CONTRIBUTION AGREEMENT
Partnership Interests in
New Castle Associates
To
PREIT Associates, L.P.
TABLE OF CONTENTS
SECTION 1. NEW CASTLE EQUITY VALUE; MISCELLANEOUS DEFINITIONS......................................................5
1.1 New Castle Equity Value..................................................................................5
1.2 Miscellaneous Definitions................................................................................5
SECTION 2. CONTRIBUTIONS AND CALL..................................................................................6
2.1 Transferred and Retained Interests.......................................................................6
2.2 Contributions at Closing.................................................................................7
2.3 Option to Acquire Retained Interests.....................................................................8
2.4 Second Closing...........................................................................................8
SECTION 3. CONSIDERATION...........................................................................................8
3.1 Unit Calculation.........................................................................................8
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS.....................................................11
4.1 As to the Contributors and Marta Individuals............................................................11
4.2 As to New Castle........................................................................................16
SECTION 5. REPRESENTATIONS AND WARRANTIES REGARDING PREIT AND THE UPREIT..........................................18
5.1 Organization............................................................................................19
5.2 Power and Authority.....................................................................................19
5.3 No Conflicts............................................................................................20
5.4 Capitalization..........................................................................................21
5.5 PREIT Reports...........................................................................................21
5.6 Litigation..............................................................................................22
5.7 Material Adverse Change.................................................................................22
5.8 Brokers.................................................................................................22
SECTION 6. CERTAIN COVENANTS AND AGREEMENTS.......................................................................23
6.1 Acceptance of Assignment; Conduct of Business...........................................................23
6.2 Reasonable Efforts......................................................................................24
6.3 Notifications...........................................................................................24
6.4 Notifications regarding Exchange Agreements.............................................................25
6.5 Transfer of Transferred and Retained Interests..........................................................26
6.6 Closing Pursuant to Exchange Agreements.................................................................26
6.7 Exchange Property Responsibilities......................................................................26
6.8 Special Covenant Regarding Replacement Property.........................................................27
6.9 Special Covenants of the Marta Individuals..............................................................27
6.10 Rights of Marta Investments.............................................................................27
6.11 Special Covenant to Ivyridge............................................................................28
SECTION 7. CLOSING; CLOSING CONDITIONS; CLOSING DELIVERIES........................................................28
7.1 Time of Closing.........................................................................................28
7.2 Closing Conditions......................................................................................28
7.3 Deliveries at the Closing...............................................................................31
(i)
SECTION 8. PRE-CLOSING DISTRIBUTIONS; CLOSING COSTS; NET DISTRIBUTION AMOUNT................................34
8.1 Costs.............................................................................................34
8.2 Cash..............................................................................................34
8.3 Net Adjustment Amount.............................................................................34
8.4 Damages...........................................................................................35
8.5 Statement.........................................................................................35
8.6 Transfer Taxes on Call or Put.....................................................................35
8.7 Survival..........................................................................................35
SECTION 9. INDEMNIFICATION..................................................................................35
9.1 Indemnification by Pan American...................................................................35
9.2 Indemnification by PREIT..........................................................................37
9.3 Limitation........................................................................................37
9.4 Procedure For Indemnification - Third Party Claims................................................37
9.5 Procedure for Indemnification - Other Claims......................................................39
9.6 Distributions of Units by Contributors............................................................39
9.7 Right of Set-Off..................................................................................39
9.8 Indemnification Payments..........................................................................39
9.9 Survival..........................................................................................39
SECTION 10. TERMINATION AND ABANDONMENT......................................................................40
10.1 Termination.......................................................................................40
10.2 Procedure for Termination; Effect of Termination..................................................40
SECTION 11. GENERAL PROVISIONS...............................................................................41
11.1 Survival of Representations and Warranties........................................................41
11.2 Costs and Expenses................................................................................41
11.3 Notices...........................................................................................41
11.4 Access to Information.............................................................................42
11.5 Confidentiality and Disclosures...................................................................42
11.6 Public Announcements..............................................................................43
11.7 Entire Agreement..................................................................................43
11.8 Counterparts......................................................................................44
11.9 Governing Law.....................................................................................44
11.10 Section Headings, Captions and Defined Terms......................................................44
11.11 Amendments, Modifications and Waiver..............................................................44
11.12 Severability......................................................................................44
11.13 Liability of Trustees, etc........................................................................45
11.14 No Third Party Beneficiary........................................................................45
11.15 Binding Effect....................................................................................45
(ii)
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THIS CONTRIBUTION AGREEMENT (this "Agreement") is made as of the 22nd
day of April, 2003, by and among PAN AMERICAN ASSOCIATES, a Pennsylvania limited
partnership ("Pan American"); THE REVOCABLE TRUST OF ALBERT MARTA (the "Marta
Entity"), and IVYRIDGE INVESTMENT CORP., a Delaware corporation (collectively
the "Limited Partners" and together with Pan American, the "Contributors," and,
each, a "Contributor"); PENNSYLVANIA REAL ESTATE INVESTMENT TRUST, an
unincorporated association in business trust form created under Pennsylvania law
pursuant to a Trust Agreement dated December 27, 1960, as last amended and
restated on December 16, 1997 ("PREIT"); and PREIT ASSOCIATES, L.P., a Delaware
limited partnership (the "UPREIT") and BARBARA M. DiFONZO and LAUREN M.
DeMICHIEL (collectively, the "Marta Individuals").
Background
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The Contributors represent 77.5% of the partnership interests in New
Castle Associates, a Pennsylvania limited partnership ("New Castle") formed
pursuant to a limited partnership agreement dated January 1, 1978, as last
amended September 10, 2001 (the "Existing New Castle Partnership Agreement") and
the Marta Individuals are the general partners of Marta Investments, L.P.
("MI"), the remaining partner of New Castle. New Castle is the owner of a retail
shopping center project in New Castle, Delaware, known as the Christiana Mall,
and approximately eight (8) acres of adjoining ground (the "Land") on which a
portion of a golf course is located (collectively, the "New Castle Property").
Pan American is the sole general partner of New Castle, and the Limited Partners
are all of the limited partners of New Castle.
The UPREIT has been formed by PREIT and PREIT Property Trust, a
Pennsylvania business trust ("PREIT Subsidiary"), pursuant to the terms of an
Agreement of Limited Partnership of PREIT Associates, L.P. dated as of June 30,
1997, as amended and restated by a First Amended and Restated Agreement of
Limited Partnership dated September 30, 1997 and as last amended on October 13,
1998 ( as the same may be amended from time to time in accordance with the
provisions thereof, the "UPREIT Partnership Agreement").
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New Castle has entered into an agreement (the "Christiana Agreement")
with the Rouse Company and/or its affiliates ("Rouse Parties") wherein, among
other things, the New Castle Property (including the Christiana Mall and the
adjoining land referred to above as well as certain corporate stock) will be
transferred to the Rouse Parties, under and subject to the existing secured
indebtedness thereon and associated rights held by the Equitable Life Assurance
Society of the United States ("Equitable"), including but not limited to the
right and option of Equitable to be admitted as a fifty percent (50%) partner in
New Castle Associates (such indebtedness and rights being hereinafter
collectively referred to as the "Equitable Lien" and the loan documents relating
to the Equitable Lien being collectively referred to as the "Loan Documents"),
but free of all other mortgage indebtedness.
The UPREIT or its Affiliates have entered into various agreements with
the Rouse Parties (the "Mall Agreements") for the acquisition of fee title to,
or all the direct and indirect beneficial ownership interests in, the six mall
properties (the "Mall Properties") known as the Cherry Hill Mall, Moorestown
Mall and Echelon Mall (in New Jersey) and the Plymouth Meeting Mall, Exton Mall
and Gallery I (in Pennsylvania).
The UPREIT will, as set forth herein, designate that New Castle accept
an assignment and assumption of those Mall Agreements which pertain to not more
than two (2) of the Mall Properties (the "Replacement Agreements", and the
property covered thereunder being referred to collectively as the "Replacement
Property", provided that the Replacement Property will include neither the
Gallery I nor the Echelon Mall, and provided that the secured indebtedness
against the Replacement Property is at least $120 Million). Pursuant to such
assignment and assumption, it is anticipated that, either directly or through a
qualified intermediary, the New Castle Property will be exchanged for the
Replacement Property in a transaction qualifying (as to New Castle) as a
tax-free exchange under Section 1031 of the Internal Revenue Code. As used
herein, the term "Exchange Agreements" means, collectively, the Christiana
Agreement and the Replacement Agreements.
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Subject to the terms and conditions of this Agreement, the parties
intend that, upon the conveyance to the Rouse Parties or their designees of the
New Castle Property pursuant to the Christiana Agreement, the Contributors (or
certain of the Contributors) will contribute to the UPREIT, in exchange for
Class A or Class B limited partner interests in the UPREIT (as applicable,
"Units"), portions of their partnership interests in New Castle, and thereupon a
designee of the UPREIT shall become the sole general partner of New Castle and
the partnership agreement of New Castle will be amended (the "Amended and
Restated New Castle Partnership Agreement"), and thereafter, New Castle will
acquire the Replacement Property. The interests of Contributors in New Castle to
be contributed initially to the UPREIT are herein referred to as the
"Transferred Interests", and the interests of the Contributors which will be
initially retained by Contributors are herein referred to as the "Retained
Interests".
NOW, THEREFORE, in consideration of the foregoing and mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. NEW CASTLE EQUITY VALUE; MISCELLANEOUS DEFINITIONS
1.1 New Castle Equity Value. As used in this Agreement, the "New Castle
Equity Value" means the stipulated amount of Forty Four Million Dollars
($44,000,000), plus or minus the Net Adjustment Amount determined at Closing
pursuant to Section 8.3 hereof, and as adjusted pursuant to Section 3.1(c)
hereof or as elsewhere expressly provided in this Agreement. The parties
acknowledge that, subject to the aforesaid adjustments, $40,000,000 of the New
Castle Equity Value is allocable to the Christiana Mall portion of the New
Castle Property, and $4,000,000 of the New Castle Equity Value is allocable to
the Land portion of the New Castle Property.
1.2 Miscellaneous Definitions.
(a) Affiliate. "Affiliate" means, with respect to any specified
Person, any other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with such
specified Person.
(b) Authorizations. "Authorizations" means all licenses, permits,
approvals, consents and authorizations required by any governmental or
quasi-governmental agency, body, department, commission, board, bureau,
instrumentality, officer, or other Person or entity with respect to the
business, assets or affairs of a party.
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(c) Contracts. "Contracts" means any contractual obligations,
commitments, undertaking or arrangements to which a party is bound, whether oral
or in writing, other than occupancy leases of the New Castle Property, including
without limitation (1) Contracts with service providers relating to the assets
of New Castle, and (2) Contracts with municipal or governmental authorities.
(d) Contributor Disclosure Exhibit. "Contributor Disclosure
Exhibit" means Schedule 1.2 (d) hereto, which sets forth certain qualifications
and exceptions to the representations, warranties and other information provided
by the Contributors in this Agreement.
(e) Laws. "Laws" means any applicable governmental laws, statutes,
ordinances, resolutions, rules, codes, regulations, orders or determinations of
any federal, state, county, municipal or other government or governmental or
quasi-governmental agency, department, commission, board, bureau, officer or
instrumentality, relating to a party, its partners, assets, rights and
obligations.
(f) Person. "Person" means any individual, partnership, limited
partnership, trust, estate, incorporated or unincorporated association, limited
liability company, limited liability partnership, or other entity.
(g) Taxes. "Taxes" means any income, franchise, sales, use, social
security, unemployment compensation or other taxes, imposts or impositions
payable by an entity to any federal, state or local collecting authority, other
than ad valorem real estate taxes.
SECTION 2. CONTRIBUTIONS AND CALL.
2.1 Transferred and Retained Interests. The Transferred Interests and
Retained Interests consist of specified percentages of the existing partnership
interests of each of the Contributors in New Castle, and are described on
Schedule 2.1 (a) hereto. Notwithstanding the foregoing, the Contributors shall
have the right, upon notice to the UPREIT given prior to Closing, to adjust the
Transferred Interests as among the Contributors, so long as the total of the
Transferred Interests equals 49% of all partnership interests in New Castle, and
the total of the Retained Interests equals the balance of Interests held by the
Contributors, and further provided, that any Marta Entity shall be a Transferred
Interest unless such entity agrees to be a Retained Interest.
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(a) Notwithstanding the foregoing, it is acknowledged that, in
connection with its admission to New Castle, the UPREIT intends to make a
capital contribution to New Castle as may be necessary (1) to consummate the
acquisition of the Replacement Property in a transaction qualifying (as to New
Castle) as a tax-free exchange under Section 1031 of the Internal Revenue Code
(the "UPREIT Added-Equity Contribution"), and (2) subject to the UPREIT's
approval of the amount thereof and to the condition that no cash distributions
shall be made to the partners of New Castle prior to Closing, to cover any
anticipated shortfall (the "Cash Closing Shortfall") in the cash position of New
Castle in order to effectuate closing under this Agreement and the Christiana
Agreement (the "Cash Closing Shortfall Contribution"). If either or both of such
capital contributions are made, the Amended and Restated New Castle Partnership
Agreement shall reflect an increase in the interest of the UPREIT, and a
corresponding decrease in the Retained Interests (to be made pro-rata among the
holders of such Retained Interests), based upon the relative aggregate amount of
such contributions as compared to the New Castle Equity Value, it being further
understood that the New Castle Equity Value shall neither increase nor decrease
by reason of the Upreit Added-Equity Contribution, but shall be reduced (as more
particularly set forth in this Agreement) by any Cash Closing Shortfall
Contribution. The New Castle Equity Value shall also be adjusted by the Net
Adjustment Amount as set forth in Section 8.3 hereof.
2.2 Contributions at Closing. Subject to the terms and conditions of
this Agreement, at the Closing (as defined in Section 7.1), the Contributors (or
such of the Contributors who are designated to make such contribution pursuant
to the terms of this Agreement) shall contribute to the UPREIT, and the UPREIT
shall acquire from such Contributors, free and clear of all liens, claims and
encumbrances of any type or nature, the Transferred Interests and all benefits
and advantages to be derived therefrom, including, without limitation, all
right, title and interest associated with the Transferred Interests in and to
(i) the capital accounts of such Contributors, (ii) distributions by New Castle,
and (iii) allocable shares with respect to profits and losses of New Castle.
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2.3 Option to Acquire Retained Interests. Pursuant to the terms of a
separate Put and Call Option Agreement in the form set forth on Schedule 2.3
hereto to be entered into at Closing by and among the UPREIT, the Contributors
(or such of Contributors who retain interests in New Castle following Closing
hereunder) and the general partner of New Castle (the "Second Acquisition
Agreement"), and as more particularly set forth therein:
(a) Each of the Contributors who has a Retained Interest has
granted to the UPREIT the right and option (the "Call"), during a specified
period of time, to acquire all of its Retained Interests, free and clear of all
liens, claims and encumbrances of any type or nature, in exchange for a
specified number of Units; and
(b) If the Call has not been exercised within the time allowed
therefor, certain rights shall accrue in favor of the Contributors during a
subsequent period of time to require the UPREIT to acquire all or some of the
Retained Interests, free and clear of all liens and encumbrances of any type or
nature, in exchange for a specified number of Units (the "Put").
2.4 Second Closing. The time at which the Retained Interests are
required to be contributed by Contributors to the UPREIT pursuant to the Call or
the Put is herein referred to as the "Second Closing".
SECTION 3. CONSIDERATION.
3.1 Unit Calculation. At the Closing, in consideration for the
contributions of the Transferred Interests described in Section 2, and subject
to the terms and conditions of this Agreement, the UPREIT shall issue to each of
the transferring Contributors the number of Class A or Class B Units of the
UPREIT computed as follows:
(a) A Contributor shall receive either Class A Units or Class B
Units. Pan American shall receive Class A Units, and all other Contributors
shall receive Class B Units. The Number of Units to be issued to a Contributor
shall be equal to the product of (A) the percentage interest in New Castle
represented by the Transferred Interest of such Contributor (i.e., the aggregate
percentage of total partnership interests represented by such Transferred
Interest), and (B) the quotient obtained by dividing the New Castle Equity Value
by the average closing price of a share of the publicly traded beneficial
interests of PREIT during the ten (10) trading day period immediately preceding
Closing (the "Average Closing Price"); provided that the number of Units so
derived shall be rounded to the nearest integer (0.5 rounded down). For example,
if a Contributor's Transferred Interest was a 10% interest in New Castle, if the
average closing price of a share of PREIT was $25, and if the New Castle Equity
Value was $44 Million, then the Contributor would be entitled to 176,000 Units.
If the UPREIT invests in New Castle as provided in Section 2.1, the Unit
calculation specified hereunder shall be made without regard thereto except for
a Cash Closing Shortfall Contribution.
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(b) Notwithstanding anything to the contrary set forth herein, the
UPREIT shall have the right and option to deliver to any Contributor who is not
an "accredited investor," as such term is defined under Regulation D promulgated
pursuant to the Securities Act of 1933, as amended (the "Act"), in lieu of any
Units which would otherwise be issuable to such Contributor pursuant to Section
3.1(a) of this Agreement, an amount of cash equal to the product of (i) the
number of Units otherwise issuable to such Contributor pursuant to Schedule 3(a)
of this Agreement and (ii) the Average Closing Price.
(c) If, after the date hereof, there shall occur any
recapitalization, unit division, reverse division, unit re-issuance or any other
transaction involving the UPREIT or PREIT whereby a Class A Unit or a Class B
Unit of the UPREIT (as it exists on the date hereof) shall be reconstituted as a
different number of Class A Units or Class B Units, respectively, and/or as a
specified number of units having a different class or designation (in each case
subject to the necessary requirements specified in the UPREIT Partnership
Agreement), or if there shall occur any merger, consolidation or other
transaction involving the UPREIT and/or PREIT whereby specified interests or
units are substituted for a Class A Unit or a Class B Unit (or for the
reconstituted Units determined as aforesaid), then for purposes of computing the
number of Units to be issued under this Agreement, such reconstituted or
substituted number of Class A Units, Class B Units and/or specified other Units
or interests shall be substituted for each Class A Unit or Class B Unit, as the
case may be, otherwise applicable hereunder. Any such substitution shall be
accomplished in a manner that neither increases nor decreases the value of the
Units to be received by the Contributors as compared to other holders of Class A
or Class B Units under the UPREIT Partnership Agreement.
(d) Notwithstanding the foregoing or anything to the contrary in
this Agreement or the UPREIT Partnership Agreement (including any applicable
time limitations on transfers of Units), solely as to any Transferred Interests
of any of the Marta Entities, PREIT and the UPREIT acknowledge and agree as
follows:
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(i) Each Marta Entity has advised PREIT and the UPREIT that,
pursuant to applicable law or its governing documents, it may desire to transfer
all or some of the Units that it receives at the Closing to its partners,
beneficiaries or other equity holders (as the case may be, the "Transferees") in
accordance with their respective interests therein. Accordingly, each Marta
Entity hereby reserves the right, upon written notice to PREIT and the UPREIT,
to transfer such Units to its Transferees, provided, in each case, that (A) such
transfer is made to the Transferees pro rata in accordance with their respective
interests in the transferring Marta Entity; (B) such Transferees do not pay any
consideration to the transferring Marta Entity(ies) for such Units; (C) each
Transferee certifies in writing to PREIT and the UPREIT that such Transferee is
accepting the Units for his, her or its own account, not as a nominee or agent
for any other Person, solely for investment purposes, and without a view to
resale or other distribution within the meaning of the 1933 Act, and the rules
and regulations thereunder, and that such Transferee will not distribute any of
such Units in violation of the 1933 Act or any applicable state securities law;
(D) each Transferee executes and delivers to PREIT and the UPREIT an agreement
whereby such Transferee shall assume all of the obligations of the transferring
Marta Entity under the UPREIT Partnership Agreement with respect to the Units
being transferred to such Transferee; and (E) each transferring Marta Entity and
each Transferee executes and delivers to PREIT and the UPREIT such other
transfer documentation as either may reasonably request. PREIT and the UPREIT
hereby consent to any transfers of Units by a Marta Entity effected in
accordance with this clause (i), and agree to take such actions as shall be
reasonably necessary to effect each such transfer.
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(ii) If any or all of the Marta Entities (or any of their
Transferees pursuant to transfers effected in accordance with clause (i) above)
shall exercise the right to tender Units for redemption under section 9.5 of the
UPREIT Partnership Agreement, and if such tender shall occur during the period
beginning on the first business day following the Closing and continuing for
five (5) business days thereafter, then PREIT, as general partner of the UPREIT,
shall waive its right to require that such tendered Units be redeemed for shares
of beneficial interest in PREIT in lieu of cash; provided that such waiver shall
extend only to fifty percent (50%) of the aggregate number of Units issued at
Closing to the Marta Entities, so that the Marta Entities (or their Transferees)
will be entitled to receive cash for fifty percent (50%) of their Units which
are redeemed within the aforesaid period.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS.
4.1 As to the Contributors and Marta Individuals. For purposes hereof,
the term "Contributor Entity" means the legal entity (i.e., limited partnership,
corporation, estate or trust) which comprises a Contributor. Each Contributor
and Marta Individual (who shall be jointly referred to as a "Contributor" for
purposes of this Section 4 only) severally, but not jointly, hereby represents
and warrants to PREIT and the UPREIT as follows:
(a) Organization. If the Contributor is a Contributor Entity, such
Contributor Entity is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all power to
carry on its business as presently conducted, to own its interest in New Castle
and to exercise all rights attributable to such interest. It is duly qualified
to do business as a foreign entity and is in good standing under the laws of
each jurisdiction in which its ownership of or other interest in assets or
properties or the nature of its activities requires such qualification except
where the failure to be so qualified would not have a material adverse effect on
the condition (financial or otherwise), assets, results of operations or
business of such Contributor Entity (a "Material Adverse Effect").
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(b) Power and Authority. It has all requisite power and authority
to execute, deliver and perform its obligations under this Agreement and under
the other agreements and documents required to be delivered by it prior to or at
the Closing (collectively, and together with all documents and agreements
required to be delivered by the other Contributors on or prior to the Second
Closing, the "Contributor Transaction Documents"). The execution, delivery and
performance by it of this Agreement and the other Contributor Transaction
Documents to which it is a party have been duly authorized by all necessary
action on the part of such Contributor or Contributor Entity. This Agreement has
been duly and validly executed and delivered by it and constitutes a legal,
valid and binding obligation of such Contributor enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally or by general equitable principles. When executed and delivered
as contemplated herein, each of the other Contributor Transaction Documents to
which such Contributor is a party shall, assuming due authorization, execution
and delivery thereof by the other parties thereto, constitute a legal, valid and
binding obligation of such Contributor enforceable against it in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
or by general equitable principles.
(c) No Conflicts. The execution and delivery by it of this
Agreement does not, and the performance by it of all of the Contributor
Transaction Documents will not (with or without the passage of time or the
giving of notice), directly or indirectly:
(i) contravene, violate or conflict with (A) its articles of
incorporation, bylaws, partnership agreement or other organizational documents,
as the case may be, or (B) any Law applicable to such Contributor, or by or to
which any assets or properties of such Contributor is bound or subject;
(ii) violate or conflict with, result in a breach of,
constitute a default or otherwise cause any loss of benefit under, or give to
others any rights (including rights of termination, amendment, foreclosure,
cancellation or acceleration) in or with respect to, any Authorization or
Contract to which such Contributor is a party or by which such Contributor or
any assets or properties thereof is bound or affected; or
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(iii) result in, require or permit the creation or imposition
of any lien or encumbrance upon or with respect to such Contributor, the
Transferred Interests, the Retained Interests, or any of such Contributor's
other assets or properties.
(d) Authorizations. The execution and delivery by it of this
Agreement does not, and the execution and delivery by such Contributor of the
other Contributor Transaction Documents, and the performance by such Contributor
of this Agreement and all of the Contributor Transaction Documents will not,
require such Contributor to obtain any authorization of, or to make any filing,
registration or declaration with or notification to, any court, government or
governmental agency or instrumentality (federal, state, local or foreign) or to
obtain the consent, waiver or approval of, or give any notice to, any other
Person.
(e) Proceedings. There are no claims, actions, suits, proceedings
or investigations pending or, to the knowledge of such Contributor, threatened
or contemplated, involving or affecting it or any of its assets or properties or
to its knowledge any of its directors, officers, partners, trustees or
shareholders, that question any of the transactions contemplated by this
Agreement or other Contributor Transaction Documents, or which, if adversely
determined, would have a Material Adverse Effect or could materially and
adversely affect such Contributor's ability to enter into or perform its
obligations under this Agreement.
(f) Orders. No officer, director, partner, or, to the knowledge of
such Contributor, employee or shareholder of such Contributor is subject to any
order that prohibits such officer, director, partner, shareholder or employee
from engaging in or continuing any conduct, activity or practice relating to its
business with respect to New Castle or the New Castle Property.
(g) The Transferred and Retained Interests.
(i) No person or entity has any partnership or other interest
in New Castle or any right to receive any distributions from New Castle or be
allocated any profits or losses of New Castle, other than the Contributors and
MI. Such Contributor owns, beneficially and of record, the portion of the
Transferred Interests and Retained Interests described in Schedule 2.1(a)
hereto, free and clear of all liens, pledges and encumbrances of any type or
nature, other than the lien of Section 6324 of the Internal Revenue Code of
1986.
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(ii) Except for this Agreement or for the rights of Equitable,
Contributor has no knowledge of any rights, subscriptions, warrants, options,
rights of first refusal, conversion rights or agreements of any kind outstanding
to purchase or to otherwise acquire any partnership interest or other securities
or obligations of any kind convertible into any partnership interest or other
securities or any participation interests of any kind in New Castle or the New
Castle Property.
(h) Brokers. No Person acting on behalf of such Contributor or any
of their respective affiliates or under the authority of any of the foregoing is
or will be entitled to any brokers' or finders' fee or any other commission or
similar fee, directly or indirectly, from any of such parties in connection with
any of the transactions contemplated by this Agreement. In such connection,
however, the parties acknowledge that a brokerage commission of $2,000,000 will
be due by reason of the closing under the Christiana Agreement by New Castle to
Preit-Rubin, Inc. or an affiliated entity, pursuant to Section 3.5 of the
existing management agreement for the New Castle Property, which brokerage
commission is to be paid by New Castle to Preit-Rubin, Inc. or an affiliated
entity at or prior to such closing.
(i) Accurate Disclosure. All documents and other papers delivered
by or on behalf of such Contributor in connection with the transactions
contemplated by this Agreement are accurate and complete in all material
respects.
(j) Investment Representations.
(i) Contributor acknowledges that the Units to be issued
pursuant to Section 3 and Schedule 2(a) hereto or pursuant to the Second
Acquisition Agreement will not be registered under the 1933 Act on the grounds
that the issuance of such units is exempt from registration pursuant to Section
4(2) of the 1933 Act and/or Regulation D promulgated under the 1933 Act, and
that the reliance of the UPREIT on such exemptions is predicated in part on the
Contributors' representations, warranties and acknowledgements set forth in this
section.
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(ii) Contributor is an accredited investor as defined in
Regulation D promulgated under the 1933 Act. The Units issued in accordance with
this Agreement will be acquired by such Contributor that is acquiring Units
hereunder for its own account, not as a nominee or agent for any other Person,
solely for investment purposes, and without a view to resale or other
distribution within the meaning of the 1933 Act, and the rules and regulations
thereunder, and such Contributor will not distribute any of such units in
violation of the 1933 Act or any applicable state securities law.
(iii) Contributor (v) acknowledges that the Units, when issued,
will not be registered under the 1933 Act and such Units will have to be held
indefinitely by it unless they are subsequently registered under the 1933 Act or
an exemption from registration is available, (w) is aware that any sales of such
Units made under Rule 144 of the Securities and Exchange Commission under the
1933 Act may be made only in limited amounts and in accordance with the terms
and conditions for that Rule and that in such cases where the Rule is not
applicable, compliance with some other registration exemption will be required,
(x) is aware that Rule 144 may not be available for use by any Contributor for
resale of the Units, and (y) is aware that the UPREIT is under no obligation to
register, and has no current intention of registering, any of such units under
the 1933 Act.
(iv) Contributor is well versed in financial matters, has had
dealings over the years in securities, including "restricted securities," and
has had sufficient experience so as to be fully capable of understanding the
type of investment being made in the Units and the risks involved in connection
therewith.
(v) Contributor has examined the UPREIT Partnership Agreement,
and is prepared to accept and abide by the terms thereof. Contributor
acknowledges that the UPREIT Partnership Agreement restricts the assignment,
sale or transfer of the Units, and that it must continue to bear the economic
risks of the investment in the units for an indefinite period.
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(vi) Contributor has received and reviewed to the extent deemed
necessary or desirable all PREIT Reports (as defined in Section 5.5 hereof), and
has consulted such of its own attorney, accountant, tax adviser and investment
counselor as it determined to be necessary or desirable.
(vii) Contributor has been given an adequate opportunity to ask
questions of and receive answers from officers of PREIT and the UPREIT with
respect to PREIT, the UPREIT, the Units, the UPREIT Partnership Agreement and
the PREIT Reports. However, in considering whether to enter into this Agreement,
consummate the transactions contemplated hereby and acquire the Units, such
Contributor has not relied upon any representations made by, or other
information (whether oral or written) furnished by or on behalf of, PREIT or the
UPREIT other than as set forth in this Agreement, the UPREIT Partnership
Agreement, and the PREIT Reports.
(viii) Contributor acknowledges that the redemption of any of
the Units may cause such Contributor to incur taxable income or gain.
(ix) With respect to the Marta Entity and MI only, the
aggregate number of partners, beneficiaries and other equity holders of the
Marta Entity and MI does not exceed ten (10) individuals.
(k) FIRPTA. Contributor is not a "foreign person" within the
meaning of Section 1445(f) of the Code or a "foreign partner" within the meaning
of Section 1446 of the Code.
Each Contributor shall have responsibility only for its own representations and
warranties as set forth in this Section 4.1, and shall not be responsible for
any breach or failure of a representation or warranty (a "Breach") made by
another Contributor pursuant to this Section 4.1, subject to the provisions
regarding indemnification set forth in Section 9 of this Agreement.
4.2 As to New Castle. Pan American, as general partner of New Castle,
hereby represents and warrants to PREIT and the UPREIT as follows:
(a) Organization. New Castle is a limited partnership duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has all partnership power to carry on its
business as presently conducted, to own and lease the assets and properties
which it owns and leases and to perform all its obligations under each agreement
and instrument to which it is a party or by which it is bound, including without
limitation the Christiana Agreement and, if assigned to it, the Replacement
Agreements. New Castle is duly qualified to do business as a foreign partnership
and is in good standing under the laws of each jurisdiction in which its
ownership or leasing of assets or properties or the nature of their activities
requires such qualification except where the failure to be so qualified would
not have a Material Adverse Effect on the condition (financial or otherwise),
assets, results of operations or business of New Castle.
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(b) Financial Statements. Except as set forth in the Contributor
Disclosure Exhibit, the financial statements for New Castle for the years 2000,
2001 and 2002 attached hereto as Schedule 4.2(d) are correct and complete in all
material respects, have been prepared in accordance with GAAP, and present
accurately the results of the operations of New Castle for the periods
indicated. Since the date of the last financial statement included on said
Schedule, no material adverse change in the financial condition of New Castle
has occurred.
(c) Undisclosed Liabilities.
(i) As of the Closing Date, there shall be no liabilities of
New Castle of any nature (whether absolute, accrued, contingent, liquidated,
unliquidated or otherwise) except liabilities with respect to the Replacement
Property to be assumed or taken subject to by New Castle in accordance with the
express terms of the Exchange Agreements (provided that any such liabilities
shall not be in contravention of any of the warranties and representations of
Contributors under this Agreement, and shall be subject to Pan American's
indemnification obligations under this Agreement to the extent applicable).
(d) Taxes.
(i) All Taxes due from or required to be remitted by New Castle
with respect to taxable periods ending on or prior to, and the portion of any
interim period up to, the Closing Date have been fully and timely paid or, to
the extent not yet due or payable, shall be adequately provided for by an actual
cash reserve which shall be available at Closing as an asset of New Castle which
shall not be taken into account in calculating the Net Adjustment Amount.
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(ii) Except as disclosed in the Contributor Disclosure Exhibit,
all federal, state, local and foreign returns and reports relating to Taxes, or
extensions relating thereto, required to be filed by or with respect to New
Castle have been timely and properly filed, and all such returns and reports are
correct and complete.
(iii) Except as set forth in the Contributor Disclosure
Exhibit, no issues have been raised with New Castle (and are currently pending)
by the Internal Revenue Service or any other taxing authority in connection with
any of the returns and reports referred to in subsection (ii) above and no
waivers of statutes of limitations have been given or requested with respect to
any such returns and reports or with respect to any Taxes. Except as set forth
in the Contributor Disclosure Exhibit, all deficiencies asserted or assessments
made as a result of any previous examinations with respect to Taxes have been
fully paid, and there are no other unpaid deficiencies asserted or assessments
made by any taxing authority against New Castle or the New Castle Property.
(e) Books and Records. To the knowledge of Pan American, the books
and records of New Castle, including financial records and books of account, are
complete and accurate in all material respects and have been maintained in
accordance with sound business practices.
SECTION 5. REPRESENTATIONS AND WARRANTIES REGARDING PREIT AND THE UPREIT.
PREIT and the UPREIT hereby represent and warrant to the Contributors
as follows; provided that each of PREIT and the UPREIT make these
representations solely as to its separate business, affairs or status and shall
not extend to matters relating to the business, affairs or status of the other:
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5.1 Organization.
(a) PREIT is an unincorporated association in business trust form
duly organized and validly existing under the laws of the Commonwealth of
Pennsylvania. PREIT has all necessary trust power to carry on its business as
presently conducted, to own and lease the assets and properties that it owns and
leases and to perform all its obligations under each agreement and instrument to
which it is a party or by which it is bound.
(b) The UPREIT is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware and has
all necessary partnership power to carry on its business as presently conducted,
to own and lease the assets and properties that it owns and leases and to
perform all its obligations under each agreement and instrument to which it is a
party or by which it is bound.
5.2 Power and Authority. Each of PREIT and the UPREIT has all requisite
trust or partnership power to execute, deliver and perform its obligations under
this Agreement and under all other agreements and documents required to be
delivered by it prior to or at the Closing (collectively, the "Preit Transaction
Documents"). The execution, delivery and performance by PREIT and the UPREIT of
this Agreement and the other Preit Transaction Documents have been duly
authorized by all necessary corporate or partnership action. This Agreement has
been duly and validly executed and delivered by PREIT and the UPREIT and
constitutes the legal, valid and binding obligation of PREIT and the UPREIT
enforceable against each of them in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors rights generally or by general equitable
principles. When executed and delivered as contemplated herein, each of the
other Preit Transaction Documents shall, assuming due authorization, execution
and delivery thereof by the other parties thereto, constitute the legal, valid
and binding obligation of each of PREIT and the UPREIT that is a party thereto
enforceable against it in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors rights generally or by general equitable
principles.
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5.3 No Conflicts.
(a) The execution and delivery by PREIT and the UPREIT of this
Agreement do not, and the execution and delivery by PREIT and the UPREIT of the
other Preit Transaction Documents and the performance by PREIT and the UPREIT of
all of the Preit Transaction Documents will not (in each case, with or without
the passage of time or the giving of notice), directly or indirectly:
(i) contravene, violate or conflict with (A) the trust or
partnership agreement (or other organizational documents) of PREIT or the UPREIT
or (B) any Law applicable to PREIT or the UPREIT, or by or to which any assets
or properties of PREIT or the UPREIT is bound or subject; or
(ii) violate or conflict with, result in a breach of,
constitute a default or otherwise cause any loss of benefit or give to others
any rights (including rights of termination, amendment, foreclosure,
cancellation or acceleration) in or with respect to any material Authorization
or material Contract to which PREIT or the UPREIT is a party or by which either
PREIT or the UPREIT is bound or affected; or
(iii) result in, require or permit the creation or imposition
of any material encumbrance upon or with respect to either PREIT or the UPREIT
or any of their respective assets or properties.
(b) Except for filings with the Securities and Exchange Commission,
the execution and delivery by PREIT and the UPREIT of this Agreement do not, and
the execution and delivery by PREIT and the UPREIT of the other Preit
Transaction Documents and the performance by PREIT and the UPREIT of all of the
Preit Transaction Documents will not, require PREIT or the UPREIT to obtain any
material Authorization of or make any material filing, registration or
declaration with or notification to any court, government or governmental agency
or instrumentality (federal, state, local or foreign) or to obtain the material
consent, waiver or approval of, or give any material notice to, any Person.
(c) Except as disclosed in filings with the Securities and Exchange
Commission made by PREIT, there are no actions, proceedings or investigations
against or involving PREIT or the UPREIT pending or, to the best knowledge of
PREIT, threatened, that question any of the transactions contemplated by this
Agreement or the validity of any of the Preit Transaction Documents or which, if
adversely determined, could have a material adverse effect on the consolidated
financial condition, assets, business or results of Operations of PREIT or could
materially and adversely affect PREIT's or the UPREIT's ability to enter into or
perform its obligations under the Preit Transaction Documents.
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5.4 Capitalization.
(a) As of March 10, 2003, the outstanding beneficial interests in
PREIT consist of 16,733,175 common shares, and the outstanding partnership
interests in the UPREIT as of said date are as described on Schedule 5.4 hereto.
(b) All Units to be issued and delivered to the Contributors
pursuant to this Agreement will be, at the time of issuance and delivery in
accordance with the terms of this Agreement, duly authorized and validly issued
by the UPREIT. Assuming the accuracy of the representations and warranties of
the Contributors set forth herein, such issuance will be exempt from
registration under the 1933 Act as an offering described in Section 4(2) of such
Act and/or pursuant to Regulation D promulgated thereunder.
5.5 PREIT Reports. PREIT has delivered to the Contributors copies of
PREIT's (a) Proxy Statement for its 2002 Annual Meeting, (b) Annual Report on
Form 10-K for the fiscal year ending December 31, 2001, (c) Quarterly Reports on
Form 10-Q for the quarters ended March 31, June 30 and September 30, 2002, and
(d) Current Reports on Form 8-K filed since December 31, 2001, all of which have
been filed by PREIT with the Securities and Exchange Commission (the "PREIT
Reports"). The Contributors acknowledge that delivery of the foregoing is
effective by reason of the filing of the aforesaid materials with the
publicly-accessible EDGAR database of the Securities and Exchange Commission. To
the knowledge of PREIT and the UPREIT, in all material respects, the audited
consolidated financial statements and unaudited interim financial statements of
PREIT included in such reports have been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto) and
fairly present the consolidated financial condition and results of operations of
PREIT as at the dates thereof and for the periods then ended, subject, in the
case of the unaudited interim financial statements, to normal year-end
adjustments and any other adjustments described therein. To the knowledge of
PREIT and the UPREIT, the PREIT Reports do not contain any untrue statements of
a material fact or omit to state a material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading at the time the filing was made.
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5.6 Litigation. Except as disclosed in filings with the Securities and
Exchange Commission, there are no claims, actions, suits, proceedings
(arbitration or otherwise) or, to the best knowledge of PREIT, investigations
involving or affecting PREIT or any of its subsidiaries or any of their assets
or properties or any of their trustees, directors, officers, partners or
shareholders in their capacities as such, before or by any court, government or
governmental agency or instrumentality (federal, state, local or foreign) or
before any arbitrator of any kind, in each case of a nature that is required to
be disclosed in the PREIT Reports.
5.7 Material Adverse Change. Except as disclosed in filings with the
Securities and Exchange Commission, since December 31, 2001 and through the date
of this Agreement, there has not been any material adverse change in the
condition (financial or otherwise), assets, results of operations or business of
PREIT on a consolidated basis.
5.8 Brokers. No Person acting on behalf of PREIT or the UPREIT is or
will be entitled to any brokers' or finders' fee or any other commission or
similar fee, directly or indirectly, from any of such parties in connection with
the issuance of Units contemplated by this Agreement.
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SECTION 6. CERTAIN COVENANTS AND AGREEMENTS
6.1 Acceptance of Assignment; Conduct of Business
(a) Promptly upon request of the UPREIT, Pan American, as general
partner of New Castle, shall cause New Castle to accept in writing an assignment
of, and to assume in writing the obligations under, the Replacement Agreements.
(b) Except as expressly provided herein, until the date of Closing,
except with the prior written consent of PREIT and the UPREIT, Pan American, as
general partner of New Castle, shall endeavor to cause New Castle to:
(i) Comply in all material respects with the terms, conditions
and provisions of the Exchange Agreements and endeavor to fulfill all
requirements necessary to close thereunder;
(ii) pay and discharge in the ordinary course of business all
payments due under the Loan Documents and all of its other debts, liabilities
and obligations as they become due and pay all debt service payments, real
estate taxes, payables and other liabilities arising from the operation of the
New Castle Property prior to the Closing Date, subject to apportionments to be
made under the Exchange Agreements;
(iii) keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried by it;
(iv) maintain its books of account and records in the usual,
regular and ordinary manner and use diligent efforts to maintain in full force
and effect all of its Authorizations;
(v) not take any action, fail to take any action or permit to
occur any event that would cause or constitute a material breach of or
inaccuracy in any representation or warranty set forth herein;
(vi) not amend or grant any waivers under the Existing New
Castle Partnership Agreement;
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(vii) not amend or grant any waivers under the Exchange
Agreements; and
(viii) not enter into any agreement or understanding to do or
engage in any of the foregoing actions.
6.2 Reasonable Efforts. Upon the terms and subject to the condition
hereof, between the date hereof and the Closing Date, each of the parties hereto
shall use its reasonable efforts to take, or cause to be taken, all appropriate
action and to do, or cause to be done, all things necessary, proper or advisable
under applicable Law to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, (i) using its
reasonable efforts to make all required regulatory filings and applications and
to obtain all Authorizations and consents, approvals, amendments and waivers
from parties to Contracts as are necessary for the consummation of the
transactions contemplated by this Agreement, (ii) using its reasonable efforts
to cause the conditions to the consummation of the acquisition of the
Transferred Interests to be satisfied, and (iii) using its reasonable efforts to
take any action within its control to allow closing to occur under the Exchange
Agreements. Without limiting the foregoing, wherever action is to be taken by
Pan American to cause New Castle to perform action specified in this Agreement,
each of the Contributors (as partners of New Castle) agrees to take such
reasonable confirmatory and ratifying action as may be necessary to effectuate
and validate such action.
6.3 Notifications. Each party hereto shall give prompt notice to the
other parties upon becoming aware of: (i) any fact or condition that causes or
constitutes (or that reasonably could be expected to cause or constitute) a
breach of its representations and warranties set forth herein, or the
occurrence, or failure to occur, of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a breach of or any
inaccuracy in any of its representations and warranties contained in this
Agreement had such representation or warranty. been made as of the time of
occurrence or discovery of such fact or condition; (ii) any material failure of
it or any of its officers, directors, employees or agents, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; (iii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and (iv) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge, threatened against,
relating to or involving or otherwise affecting any Contributor, New Castle, the
UPREIT or PREIT, as the case may be, or any of the transactions contemplated by
this Agreement.
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6.4 Notifications regarding Exchange Agreements.
(a) Without limiting the provisions of Section 6.3 above, each
party hereto shall give prompt notice to the other parties upon becoming aware
of: (i) any fact or condition that causes or constitutes (or that reasonably
could be expected to cause or constitute) a breach of any of the
representations, warranties, covenants or agreements set forth in the Exchange
Agreements, or the occurrence, or failure to occur, of any fact or condition
that would cause or constitute a breach of or any inaccuracy in any of the
representations, warranties, covenants or agreements contained in the Exchange
Agreements or could reasonably be anticipated to result in the non-satisfaction
of any condition to closing hereunder; (ii) any failure of any party or any of
such party's officers, directors, employees or agents, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
under the Exchange Agreements; (iii) the assertion by any party to the Exchange
Agreements of any of the matters set forth in subsections (i) or (ii)
immediately preceding regardless of the accuracy thereof; (iv) any notice or
other communication from any governmental or regulatory agency or authority in
connection with the transactions contemplated by the Exchange Agreements; and
(v) any actions, suits, claims, investigations or proceedings commenced or, to
the best of its knowledge, threatened against, relating to or involving or
otherwise affecting any party to the Exchange Agreements or the transactions
contemplated thereunder.
(b) Pan American, in its status as general partner, shall cause New
Castle to promptly deliver to the UPREIT copies of all reports, studies,
materials, leases, rent rolls, estoppel certificates, mortgagee statements, data
and other relevant information obtained from any source (including without
limitation the Rouse Parties or independent contractors) with regard to the
Replacement Property, as well as all relevant correspondence and communications
relating thereto (and to the extent any such information is not in written form,
Pan American shall endeavor to advise the UPREIT thereof with reasonable
promptness).
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6.5 Transfer of Transferred and Retained Interests. Between the date
hereof and the Closing, except with the prior written consent of PREIT and the
UPREIT which may be withheld in their sole discretion, no Contributor shall
sell, assign, transfer or otherwise encumber all or any portion of the
Transferred Interests or the Retained Interests or any rights relating to the
Transferred Interests or the Retained Interests, whether voluntarily, by
operation of law or otherwise, including without limitation a transfer by reason
of any merger, division or consolidation, and any such sale, assignment,
transfer or encumbrance shall be void.
6.6 Closing Pursuant to Exchange Agreements. Pan American, as general
partner, shall not cause or allow New Castle to complete closing pursuant to the
Exchange Agreements unless and until the UPREIT has delivered its written
certification to Pan American that the UPREIT and/or its Affiliates are prepared
to immediately consummate closing under the Mall Agreements which have not been
assigned to New Castle (the "Ancillary Mall Agreements") in a transaction
qualifying as a tax-free exchange under Section 1031 of the Internal Revenue
Code (including, if so agreed by the UPREIT, a closing with proceeds placed with
an intermediary for a deferred exchange).
6.7 Exchange Property Responsibilities. PREIT and the UPREIT
acknowledge that they have conducted or shall conduct their own due diligence
review of the Mall Properties (and, accordingly, the Replacement Property to be
designated by the UPREIT). PREIT and the UPREIT shall bear full responsibility
for such due diligence review. No condition at any of the Mall Properties
(including the Replacement Property) or liability under the Exchange Agreements,
other than any liability arising under the Christiana Agreement or any liability
created or assumed in contravention of the express covenants and provisions of
this Agreement, shall in any way impose liability on New Castle or the
Contributors or diminish the consideration to be received by the Contributors
hereunder.
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6.8 Special Covenant Regarding Replacement Property. The UPREIT and
PREIT as the general partner thereof, covenant and agree that, if Closing occurs
hereunder, then the UPREIT shall not permit the Replacement Property or the
interests in New Castle which are acquired from the Contributors pursuant to
this Agreement or pursuant to the Put/Call Agreement, to be disposed of for a
period of eight (8) years following Closing in such manner as to cause the
Contributors to recognize taxable income and that any such disposition within
such time period must be pursuant to a tax-free exchange under Section 1031 of
the Internal Revenue Code or other tax-free disposition; provided that such
disposition shall be permitted in a taxable transaction if the Contributors are
paid an amount sufficient to reimburse them for any tax liability resulting from
such disposition by reason of Section 704(c) of the Internal Revenue Code,
together with all taxes payable on such reimbursement. The covenants of this
Section 6.8 shall survive the Closing and the Second Closing.
6.9 Special Covenants of the Marta Individuals. The Marta Individuals
agree to use reasonable efforts to enable MI to join this Agreement as a
Contributor or to reorganize MI so that its successor can join this Agreement as
a Contributor. In the event that such efforts are not successful, the Marta
Individuals agree that as the sole general partners of MI, on behalf of MI, they
shall cause MI to waive any rights of first refusal which MI may possess, under
the Existing New Castle Partnership Agreement with respect to the transactions
contemplated herein and further that they shall cause MI to consent to the
Amended and Restated New Castle Partnership Agreement.
6.10 Rights of Marta Investments. The parties hereto agree that MI or
its successor may give written notice to Pan American at any time from the date
hereof through the day before Closing that MI intends to join in this Agreement
as a Contributor. MI shall exercise such right by delivering a writing
reasonably acceptable to counsel for New Castle and PREIT whereby MI or its
successors makes and affirms all of the representations, warranties and
undertakings and is granted all of the rights and benefits of a Contributor and
a Marta Entity hereunder. Upon such joinder, Schedule 2.1(a)(2) shall become
operative, in lieu of Schedule 2.1(a).
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6.11 Special Covenant to Ivyridge. In the event that Ivyridge
Investment Corp. ("IRIC") holds a Retained Interest, the UPREIT shall cause New
Castle's general partner to deliver a blanket authorization to IRIC allowing it
to pledge interests in New Castle to bona fide financial institutions in accord
with the procedures governing the Units, as set forth in UPREIT Partnership
Agreement.
SECTION 7. CLOSING; CLOSING CONDITIONS; CLOSING DELIVERIES.
7.1 Time of Closing. The closing (the "Closing" and the date thereof,
the "Closing Date") of the acquisition by the UPREIT of the Transferred
Interests shall take place at the offices of Blank Rome LLP, Philadelphia,
Pennsylvania, immediately following the transfer by New Castle of the New Castle
Property to the Rouse Parties (or their designees) pursuant to the Christiana
Agreement.
7.2 Closing Conditions.
(a) Conditions Precedent to PREIT's and the UPREIT's Obligations.
The obligation of PREIT and the UPREIT to consummate the acquisition of the
Transferred Interests and to take the other actions required to be taken by them
at the Closing is subject to the fulfillment by or at the Closing of each of the
following conditions, any or all of which may be waived (but only by a duly
executed writing) by both PREIT and the UPREIT in their sole discretion:
(i) Exchange Agreement.
(A) All conditions to closing under the Christiana
Agreement and the Replacement Agreements shall have been satisfied as
in a manner and to the extent reasonably determined by PREIT and the
UPREIT, including without limitation the accuracy of all
representations and warranties of the Rouse Parties under the
Replacement Agreements, the condition, title and status of the
Replacement Property, and the status of all tenant estoppel
certificates, mortgagee certificates, surveys, title information and
all other deliverables relating to the Replacement Property;
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(B) Without limiting the foregoing, New Castle shall have
conveyed the New Castle Property to the Rouse Parties or their
designees, and shall have the unqualified right to obtain fee title to
(or all beneficial interests in) the Replacement Property pursuant to
the Replacement Agreements (subject to no liens or encumbrances except
as contemplated by the terms of the Replacement Agreements), without
the requirement for any further payment or performance except for (x)
such payment and/or performance as is specified in the Replacement
Agreements and as is contemplated to occur in due course without
violation of any of the terms, warranties or representations of this
Agreement or of the Replacement Agreements.
(C) Equitable shall have entered into an agreement
reasonably satisfactory to PREIT and the UPREIT whereby New Castle (and
any guarantors of New Castle's obligations) shall be relieved of any
further obligation or liability (fixed, contingent or otherwise) under
or with respect to the Equitable Lien and/or the Loan Documents;
(D) New Castle shall have obtained an unconditional
commitment, from the title insurance company insuring title to the
Replacement Property, to issue its title insurance policy to New Castle
with a "non-imputation" endorsement which shall effectively waive any
defense of said title insurance company based upon any knowledge or
action of any of the Contributors obtained or occurring prior to the
Closing Date.
(ii) Representations and Warranties. The representations and
warranties of the Contributors set forth in this Agreement shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date.
(iii) Performance of Covenants. All of the agreements,
covenants and obligations that any Contributor and Marta Individual is required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing shall have been duly performed and complied with in all material
respects.
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(iv) Legal Matters. The performance of the Preit Transaction
Documents and the Contributor Transaction Documents and the consummation of the
Closing shall not, directly or indirectly (with or without notice or lapse of
time), violate, contravene, conflict with or result in a violation of any Law
and shall not violate any order of any court or governmental body of competent
jurisdiction, and no suit, action, investigation or legal or administrative
proceeding shall have been brought or threatened by any Person that questions
the validity or legality of this Agreement or the transactions contemplated
hereby.
(v) Consents and Approvals. Each consent, approval,
ratification, waiver or other authorization of any Person necessary, in the
reasonable opinion of PREIT and the UPREIT, for the consummation of the
transactions contemplated hereby shall have been obtained and shall be in full
force and effect, and no such consent, approval, ratification, waiver or other
authorization: (x) shall have been conditioned upon the modification,
cancellation or termination of any Contract, right or Authorization of PREIT,
the UPREIT or New Castle (except for Contracts, rights or Authorizations
relating to the New Castle Property), or (y) shall impose on PREIT, New Castle
or the UPREIT any material condition, provision or requirement not presently
imposed.
(vi) Opinion of Counsel. PREIT and the UPREIT shall have
received an opinion of counsel for each of the Contributors, dated the Closing
Date, in form and substance reasonably satisfactory to PREIT and its counsel,
relating to the execution and delivery by the Contributors of the Contributor
Transaction Documents.
(vii) Consummation of UPREIT/Rouse Exchange. The UPREIT and/or
its Affiliates shall have determined, in their sole discretion, to consummate,
and shall have consummated, closing under the Ancillary Mall Agreements.
(b) Conditions Precedent to the Contributors' Obligations. The
obligation of the Contributors to consummate the contribution of the Transferred
Interests contemplated by this Agreement and to take the other actions required
to be taken by them at the Closing is subject to the fulfillment by or at the
Closing of each of the following conditions, any or all of what may be waived by
the Contributors in their reasonable discretion:
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(i) Representations and Warranties. Each of the representations
and warranties of PREIT and the UPREIT set forth in this Agreement shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date.
(ii) Performance of Covenants. Each of the agreements,
covenants and obligations that PREIT or the UPREIT is required to perform or to
comply with pursuant to this Agreement at or prior to the Closing shall have
been duly performed and complied with in all material respects.
(iii) Legal Matters. The performance of the Preit Transaction
Documents and the consummation of the Closing shall not, directly or indirectly
(with or without notice or lapse of tine), violate, contravene, conflict with or
result in a violation of any Law and shall not violate any order of any court or
governmental body of competent jurisdiction, and no suit, action, investigation
or legal or administrative proceeding shall have been brought or threatened by
any Person that questions the validity or legality of this Agreement or the
transactions contemplated hereby.
(iv) Opinion. The Contributors shall have received an opinion
of counsel for PREIT and the UPREIT, dated the Closing Date, in form and
substance reasonably satisfactory to the Contributors and their counsel,
relating to the execution and delivery by the PREIT and the UPREIT of the Preit
Transaction Documents.
7.3 Deliveries at the Closing. At the Closing, in addition to the other
actions contemplated elsewhere herein:
(a) The Contributors (or such of the Contributors who are
transferring their interests in New Castle) shall deliver or cause to be
delivered to the UPREIT:
(i) An assignment by each of such Contributors of its
Transferred Interest, in the form set forth on Schedule 7.3 (a)(i) hereto;
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(ii) The Amended and Restated New Castle Partnership Agreement,
wherein the UPREIT or its designee shall be the sole general partner, in the
form set forth on Schedule 7.3(a)(ii) hereto. In such connection, it is agreed
that:
(A) for purposes of allocating taxable income and losses
between the portion of New Castle's taxable year up to and including
the date of Closing and the portion of New Castle's taxable year after
the date of Closing to take into account the varying interests of the
partners of New Castle as a result of the acquisition by the UPREIT of
the Transferred Interests at the Closing, there shall be an interim
closing of the books of New Castle as of the close of the date of
Closing as permitted by Treasury Regulations under Section 706 of the
Internal Revenue Code; and
(B) As more particularly set forth in the assignment
referenced in subclause (a)(i) above, certain refunds which may be
remitted to New Castle after the Closing and which were taken into
account in computing the Cash Closing Shortfall, shall be paid to the
Contributors;
(iii) An Amendment to the Certificates of Limited Partnership
of New Castle, reflecting the admission of the UPREIT or its designee as a
general partner and the withdrawal of Pan American as a general partner;
(iv) A termination of the existing management agreement for the
New Castle Property, which shall be replaced by a new management contract for
the Replacement Property with an affiliate of PREIT for a fee of approximately
5.25% of gross rental receipts in the form of that attached as Schedule
7.3(a)(iv) hereto.
(v) certificates of good standing of a recent date for each
Contributor Entity certified by the Secretary of State or corresponding
certifying authority of the state of incorporation or organization of such
Contributor Entity, and Uniform Commercial Code financing statement searches for
the Secretaries of State of Delaware and Pennsylvania, disclosing no grant of a
security interest in the Transferred Interests or Retained Interests;
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(vi) a counterpart limited partner signature page for the
UPREIT Partnership Agreement, evidencing the Contributor's agreement to be bound
by the provisions thereof with respect to its Units;
(vii) The Second Acquisition Agreement;
(viii) The Registration Rights Agreements referred to in
subsection (b) below; and
(ix) such other documents and instruments as the UPREIT or
PREIT may reasonably request to effectuate or evidence the transactions
contemplated by this Agreement.
(b) The UPREIT shall deliver or cause to be delivered to the
Contributors the following:
(i) the Units to be delivered at Closing as set forth in this
Agreement;
(ii) a Registration Rights Agreement for the Class A Unit
holders in the form set forth on Schedule 7.3(b)(ii) hereto;
(iii) a Registration Rights Agreement for the Class B Unit
holders in the form set forth on Schedule 7.3(b)(iii) hereto;
(iv) each of the documents referred to in Section 7.3(a)(i)
through (iv) above, duly executed by the UPREIT its designee;
(v) the Second Acquisition Agreement; and
(vi) to IRIC, the authorization referenced in Section 6.11
hereof.
(c) The UPREIT and the Contributors will cooperate in good faith in
executing such documentation (such as limited guarantees of indebtedness by the
Contributors, if so desired by the Contributors at each Contributor's option,
and not as their obligation) to avoid recognition of income or gain to the
Contributors by reason of a constructive distribution to them under Section 752
of the Internal Revenue Code relating to relief from liabilities.
(d) Each party shall deliver or cause to be delivered, as the case
may be, to the other parties hereto such other documents, instruments,
certificates and opinions as may be required by this Agreement.
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SECTION 8. PRE-CLOSING DISTRIBUTIONS; CLOSING COSTS; NET DISTRIBUTION AMOUNT
8.1 Costs. The Contributors shall bear and be responsible for their
respective costs in connection with the contributions contemplated by this
Agreement, including counsel fees. New Castle shall bear and be responsible for
New Castle's costs in connection with the transactions contemplated by the
Exchange Agreements, including all applicable realty transfer taxes, counsel
fees and brokerage fees; it being further understood that all such costs to be
borne by New Castle shall be chargeable to the Contributors but shall not be a
personal obligation of the Contributors and instead shall be encompassed within
the Cash Closing Shortfall and shall reduce the New Castle Equity Value. The
Contributors and New Castle shall bear no responsibility for PREIT or the
UPREIT's costs in connection with the negotiation of, or due diligence with
respect to, the Exchange Agreements, and no adjustment to the New Castle Equity
Value will result therefrom. PREIT and the UPREIT agree that the Contributors
shall have the right to structure, subject to PREIT'S reasonable approval, the
form of the Exchange Agreement(s) to eliminate or minimize realty transfer
taxation.
8.2 Cash. Pan American shall cause New Castle, prior to Closing, to
apply cash and cash equivalents of New Castle (subject to any rights of
Equitable), to closing-related expenses under this Agreement and the Christiana
Agreement and it is not intended that the UPREIT will acquire any interest
therein. The foregoing shall not apply to any reserves which are to be
established or maintained pursuant to the terms of this Agreement. If any
reserves or escrows are in effect at the time of Closing, any balances payable
from them shall be distributed pro rata to the pre-Closing partners of New
Castle.
8.3 Net Adjustment Amount. For purposes of this Agreement, the Net
Adjustment Amount shall mean (i) the amount by which the purchase price for the
New Castle Property to be paid by the Rouse Parties pursuant to the Christiana
Agreement is increased or decreased as a result of the closing adjustments and
apportionments to be made between New Castle and the Rouse Parties under the
Christiana Agreement and (ii) if the UPREIT makes a capital contribution
pursuant to Section 2.1 (a) of this Agreement for the purpose of paying the Cash
Closing Shortfall (i.e., the excess of New Castle's required payments to
Equitable, closing costs and related cash expenditures over its cash on hand),
then the Net Adjustment Amount shall include a deduction in the amount of such
Cash Closing Shortfall; if New Castle's assets other than those conveyed to
Rouse exceed the cash required to Close, such excess shall be a positive Net
Adjustment Amount. If accurate allocations for any of the items set forth herein
cannot be made at Closing because current bills are not available or the like,
then the parties shall make the allocations on the basis of the best available
information, subject to final adjustment when reasonably practicable.
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8.4 Damages. Any known Damages (as defined in Section 9.1 below) shall
be calculated and shall increase the New Castle Equity Value if the net amount
thereof is owed to Contributors, and shall decrease the New Castle Equity Value
if the net amount thereof is owed to PREIT or the UPREIT.
8.5 Statement. At Closing, the parties shall execute and deliver to one
another a statement detailing the Net Adjustment Amount and all relevant
components and calculations thereof.
8.6 Transfer Taxes on Call or Put. Any realty transfer taxes which may
be due by reason of the exercise of the Call or the Put or by reason of the
transfers by the Contributors to the UPREIT of the Retained Interests or of the
Transferred Interests or by reason of transfers of the Units from the UPREIT to
the Contributors shall be the sole responsibility of the UPREIT.
8.7 Survival. The provisions of this Section 8 shall survive Closing
and the Second Closing.
SECTION 9. INDEMNIFICATION
9.1 Indemnification by Pan American. Pan American shall and does hereby
indemnify, defend and hold harmless PREIT and the UPREIT (collectively, "Preit
Indemnitees") against and in respect of any and all losses, costs, expenses
(including, without limitation reasonable attorneys' fees), claims, actions,
damages, obligations, liabilities or diminutions in value (collectively,
"Damages"), arising out of, based upon or otherwise in respect of: (a) any
inaccuracy in or breach of any representation or warranty of Pan American or any
other Contributor or Marta Individual made in or pursuant to this Agreement or
failure of Pan American or such other Contributor or Marta Individual to perform
any other obligation or undertaking hereunder; and (b) if closing occurs under
the Christiana Agreement, any indemnification obligations, undertakings,
agreements, warranties and/or representations of New Castle in favor of the
Rouse Parties, their designees or successors, under or with respect to the
Christiana Agreement, and (c) any act or omission of New Castle Associates or
any of its partners, employees, agents or representatives in connection with the
ownership or operation of the New Castle Property occurring at any time prior to
the Closing or any liability or obligation incurred by New Castle at any time
prior to the Closing, including without limitation any liability under or with
respect to the Equitable Lien or the Equitable Loan Documents, provided that
this indemnity right does not limit any claims that New Castle may otherwise
possess against PREIT-Rubin, Inc., and its affiliates as manager of the New
Castle Property. Notwithstanding the foregoing:
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(a) The indemnification obligations of Pan American hereunder shall
be fully enforceable against Pan American notwithstanding that the underlying
claim or matter is the responsibility, as between Pan American and the other
Contributors, of one or more of the other Contributors. The parties acknowledge
that, pursuant to separate agreements between Pan American and the Contributors,
the Contributors have agreed to certain contribution and sharing arrangements
with respect to the indemnity obligations of Pan American; and it is further
understood that (1) the UPREIT is not a beneficiary under such separate
agreements, (2) such separate agreements shall not limit or restrict the rights
of the UPREIT regarding the indemnification obligations of Pan American, and (3)
the UPREIT consents to a pledge of and grant of a security interest in, the
Units to be issued to the Contributors, in favor of Pan American, for the
purpose of securing such contribution and sharing arrangements relating to the
indemnity obligations of Pan American, provided that any proceeds or other
realization by Pan American of such pledged Units shall be held and applied on
account of Pan American's indemnity obligations; and
(b) Without limiting any other provisions, rights or remedies under
this Agreement, the UPREIT shall have no recourse against any Contributor other
than Pan American for the indemnification obligations of Pan American under this
Section 9.
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9.2 Indemnification by PREIT. Subject to applicable limitations set
forth in Section 5 above, the UPREIT and PREIT shall indemnify, defend and hold
harmless each Contributor against and in respect of any and all Damages arising
out of, based upon or otherwise in respect of; (a) any inaccuracy in or breach
of any representation or warranty of PREIT or the UPREIT made in or pursuant to
this Agreement; and (b) any breach or nonfulfillment of any covenant or
obligation of PREIT or the UPREIT contained in this Agreement.
9.3 Limitation. No party may assert a claim for indemnification
pursuant to this Section 9 unless the Closing has occurred under this Agreement.
9.4 Procedure For Indemnification - Third Party Claims.
(a) Within thirty days after receipt by an indemnified party of
notice of the commencement of any proceeding against it to which the
indemnification in this Section 9 relates, such indemnified party shall, if a
claim is to be made against an indemnifying party under Section 9, give notice
to the indemnifying party of the commencement of such proceeding, but the
failure to so notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any indemnified party, except to the
extent that the indemnifying party, demonstrates that the defense of such
proceeding is materially prejudiced by the indemnified party's failure to give
such notice.
(b) If any proceeding referred to in paragraph (a) above is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such proceeding, the indemnifying party will be entitled to
participate in such proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such proceeding and the indemnified party
-37-
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such proceeding and
provide indemnification with respect to such proceeding), to assume the defense
of such proceeding with counsel reasonably satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party of its
election to assume the defense of such proceeding, the indemnifying party will
not, as long as it diligently conducts such defense, be liable to the
indemnified party under Section 9 for any fees of other counsel or any other
expenses with respect to the defense of such proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense of
such proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a proceeding, (A) it will be
conclusively established for purposes of this Agreement that the claims made in
that proceeding are within the scope of and subject to indemnification; (B) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (l) there is no finding or
admission of any violation of Law by the indemnified party (or any affiliate
thereof) or any violation of the rights of any Person and no effect on any other
claims that may be made against the indemnified party, and (2) the sole relief
provided is monetary damages that are paid in full by the indemnifying party.
The indemnified party will have no liability with respect to any compromise or
settlement of the claims underlying such proceeding effected without its
consent. If notice is given to an indemnifying party of the commencement of any
proceeding and the indemnifying party does not, within ten days after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense of such proceeding, the indemnifying party will
be bound by any determination made in such proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, with respect to those issues, by notice to
the indemnifying party, assume the exclusive right to defend, compromise, or
settle such proceeding, but the indemnifying party will not be bound by any
determination of a proceeding so defended or any compromise or settlement
effected without its consent.
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9.5 Procedure for Indemnification - Other Claims. A claim for any
matter not involving a third party claim may be asserted by notice to the party
from whom indemnification is sought.
9.6 Distributions of Units by Contributors. Without limiting any other
applicable restrictions or limitations on the transfer of Units, Pan American
shall not distribute or otherwise transfer to any other Person Units issued to
it pursuant to this Agreement unless such Person first executes and delivers to
PREIT and the UPREIT an agreement, in form and substance reasonably satisfactory
to PREIT and the UPREIT, by which such Person would join in and become a party
to this Agreement for purposes of the indemnification provisions hereof.
9.7 Right of Set-Off. PREIT and the UPREIT shall have the right to
set-off, against any Units which may be owed by PREIT or the UPREIT to Pan
American or any distributions, rights or benefits with respect thereto, any
amount owed to any Preit Indemnitee. To the extent that Pan American contests an
indemnification claim of PREIT or the UPREIT that would be the basis for the
exercise of a right to set off against any Units owed to Pan American, the
UPREIT shall issue such Units and deposit them with an escrow agent reasonably
satisfactory to the UPREIT and Pan American until the earlier to occur of (i)
resolution of such dispute by a final nonappealable order of a court of
competent jurisdiction or (ii) the mutual agreement of Pan American and the
UPREIT that such units should be released from escrow.
9.8 Indemnification Payments. Pan American shall be entitled to use
cash or Units to make indemnification payments hereunder. In the event Units are
used, each such unit shall be valued based on the per share Value (as defined in
the UPREIT Partnership Agreement) of a PREIT Share as of the date such unit is
tendered to PREIT as an indemnification payment hereunder.
9.9 Survival. The rights and obligations of the parties set forth in
this Section 9 shall survive the Closing and the Second Closing.
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SECTION 10. TERMINATION AND ABANDONMENT.
10.1 Termination. This Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time prior to the Closing:
(i) by any party hereto, if the Closing has not occurred (other
than through the failure of the party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before June 28,
2003, or such later date as the parties may mutually agree upon in writing;
(ii) by mutual consent of the UPREIT, PREIT and the Contributors;
(iii) by PREIT and the UPREIT, if any of the conditions in Section
7.2(a) have not been satisfied as of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the failure of PREIT or
the UPREIT to comply with its obligations under this Agreement) and PREIT and
the UPREIT have not waived all such unsatisfied conditions before termination
pursuant to this subparagraph (iii); or
(iv) by the Contributors if any of the conditions in Section 7.2(b)
have not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of any
Contributor to comply with its obligations hereunder) and the Contributors have
not waived all such unsatisfied conditions before termination pursuant to this
subparagraph (iv).
10.2 Procedure for Termination; Effect of Termination. A party
terminating this Agreement pursuant to this Section 10 shall give written notice
thereof to each other party hereto, whereupon this Agreement shall terminate and
the transactions contemplated hereby shall be abandoned without further action
by any party and all further obligations of the parties under this Agreement
will terminate; provided, however, that if the reason for such termination is
attributable to the willful failure of a party to perform its obligations
hereunder, or a willful misrepresentation or breach of warranty, then such party
shall reimburse to the other party its reasonable costs and expenses (including
reasonable legal fees) in connection with this Agreement and the efforts to
proceed to Closing hereunder.
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SECTION 11. GENERAL PROVISIONS.
11.1 Survival of Representations and Warranties.
(a) All representations and warranties made by the parties in
this Agreement and in the certificates, documents and other agreements delivered
pursuant hereto shall survive the Closing. Anything in this Agreement to the
contrary notwithstanding: (i) the representations and warranties of the
Contributors and the right of the Preit Indemnitees to indemnification for
breach thereof, shall not be affected by any investigation of the Contributors,
New Castle, the New Castle Property or the Replacement Property made by PREIT,
the UPREIT or their agents or representatives; and (ii) the representations and
warranties of PREIT hereunder, and the right of the Contributors to
indemnification for breach thereof, shall not be affected by any investigation
of PREIT, the UPREIT or its affiliates made by the Contributors or their agents
or representatives.
11.2 Costs and Expenses. Except as otherwise expressly provided
herein, each party shall bear its own expenses in connection herewith.
11.3 Notices. All notices or other communications permitted or
required under this Agreement shall be in writing and shall be sufficiently
given if and when hand delivered to the persons set forth below or if sent by
documented overnight delivery service or registered or certified mail, postage
prepaid, return receipt requested, or by telegram, telex or telecopy, receipt
acknowledged, addressed as set forth below or to such other person or persons
and/or at such other address or addresses as shall be furnished in writing by
any party hereto to the others. Any such notice or communication shall be deemed
to have been given as of the date received, in the case of personal delivery, or
on the date shown on the receipt or confirmation therefor in all other cases.
To PREIT or the UPREIT:
c/o PREIT-Rubin, Inc.
200 South Broad Street - 3rd Floor
Philadelphia, PA 19102
Attn: Jonathan B. Weller
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With a copy to:
Blank Rome LLP
One Logan Square
Philadelphia, PA 19103
Attn: G. Craig Lord, Esq.
To the Contributors:
c/o Pan American Associates, L.P.
200 South Broad Street, 3rd Floor
Philadelphia, PA 19102
Attention: George Rubin
With copies to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
260 S. Broad Street
Philadelphia, PA 19102
Attention: Lawrence J. Arem, Esquire
And to the following additional counsel:
- --------------------------- ------------------------- --------------------------
Thomas C. Martin, Esq. Thomas Mammarella, Esq. Jeffrey M. Weiner, Esq.
Maron & Marvel, P.A. Gordon, Fournaris & 1332 King Street
1300 N. Broom St. Mammarella, PA Wilmington, DE 19801
Wilmington, DE 19806 1220 N. Market St.
Wilmington, DE 19899
- --------------------------- ------------------------- --------------------------
11.4 Access to Information. Between the date of this Agreement and the
Closing Date, PREIT and the UPREIT, on the one hand, and the Contributors, on
the other hand, will give to the other party and its officers, employees,
counsel, accountants and other representatives free and full access to and the
right to inspect, during normal business hours, all of the assets, records,
facilities, properties and Contracts relating to its business as the other party
may reasonably request.
11.5 Confidentiality and Disclosures. Except as hereinafter provided,
from and after the execution of this Agreement, PREIT, the UPREIT and the
Contributors shall keep the terms, conditions and provisions of this Agreement
confidential and neither shall make any public announcements hereof unless the
-42-
other first approves of same in writing, nor shall either disclose the terms,
conditions and provisions hereof, except to persons who "need to know", such as
their respective officers, directors, employees, attorneys, accountants,
engineers, surveyors, consultants, financiers, partners, investors and bankers,
and such other third parties whose assistance is required in connection with the
consummation of this transaction or as required by law or order of court of
competent jurisdiction. Notwithstanding the foregoing, it is acknowledged that
PREIT and their affiliates shall have the absolute and unbridled right to
disclose any information regarding the transaction contemplated by this
Agreement required by law or as determined to be necessary or appropriate by
attorneys for each such entity to satisfy disclosure and reporting obligations
of each such entity. After Closing, PREIT and the UPREIT shall be free to
disclose previously confidential information in their discretion.
11.6 Public Announcements. Except as and to the extent required by Law
or by the rules of the New York Stock Exchange, without the prior written
consent of the other party, the Contributors, on the one hand, and PREIT and the
UPREIT, on the other hand, will not, and each will direct its representatives
not to, directly or indirectly, make any public comment, statement or
communication with respect to, or otherwise disclose or permit the disclosure of
any of the terms, conditions or other aspects of the transactions contemplated
hereby; provided, however, that PREIT may issue a press release, after
discussion of the contents thereof with the Contributors, regarding the
transactions contemplated by this Agreement and the Exchange Agreements; and
further provided that PREIT and the UPREIT may each maintain and continue such
communications with principals, partners, lenders, trustees, attorneys,
accountants, investment bankers, consultants engaged by PREIT and UPREIT, as may
be legally required or necessary or appropriate in connection with the
consummation of the transactions contemplated by this Agreement.
11.7 Entire Agreement. This Agreement, together with the Schedules
hereto and the Contributor Disclosure Exhibit, and any supplementary agreements
of the Contributors regarding the confidentiality of the transactions
contemplated hereunder, constitutes the entire agreement between the parties
hereto with respect to its subject matter and supersede all prior agreements and
understandings with respect to the subject matter hereof.
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11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of this
Agreement, and all of which, when taken together, shall be deemed to constitute
but one and the same Agreement.
11.9 Governing Law. This Agreement is made pursuant to, and shall be
construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania (and United States federal law, to the extent applicable),
irrespective of the principal place of business, residence or domicile of the
parties hereto, and without giving effect to otherwise applicable principles of
conflicts of laws.
11.10 Section Headings, Captions and Defined Terms. The section
headings and captions contained herein are for reference purposes only and shall
not in any way affect the meaning and interpretation of this Agreement. The
terms defined herein and in any agreement executed in connection herewith
include the plural as well as the singular, and the use of any pronouns includes
the masculine, feminine and neuter. Except as otherwise indicated, all
agreements defined herein refer to the same as from time to time amended or
supplemented or the terms thereof waived or modified in accordance herewith and
therewith.
11.11 Amendments, Modifications and Waiver. The parties may amend or
modify this Agreement in any respect. Any such amendment or modification shall
be in writing. The waiver by any party of any provision of this Agreement shall
not constitute or operate as a waiver of any other provision hereof, nor shall
any failure to enforce any provision hereof operate as a waiver of such
provision or of any other provision.
11.12 Severability. The invalidity or unenforceability of any
particular provision, or part of any provision, of this Agreement shall not
affect the other provisions or parts hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions or
parts were omitted.
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11.13 Liability of Trustees, etc. No recourse shall be had for any
obligation of PREIT hereunder, or for any claim based thereon or otherwise in
respect thereof, against any past, present or future trustee, shareholder,
officer or employee of PREIT, whether by virtue of any statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise, all such
liability being expressly waived and released by each other party hereto.
11.14 No Third Party Beneficiary. No party other than the parties to
this Agreement and their respective successors and permitted assigns shall be a
beneficiary of this Agreement; and without limiting the foregoing, the Rouse
Parties shall not be beneficiaries of this Agreement.
11.15 Binding Effect. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns,
provided that no assignment by Contributors shall be binding or effective unless
approved by PREIT and the UPREIT.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, all as of the date first written above.
PAN AMERICAN ASSOCIATES
By: Pan American Office Investments, L.P., a Pennsylvania limited
partnership, general partner
By: Pan American Office Investments-G.P., Inc., its sole general partner
By: /s/ George F. Rubin (SEAL)
-----------------------------------
Name: George F. Rubin
Title: President
REVOCABLE TRUST OF ALBERT MARTA
By: /s/ Lauren M. DeMichiel (SEAL)
--------------------------------------------
Lauren M. DeMichiel, Co-Trustee
By: /s/ Barbara M. DiFonzo (SEAL)
--------------------------------------------
Barbara M. DiFonzo, Co-Trustee
IVYRIDGE INVESTMENT CORP.
By: /s/ Arthur H. Kaplan (SEAL)
--------------------------------------------
Name: Arthur H. Kaplan
Title: President
[Signatures continued on next page]
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[Continuation of signatures]
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
By: /s/ Jonathan B. Weller (SEAL)
-------------------------------------------------
Name: Jonathan B. Weller
Title: President and Chief Operating Officer
PREIT ASSOCIATES, L.P.
By: Pennsylvania Real Estate Investment Trust, its General Partner
By: /s/ Jonathan B. Weller (SEAL)
--------------------------------------------
Name: Jonathan B. Weller
Title: President and Chief Operating Officer
MARTA INDIVIDUALS
/s/ Laurence M. DeMichiel
- ------------------------------
Lauren M. DeMichiel
/s/ Barbara M. DiFonzo
- ------------------------------
Barbara M. DiFonzo
-47-
SCHEDULES TO BE ATTACHED:
- ------------------ -------------------------------------------------------------
1.2(d) Contributor Disclosure Exhibit
- ------------------ -------------------------------------------------------------
2.1(a) Transferred and Retained Interests
- ------------------ -------------------------------------------------------------
2.1(a)(2) Transferred and Retained Interests
- ------------------ -------------------------------------------------------------
2.3 Call and Put Option Agreement
- ------------------ -------------------------------------------------------------
4.2(d) New Castle Financial Statements
- ------------------ -------------------------------------------------------------
5.4 Existing Partnership interests in the UPREIT
- ------------------ -------------------------------------------------------------
7.3(a)(i) Transfer of Partnership Interests
- ------------------ -------------------------------------------------------------
7.3(a)(ii) Amended and Restated New Castle Partnership Agreement
- ------------------ -------------------------------------------------------------
7.3(a)(iv) Form of New Management Agreement for Replacement Property
- ------------------ -------------------------------------------------------------
7.3(b)(i) Registration Rights Agreement - Class A Unit holders
- ------------------ -------------------------------------------------------------
7.3(b)(ii) Registration Rights Agreement - Class B Unit holders
- ------------------ -------------------------------------------------------------
CERTIFICATION AND JOINDER AGREEMENT
To: Pan American Associates
Preit Associates, L.P.
Pennsylvania Real Estate Investment Trust
Date: April 28, 2003
--------------
The undersigned, Marta Holdings I, L.P., (the "Marta Partnership") hereby agrees
and certifies as follows, for itself, its successors and assigns and for the
benefit of the above-named parties, their successors and assigns:
1. The Marta Partnership is a Delaware limited partnership and is successor by
merger to Marta Investments, L.P. pursuant to Articles of Merger filed with the
Delaware Secretary of State on April 23, 2003.
2. The Marta Partnership is in good standing as a limited partnership under the
laws of the State of Delaware and has full power and authority to execute and
deliver this Certification and Joinder Agreement.
3. The sole general partners of the Marta Partnership are Barbara M. DiFonzo and
Lauren M. DeMichiel (the "General Partners"), and such persons have full power
and authority to execute and deliver this Certification and Joinder Agreement on
behalf of the Marta Partnership.
4. The General Partners have executed a Contribution Agreement dated April 22,
2003 along with Pan American Associates, The Revocable Trust of Albert Marta,
Ivyridge Investment Corp., Pennsylvania Real Estate Investment Trust, and Preit
Associates, L.P. (the "Contribution Agreement"). Pursuant to Paragraph 6.10 of
the Contribution Agreement, the Marta Partnership hereby gives notice that it is
joining in the Contribution Agreement as a Contributor, and that, accordingly,
it shall transfer its partnership interests in New Castle Associates to Preit
Associates, L.P. in accordance with Schedule 2.1(a)(2) thereunder.
5. Pursuant to the foregoing, the Marta Partnership hereby agrees, intending to
be legally bound, that it joins in the Contribution Agreement as a Contributor
and as a Marta Entity, as if the Marta Partnership was an original signatory
thereto, and in furtherance thereof the Marta Partnership makes and affirms all
of the representations, warranties and undertakings of a Contributor and a Marta
Entity under the Contribution Agreement and the Marta Partnership shall be bound
by all of the provisions of the Contribution Agreement which are applicable to a
Contributor and a Marta Entity. As a consequence thereof, the Marta Partnership
shall have the rights and benefits of a Contributor and a Marta Entity under the
Contribution Agreement.
This Certification and Joinder Agreement has been executed this 28th day of
April, 2003.
Marta Partnership:
MARTA HOLDINGS I, L.P.
By: Barbara M. DiFonzo
-----------------------------------------
Barbara M. DiFonzo, general partner
By: Lauren M. DeMichiel
-----------------------------------------
Lauren M. DeMichiel, general partner
Approved:
Pan American Associates
By: Pan American Office Investments, L.P.
By: Pan American Office Investments - G.P., general partner
By: George F. Rubin
---------------------------------
Name: George F. Rubin
Title: President
Preit Associates, L.P.
By: Pennsylvania Real Estate Investment Trust, general partner
By: Bruce Goldman
------------------------------------
Name: Bruce Goldman
Title: Senior Vice President and General Counsel
Pennsylvania Real Estate Investment Trust
By: Bruce Goldman
-------------------------------
Name: Bruce Goldman
Title: Senior Vice President and General Counsel
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