefits hereof.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MARYLAND.
(i) 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 provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
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<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.
MERIDIAN INDUSTRIAL TRUST, INC., a Maryland
corporation
By: /s/ Robert A. Dobbin
--------------------------------------
Name: Robert A. Dobbin
Title: Secretary
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
a New Jersey corporation (acting for the
benefit of the Chevron Separate Account)
By: /s/ John Maurer
-------------------------------------
John Maurer
Vice President
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
a New Jersey corporation (acting for the
benefit of the Strategic
Performance Fund I Separate Account)
By: /s/ John Maurer
----------------------------------
John Maurer
Vice President
IX-17
<PAGE> 1
EXHIBIT X
<PAGE> 2
INVESTMENT ADVISORY AGREEMENT
This Agreement (the "Agreement") made and entered into as of this 1st
day of February, 1997, between Strategic Performance Fund-II, Inc. a Maryland
corporation ("SPF-II") and the Prudential Investment Corporation, a New
Jersey corporation ("Advisor").
W I T N E S S E T H:
WHEREAS, SPF-II has been organized to serve as an investment vehicle
through which investors may invest in a professionally managed real estate
portfolio to consist of existing office, industrial and apartment properties, as
more fully described in the Memorandum, as supplemented or amended from
time-to-time;
WHEREAS, SPF-II intends to qualify as a "real estate investment trust," as
defined in the Internal Revenue Code of 1986, as amended (the "Code"), and to
invest its assets in investments permitted by the terms of the Memorandum and
Sections 856 through 860 of the Code; and
WHEREAS, SPF-II desires to engage Advisor to provide investment advisory
and asset management services, all as more particularly set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and the mutual promises
and undertakings hereinafter set forth, the parties hereto covenant and agree as
follows:
11. DEFINITIONS. As used in this Agreement, the following terms shall have
the following means:
"Board" shall mean the Board of Directors of SPF-II, as the same may
constituted from time-to-time.
"Investments" shall mean the investments of SPF-II in real property
or interests therein.
"Investment Criteria" shall mean the investment criteria annually
approved by the Board as provided in paragraph 3. The initial Investment
Criteria have been approved by the Board and are attached hereto as Exhibit "A."
"Investment Strategy" shall mean the written investment goals and
objectives of SPF-II. The Investment Strategy, until amended by the Board and
provided to Advisor, is as set forth in the Memorandum.
"Memorandum" shall mean the Private Placement Memorandum of SPF-II,
dated February 20, 1996, as supplemented or amended from time-to-time.
"Property Strategic Plan" shall mean, with respect to each
Investment, the specific plan developed by Advisor to implement the Investment
Strategy and guide the formulation of the annual operating and capital budgets.
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<PAGE> 3
"SPF-II Account" shall mean a bank or other account or accounts
established by SPF-II for the deposit of Investment net revenue and the payment
of fees and expenses of SPF-II.
12. ENGAGEMENT OF ADVISOR. SPF-II hereby engages Advisor to provide
investment advisory and asset management services with respect to real estate
investments as provided herein. Advisor accepts said engagement on the terms and
conditions hereinafter set forth.
13. SERVICES. Advisor agrees to perform the following services:
(a) ACQUISITIONS. On at least an annual basis, Advisor shall submit
proposed Investment Criteria to SPF-II for approval by the Board. Investment
Criteria shall be consistent with and be designed to implement the Investment
Strategy. The Investment Criteria most recently approved by the Board shall
continue to apply to Advisor's activities until revised or amended Investment
Criteria are approved by the board and provided to Advisor.
Advisor shall use its knowledge of real estate markets to generate
potential acquisitions for SPF-II. In the event of a potential acquisition which
Advisor believes satisfies the Investment Criteria ("Investment Opportunity"),
and subject to paragraph 14 hereof. Advisor shall perform or arrange for such
due diligence and financial analysis as is reasonable and customary, and shall
negotiate with sellers and execute purchase and sale agreements and other
necessary documents on behalf of SPF-II as agent as provided for in paragraph 4
hereof. Advisor may discontinue its efforts at any time if the results of its
financial analysis or due diligence investigation are not satisfactory to
advisor. All acquisitions of Investments must be approved by the Board.
(b) ASSET MANAGEMENT. Advisor will develop for each Investment a Property
Strategic Plan and operating and capital budgets, which budgets shall then be
approved by the Board. Each Investment will be managed by Advisor in its
discretion in accordance with the Property Strategic Plan and operating and
capital budgets. Advisor shall perform or cause to be performed all services
necessary for the operation, management and leadings of the investments,
including (i) periodically inspect each Investment; (ii) procure reports and
information from consultants and other third-party service providers; (iii)
obtain legal advice and undertake legal proceedings; (iv) appoint property
managers and other experts; and (v) undertake and perform such other functions;
in each of the foregoing instances as Advisor deems necessary or advisable in
the course of the performance of its duties and the discharge of its
responsibilities under this Agreement.
(c) DISPOSITIONS. Advisor will recommend to SPF-II those investments which
it believes should be marked for sale. All dispositions of Investments must be
approved by the Board. If approved by the Board, Advisor will market the
Investment (typically through exclusive third-party brokers), and will negotiate
and arrange for the closing of all sales.
(d) INSURANCE. Advisor shall obtain and maintain liability and casualty
insurance coverage on the investments (including, as deemed appropriate,
earthquake, flood and certain other disaster-type insurance coverage, unless
such disaster-type coverage is unavailable or available only at prices which
Advisor deems prohibitive) insuring SPF-II and Advisor, of such kind, in such
amounts, with such deductibles and against such risks as in the reasonable
determination of Advisor shall be in accordance with customary and prudent
business practices for the management of such Investment. Advisor may insure the
Investments under a blanket
X-2
<PAGE> 4
insurance policy applicable to properties owned or managed by Advisor and its
affiliates. Advisor shall, upon SPF-II's request, use its best efforts to obtain
other or additional insurance.
(e) CASH DISTRIBUTIONS. Advisor shall arrange for all cash flow from the
Investments, after payment of all operating expenses, capital expenditures and
the establishment and maintenance of the appropriate reserves, to be deposited
in the SPF-II Account.
(f) BOOKS AND RECORDS. Advisor shall keep accurate books and records
relating to SPF-II transactions with respect to the Investments in accordance
with generally accepted accounting principles, uniformly and consistently
applied from year-to-year; permit SPF-II to inspect its books and records
relating to transactions with respect to the Investments at all reasonable times
after reasonable notice; and furnish such information concerning the Investments
to such performs as SPF-II may reasonably request in writing.
14. AGENCY; INDEMNIFICATION. SPF-II hereby appoints Advisor as its agent
to enter into and execute letters of intent, purchase and sale agreements,
contracts with professionals and other consultants, insurance contracts, deeds,
easements, leases, notes, mortgagees, pleadings, assignments and any other
document, instrument, certificate or other writing necessary for Advisor to
carry out its duties hereunder. The authority granted herein may be exercised
without further notice, consent or approval by SPF-II; provided, however, that
nothing contained herein shall be construed as granting Advisor authority to
take any action requiring Board approval without obtaining such approval.
Advisor shall not be liable for any action taken, omitted or suffered to
be taken by it in good faith and authorized or within the rights or powers
conferred by this Agreement or in accordance with the written opinion of its
counsel, except to the extent of Advisor's negligence, bad faith or willful
misconduct. SPF-II hereby indemnifies, defends and holds Advisor harmless from
and against any and all loss, claim, cost, damage or expense (including but not
limited to reasonable attorneys' fees and court costs) raised or incurred in
connection with Advisor's performance of its duties hereunder or execution of
any instrument as provided for herein; provided, however, that SPF-II shall have
no such obligation with respect to loss, claim cost, damage or expense caused by
Advisor's negligence, bad faith or willful misconduct. Advisor shall not be
answerable for any act or omission of any agent, appraiser, contractor, engineer
, consultant, attorney, property manager, accountant or bookkeeper if such
individual or entity was selected and retained by Advisor with reasonable care,
unless Advisor knowingly participates in any default or misconduct, or has
actual knowledge of such default or misconduct and fails to take reasonable
remedial action, or through negligence in the performance of its specific
responsibilities hereunder has enabled such default or misconduct to occur.
Notwithstanding the foregoing, this provision shall not constitute a waiver of
any rights that SPF-II may have under applicable federal or state securities
laws.
15. PERSONNEL AND CONSULTANTS.
(a) Advisor may arrange to have certain services it is obligated to
provide hereunder performed by its affiliates. The management team responsible
hereunder will include senior investment professional from the Prudential Real
Estate Investors division of The Prudential Insurance Company of America, or any
successor division.
X-3
<PAGE> 5
(b) Advisor shall employ those consultants, professionals and experts,
including, without limitation, securities advisors, that it, in its sole
professional judgment, deems necessary to discharge its responsibilities
hereunder. Advisor shall have sole discretion over the selection of such
consultants, professionals and experts.
(c) Advisor may employ affiliates of Advisor, provided the fees and
expenses of such affiliates do not exceed the usual and customary charges for
such services imposed by persons engaged in the same or substantially similar
activities with respect to similar properties in the same geographical area.
Notwithstanding the foregoing, Advisor may not retain any securities advisors
affiliated with Advisor, without the prior consent of the Independent Directors
of SPF-II. Advisor may utilize attorneys, engineers, accountants and other
professionals or service providers employed by Advisor or its affiliates in lieu
of third-party vendors if Advisor reasonably believes that use of such in-house
service providers is in the best interest of SPF-II. The costs of such in-house
services shall not exceed the usual and customary charges for such services
imposed by persons engaged in the same or substantially similar activities with
respect to similar properties in the same geographical area.
(d) Advisor shall discharge its duties under this Agreement as a fiduciary
to SPF-II and with the care, skill, prudence and due diligence under the
circumstances then prevailing that a prudent institutional asset manager of a
real estate investment portfolio acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character and
with like aims and investment policies. In the performance of its duties
hereunder, the actions of Advisor shall be based on its professional judgment
and considered or construed to be a guarantee of investment results. In no event
shall Advisor incur liability as a result of following the directions of SPF-II
or for any decisions made by SPF-II or the results stemming from such directions
or decisions.
16. FEES. It is agreed by the parties hereto that Advisor shall be paid
acquisition, investment management, disposition and incentive fees, each payable
in accordance with the terms and provisions set forth in the attached Exhibit
"B" (the "Fee Schedule"). Advisor may withdraw fees from the SPF-II Account as
and when such fees become due and payable. In the event sufficient funds are not
available in the SPF-II Account for the payment of fees due and payable to
Advisor, Advisor shall invoice SPF-II, and SPF-II shall pay such fees (either
directly or by depositing sufficient funds into the SPF-II Account) within
twenty (20) days of such notice.
17. VALUATION. The Advisor shall periodically provide the Board with a
list of appraisers it deems qualified to value the REIT's investments in real
property (including mortgage loans and partnership interests). Each such
investment will be independently appraised by a Member of the Appraisal
Institute (designated MAI, or comparable designation by a comparable successor
organization) selected by the independent directors of the Board once every
calendar year, with the first such appraisal being not later than fifteen (15)
months after the acquisition of the investment. If requested, the Advisor will
review and comment to the board on any appraisal report received by the Board.
The Board may, upon notice to Advisor, adjust the value of any Investment
(upward or downward) if the Board determines that fairness requires such an
adjustment (as a result, for example, of capital improvements made to the
Investment or the addition or loss of a major tenant). Upon receipt of such
notice from the Board, Advisor shall so adjust the value of the Investment.
18. REPORTING.
X-4
<PAGE> 6
(a) PERIODIC MEETINGS. Review meetings will be held quarterly with
the Board or as frequently as SPF-II reasonably deems necessary upon reasonable
notice to Advisor to discuss investment activities, results, and the outlook for
the next quarter.
(b) QUARTERLY REPORTS. Advisor shall provide quarterly activity
reports, including unaudited financial statements and a description of any
investment activities and information regarding the Investments such as income,
expense, extraordinary damage, repairs, and expenses during the prior quarter,
and the current status of each Investment.
(c) ANNUAL REPORTS. Annual audited financial statements, review of
investment activities for the year, and Investment summaries containing a
description of each Investment and current market value, will be presented
within one hundred twenty (120) days after the end of a calendar year.
(d) ADDITIONAL REPORTS. The Board may request (i) reports on a more
frequent basis than provided for herein; (ii) that reports contain any further
or additional relevant financial information available to Advisor; and (iii)
additional or supplemental reports to those provided for herein (collectively,
"Additional Reports"). Advisor shall be entitled to an additional fee to be
agreed upon by Advisor and the Board for providing any Additional Reports.
19. INVESTMENT EXPENSES. All of the expenses of due diligence,
acquisition, ownership, operation, financing, improvement, maintenance, repair,
leasing and sale of the Investments and Investment Opportunities shall be paid
by SPF-II, including but not limited to, on-site operating expenses, real estate
taxes, leasing commissions, capital expenses, property management services,
property casualty and liability insurance, other taxes attributable to ownership
of the Investments, audits and appraisals, accountant's fees, legal expenses,
professional architectural, environmental, consulting and engineering fees, and
due diligence and closing expenses. Advisor shall have access to the SPF-II
Account for the purposes of paying all of the expenses outlined herein. In the
event cash available in the SPF-II Account is not sufficient to pay such
expenses, Advisor shall invoice SPF-II, which shall pay the same (either
directly or by depositing sufficient funds in the SPF-II Account) within twenty
(20) days from receipt of the invoice.
Advisor shall, at its expense, pay (and not charge to SPF-II or the
Investments except as provided herein) the compensation of all its employees
engaged in the tasks enumerated herein and provide adequate office space and all
necessary office furnishings and equipment, and shall pay the cost of telephone
service, heat, utilities, stationery, postage, supplies and similar
miscellaneous office expenses in connection therewith, business and travel
expenses, and other items of an overhead or administrative nature incurred by
Advisor in the performance of its duties under this Agreement.
20. REPRESENTATIONS AND WARRANTIES OF ADVISOR. Advisor represents and
warrants that (i) Advisor is duly organized, validly existing and in good
standing under the laws of the state of its organization; (ii) Advisor has the
power and authority to enter into this Agreement and carry out its obligations
hereunder; (iii) the execution of this Agreement has been duly authorized by
Advisor and no other proceedings are necessary to authorize this Agreement; (iv)
neither the execution of this Agreement nor the acts contemplated hereby nor
compliance by Advisor with any provisions will violate any provision of the
charter documents of
X-5
<PAGE> 7
Advisor; and (v) Advisor is registered with the Securities and Exchange
Commission pursuant to the provisions of the Investment Advisers Act of 1940, as
amended.
21. TERM.
(a) INITIAL TERM. This Agreement shall have an initial term of ten
years and, thereafter, unless terminated as hereinafter provided, shall be
automatically renewed for successive periods of one year each until terminated
subject to the following provisions.
(b) TERMINATION. This Agreement shall terminate at such time as all
Investments have been sold, and may be terminated at any time with or without
cause by SPF-II or by Advisor upon at least ninety (90) days prior written
notice to the other party. Upon such termination, Advisor shall deliver to
SPF-II (or such party as is designated in writing by SPF-II) all books and
records, documents and related materials which relate to SPF-II to SPF-II (or
its designee). Advisor may retain copies of any books and records, documents or
other materials necessary to evidence its compliance with this Agreement.
(c) EFFECT OF TERMINATION. Any termination or expiration of the term
of this Agreement shall not relieve any party of any liability that may be
incurred by it for its activities hereunder prior to the effective date of such
termination (and shall not terminate or affect the obligations under paragraph 4
hereof), nor shall it relieve SPF-II of its obligations herein to (i) pay
Advisor any fees (including but not limited to any Incentive Fee) earned by it
prior to the effective date of such termination; or (ii) reimburse Advisor for
expenses incurred prior to such effective date; provided, however, that after
the effective date of such termination all other rights and obligations
hereunder shall cease, except as specifically provided herein. Notwithstanding
the foregoing, SPF-II shall reimburse Advisor for its actual out-of-pocket
expenses (such as travel, copying and shipping charges) incurred following
termination.
22. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New Jersey and, for all purposes, shall be construed in accordance with
said laws and the decisions of the courts of New Jersey thereon, and shall be
binding upon the parties hereto and their respective successors and assigns. The
parties hereby waive the right to trial by jury.
23. MERGER; AMENDMENT. No amendment or modification of this Agreement
shall have any force or effect unless it is in writing and signed by the
parties. This Agreement supersedes all prior contracts and undertakings, written
or oral, between the same parties concerning the same subject matter.
24. ADVISOR'S ALLOCATION PROCEDURE. SPF-II acknowledges that Advisor, its
officers, employees and affiliates provide investment advice and management
services to other clients and for the account of such affiliates, and that it,
such affiliates or such other clients may own, purchase or sell real estate
investments which may be suitable for acquisition by SPF-II. Advisor has
established a procedure which seeks to fairly allocate investment opportunities
among its and its affiliates' advisory clients, and shall use its best efforts
to utilize such investment allocation procedure in offering real estate
investments to SPF-II. To the extent that such system for allocating investments
includes an annual acquisition target, SPF-II's annual acquisition target shall
be the aggregate of all funds available for investment.
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<PAGE> 8
25. ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by either party without the prior written
consent of SPF-II or Advisor, as appropriate.
Notwithstanding the foregoing, Advisor may, without obtaining SPF-II's
consent, assign its rights and obligations under this Agreement to an entity
which is wholly-owned, directly or indirectly, by The Prudential Insurance
Company of America and provided that the personnel responsible for the advisory
services hereunder are not substantially changed.
X-7
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto, each intending to be legally bound
hereby, have caused this Agreement to be executed.
THE PRUDENTIAL INVESTMENT CORPORATION
By: /s/ Joel W. Stoesser
__________________________________
Joel W. Stresser
Vice President
STRATEGIC PERFORMANCE FUND-II, INC.
By: /s/ Joel W. Stoesser
__________________________________
President
X-8
<PAGE> 1
EXHIBIT XI
<PAGE> 2
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT, dated as of April 29, 1988, between
The Prudential Insurance Company of America ("Prudential"), a mutual life
insurance company organized under the laws of New Jersey, and The Prudential
Variable Contract Real Property Partnership (the "Partnership"), a general
partnership organized under the laws of New Jersey.
WITNESSETH THAT:
WHEREAS, The Partnership has been established to provide a means for
investing and reinvesting the assets allocated to real estate investment options
under the variable life and variable annuity contracts issued by Prudential and
under such contracts issued by affiliated life insurance companies; and
WHEREAS, Prudential has extensive experience in the acquisition and
management of real estate equities, mortgages, land sale-leasebacks and other
investments (including short-term and intermediate-term debt instruments) that
satisfy the investment policies of the Partnership; and
WHEREAS, The Partnership desires that Prudential act as the
Partnership's investment manager; and
WHEREAS, Prudential desires to accept such appointment, on the terms
and conditions set forth herein.
NOW, THEREFORE, The Partnership and Prudential agree as follows:
1. Prudential shall act as the investment manager of the Partnership
for a daily investment management fee equal to an aggregate 1.25% per year of
the average daily gross assets of the Partnership. The Partnership shall also
bear all of its actual operating expenses. The Partnership acknowledges that
XI-1
<PAGE> 3
Prudential engages in real estate investment activities on its own behalf and
manages other real estate investment portfolios for separate accounts,
subsidiaries, real estate investment trusts, limited partnerships, and other
entities, and further acknowledges that such activities may be in competition
with the Partnership for the acquisition and disposition of investments and the
time and services of Prudential's employees.
2. Prudential shall manage the investment and reinvestment of assets
held by the Partnership in a manner consistent with the prospectuses for the
separate accounts participating in the Partnership contained in the then-current
registration statements for such accounts on file with the Securities and
Exchange Commission. The Partnership has delivered or will deliver to Prudential
copies of such prospectuses and shall promptly furnish Prudential with a copy of
each amendment or supplement thereto.
3. The Partnership shall provide Prudential with instructions for
monitoring the composition of investments of the Partnership to ensure that, in
accordance with a "no-action" position taken by the staff of the Securities and
Exchange Commission, the separate accounts participating in the Partnership do
not become "investment companies" within the meaning of Section 3(a) of the
Investment Company Act of 1940. Prudential shall comply with those instructions.
4. Prudential will make such reports regarding the management of the
Partnership as the Partnership may from time to time require. In addition,
Prudential shall furnish applicable federal and state regulatory authorities
with any information or reports in connection with its services under this
Agreement which such authorities may request in order to ascertain whether the
Partnership's operations are being conducted in a manner consistent with any
applicable law or regulation.
5. The Partnership shall be ultimately responsible for the
management and control of the Partnership's assets and in furtherance thereof,
the Partnership shall have the right (a) to interpret the investment objectives
and policies and restrictions of the Partnership and direct Prudential to comply
therewith,
XI-2
<PAGE> 4
(b) to direct Prudential to pursue, or not pursue, any investment strategies for
the Partnership, and (c) to direct Prudential to purchase or sell any specific
investments for the Partnership. The Partnership shall also have the right to
change the partnership's investment objectives, policies and restrictions.
6. Prudential shall maintain such records regarding its management
of the Partnership as the Partnership may require. All records maintained by
Prudential in connection with this Agreement shall be the property of the
Partnership and shall be returned to the Partnership upon termination of this
Agreement, free from any rights of retention. The Partnership shall have the
right to inspect, audit and copy all pertinent records pertaining to the
performance of services under this Agreement. Prudential shall keep confidential
any information obtained pursuant to this Agreement and shall disclose such
information only if the Partnership has authorized such disclosure, or if such
disclosure is expressly required by applicable regulatory authorities.
7. The Partnership acknowledges that, in addition to the management
fee set forth in paragraph one of this Agreement, Prudential's management of the
Partnership's assets may result in Prudential or its affiliates obtaining
substantial fee income from the Partnership's assets or from the cash flow of
the Partnership's investments for services rendered in connection with the
Partnership's operations, including, but not limited to, real estate brokerage
commissions and fees for property management services.
8. The term of this Agreement shall be one year, commencing as of
the date set forth above and continuing automatically from year to year
thereafter; provided, however, that this Agreement may be terminated by either
party at any time upon not less than 15 days' prior written notice to the other
party.
9. This Agreement may not be assigned by either party without the
prior written consent of the other party.
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<PAGE> 5
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by the undersigned, thereunto duly authorized as of
the date first written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
ATTEST:
/s/ Dorothy K. Light By: /s/ Robert P. Hell
- ----------------------- ---------------------------------
Secretary Senior Vice President
and Actuary
THE PRUDENTIAL VARIABLE CONTRACT
REAL PROPERTY PARTNERSHIP
ATTEST: BY: PRUCO LIFE INSURANCE COMPANY
(A General Partner)
/s/ Cynthia M. Kalen By: /s/
- ----------------------- _________________________________
Assistant Secretary President
XI-4
<PAGE> 1
EXHIBIT XII
<PAGE> 2
AGREEMENT RE JOINT FILING
Each of the undersigned hereby agrees, as required pursuant to Rule
13d-1(f)(1)(iii) under the Securities and Exchange Act of 1934, that this
Schedule 13D is to be filed on behalf of each such party.
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By: /s/ Robert W. Gadsden
------------------------------------
Name: Robert W. Gadsden
Title: Vice President
STRATEGIC PERFORMANCE FUND-II,
INC.
By: /s/ Joel W. Stoesser
------------------------------------
Name: Joel W. Stoesser
Title: President
THE PRUDENTIAL VARIABLE CONTRACT
REAL PROPERTY PARTNERSHIP
By: THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, its general partner
By: /s/ Roger S. Pratt
------------------------
Name: Roger S. Pratt
Title: Vice President
XII-1
