-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BPA7m1tAWKCkK1GsjkdGyDZX0eN545hpKjkbZ6wFoEKZZ4nDsHuevjLCFqHCjSKl g6C4gkYUqQX4pKMDgUjulg== 0000950123-97-008302.txt : 19971006 0000950123-97-008302.hdr.sgml : 19971006 ACCESSION NUMBER: 0000950123-97-008302 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19971003 SROS: NONE GROUP MEMBERS: PRUDENTIAL INSURANCE CO OF AMERICA GROUP MEMBERS: PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY GROUP MEMBERS: STRATEGIC PERFORMANCE FUND-II, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MERIDIAN INDUSTRIAL TRUST INC CENTRAL INDEX KEY: 0000946637 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 943224765 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-46147 FILM NUMBER: 97690766 BUSINESS ADDRESS: STREET 1: 455 MARKET ST STREET 2: 17TH FL CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 4152813900 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PRUDENTIAL INSURANCE CO OF AMERICA CENTRAL INDEX KEY: 0000729057 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 221211670 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: PRUDENTIAL PLZ STREET 2: 751 BROAD STREET CITY: NEWARK STATE: NJ ZIP: 07102-3777 SC 13D 1 SCHEDCULE 13D 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). 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 3 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- Page 3 of 26 Pages 4 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 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 6 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 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 8 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 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 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 11 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 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 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 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 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 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 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 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 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 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 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 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 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
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
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 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 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 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 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 EX-99.I 2 SPF-I CONTRIBUTION AGREEMENT 1 EXHIBIT I 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 3 TABLE OF CONTENTS
Page 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
I-2 4 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
I-3 5 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
I-4 6 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
I-5 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 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 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 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 I-9 11 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 I-10 12 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 I-11 13 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 I-12 14 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 I-13 15 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 I-14 16 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 I-15 17 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 I-16 18 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. I-17 19 (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. I-18 20 (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. I-19 21 (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 I-20 22 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. I-21 23 (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. I-22 24 (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. I-23 25 (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 I-24 26 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 I-25 27 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. I-26 28 .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 I-27 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. I-28 30 (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. I-29 31 .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. I-30 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. I-31 33 (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 I-32 34 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: I-33 35 (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. I-34 36 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 I-35 37 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 I-36 38 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. I-37 39 .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. I-38 40 .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 I-39 41 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. I-40 42 .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. I-41 43 (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. I-42 44 .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. I-43 45 .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 I-44 46 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. I-45 47 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 I-46 48 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 I-47 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, I-48 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 I-49 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. I-50 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. I-51 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 I-52 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. I-53 55 .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.] I-54 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 I-55 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 I-56 EX-99.II 3 CHEVRON CONTRIBUTION AGREEMENT 1 EXHIBIT II 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 II-1 3 TABLE OF CONTENTS
Page 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
II-2 4 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
II-3 5 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
II-4 6 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
II-5 7 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
II-6 8 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
II-7 9 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
II-8 10 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
II-9 11 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 II-10 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 II-11 13 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 II-12 14 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 II-13 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 II-14 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 II-15 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 II-16 18 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 II-17 19 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 II-18 20 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 II-19 21 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. II-20 22 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 II-21 23 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. II-22 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. II-23 25 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. II-24 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: II-25 27 (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. II-26 28 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 II-27 29 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. II-28 30 .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 II-29 31 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. II-30 32 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, II-31 33 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 II-32 34 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 II-33 35 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. II-34 36 (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 II-35 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 II-36 38 (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. II-37 39 .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. II-38 40 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. II-39 41 .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. II-40 42 .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 II-41 43 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 II-42 44 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 II-43 45 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. II-44 46 .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 II-45 47 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. II-46 48 .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 II-47 49 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 II-48 50 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 II-49 51 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 II-50 52 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 II-51 53 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. II-52 54 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. II-53 55 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 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 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 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 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 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 EX-99.III 4 GENERAL ACCOUNT STOCK PURCHASE AGREEMENT 1 EXHIBIT III 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 3 TABLE OF CONTENTS
PAGE 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
III-2 4 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
III-3 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 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 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 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 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 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 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 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 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 III-12 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). III-13 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. III-14 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 III-15 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 III-16 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 III-17 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 III-18 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. III-19 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. III-20 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 III-21 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 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 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 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 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 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 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 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 EX-99.IV 5 DIRECTOR NOMINEE LETTER AGREEMENT 1 EXHIBIT IV 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 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 EX-99.V 6 WESTERN CONFERENCE OF TEAMSTERS STOCK PURCH. AGMT. 1 EXHIBIT V 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 3 TABLE OF CONTENTS
PAGE 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
V-2 4 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
V-3 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 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. V-5 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. V-6 8 "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. V-7 9 "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. V-8 10 "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. V-9 11 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 V-10 12 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, V-11 13 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 V-12 14 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). V-13 15 (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 V-14 16 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. V-15 17 (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. V-16 18 (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. V-17 19 (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 V-18 20 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 V-19 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 V-20 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 V-21 23 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 V-22 24 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. V-23 25 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 V-24 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 V-25 27 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 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] V-27 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 EX-99.VI 7 VARIABLE CONTRACT STOCK PURCHASE AGREEMENT 1 EXHIBIT VI 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 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................................ 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
VI-2 4 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
VI-3 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 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 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 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 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 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 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 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 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. VI-12 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. 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 VI-13 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. VI-14 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 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 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 VI-17 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 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 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 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. VI-21 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 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 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 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 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 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 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 EX-99.VII 8 SPF-II STOCK PURCHASE AGREEMENT 1 EXHIBIT VII 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 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 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 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 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 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 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 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 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. VII-9 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 VII-10 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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. VII-26 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] VII-27 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 EX-99.VIII 9 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT VIII 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 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. VIII-2 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 VIII-3 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 VIII-4 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 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 VIII-6 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: VIII-7 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 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 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; VIII-10 12 (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. VIII-11 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 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 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 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 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 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 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 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 EX-99.IX 10 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT IX 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 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. IX-2 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 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 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 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 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 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 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 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 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 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 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 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 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 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.] IX-16 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 EX-99.X 11 SPF-II MANAGEMENT AGREEMENT 1 EXHIBIT X 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. X-1 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 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 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 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 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. X-6 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 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 EX-99.XI 12 PRUDENTIAL VARIABLE CONTRACT PARTNERSHIP MGMT AGRM 1 EXHIBIT XI 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 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 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. XI-3 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 EX-99.XII 13 AGREEMENT REGARDING JOINT FILING 1 EXHIBIT XII 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 -----END PRIVACY-ENHANCED MESSAGE-----