Exhibit 2.8
FORM OF SHAREHOLDER AGREEMENT
___________ ___, 2003
Pennsylvania Real Estate Investment Trust
PREIT Associates, L.P.
The Bellevue
200 S. Broad Street
Philadelphia, PA 19102
Re: Shareholder Agreement
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Ladies and Gentlemen:
Each of the undersigned (collectively, the "undersigned") understands
and acknowledges that Pennsylvania Real Estate Investment Trust, a Pennsylvania
business trust ("PREIT Trust"), PREIT Associates, L.P., a Delaware limited
partnership ("PREIT Partnership" and, together with PREIT Trust, "PREIT"), Crown
American Realty Trust, a Maryland real estate investment trust ("Crown"), and
Crown American Properties, L.P., a Delaware limited partnership ("Crown
Partnership"), entered into an Agreement and Plan of Merger, dated as of May 13,
2003 (the "Merger Agreement"), pursuant to which, among other things, (i) Crown
will be merged with and into PREIT Trust (the "Merger"), with PREIT Trust as the
survivor of the Merger, and (ii) PREIT Partnership and Crown Partnership will
consummate certain transactions contemplated in connection with the Merger, as
described in the Merger Agreement, that will result in PREIT Partnership
acquiring substantially all of the assets of Crown Partnership in exchange for
limited partnership interests in PREIT Partnership.
In connection with the Merger Agreement and the closing of the Merger,
PREIT Partnership has made certain undertakings to the partners of Crown
Partnership, consisting of the undersigned, who will become, directly or
indirectly, limited partners in PREIT Partnership as a result of the Merger.
Among those undertakings is the requirement that PREIT Partnership enter into a
Tax Protection Agreement, dated as of the date hereof, with the undersigned (the
"Tax Protection Agreement"), pursuant to which PREIT Partnership will agree to
provide certain tax and debt protections to the undersigned, subject to certain
terms and conditions.
As a condition of, and a material inducement to, PREIT providing tax
and debt protection to the undersigned as and to the extent set forth in the Tax
Protection Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, each of the undersigned hereby
agrees, intending to be legally bound hereby, as follows:
1. Definitions. Capitalized terms used herein and not defined are used
as defined in the Merger Agreement. As used in this Shareholder Agreement (the
"Agreement"), the following capitalized terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person. The term "control" has the meaning ascribed to such term in
Rule 405 under the Securities Act.
"Beneficial Owner" shall mean any Person deemed to be a "beneficial
owner" of a security as defined in Rule 16a-1(a)(2) or Rule 13d-3(d)(1)(i) under
the Securities Exchange Act of 1934, as amended. The term "Beneficially Own" has
a correlative meaning.
"Covered PREIT Common Shares" shall mean, with respect to any Person,
the PREIT Common Shares received by such Person pursuant to the Merger or the
other transactions contemplated by the Merger Agreement or pursuant to the
redemption of any Covered PREIT OP Units.
"Covered PREIT OP Units" shall mean, with respect to any Person, the
PREIT OP Units received or to be received by such Person pursuant to the Merger
or the other transactions contemplated by the Merger Agreement.
"Covered PREIT Securities" shall mean, with respect to any Person, the
Covered PREIT OP Units and the Covered PREIT Common Shares Beneficially Owned by
such Person; it being the intent of the parties that any securities of PREIT
Trust or PREIT Partnership acquired by any of the undersigned other than
pursuant to the Merger and the other transactions contemplated by the Merger
Agreement, including without limitation securities acquired in the open market
and pursuant to the exercise of options and dividend reinvestment plans, shall
not constitute Covered PREIT Securities subject to this Agreement.
"Immediate Family" shall mean, with respect to any natural person, such
person's (natural, adoptive or by re-marriage) spouse, parents, descendants,
nephews, nieces, brothers, sisters and their respective spouses.
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"Indemnification Agreement" shall mean that certain Indemnification
Agreement by and among PREIT Trust, PREIT Partnership, Crown Investments Trust,
Crown American Investment Company, Mark E. Pasquerilla and Crown Delaware
Holding Company, as guarantor, dated as of May 13, 2003.
"Initial Period" shall mean the period beginning immediately upon the
expiration of the Two Week Post-Closing Period and ending on the date that is
nine (9) months after the date hereof.
"Oak Ridge Net Proceeds of Sale" shall mean an amount equal to the
aggregate value of all consideration received (except, in the case of any
promissory note or other deferred consideration received, only the aggregate
value of all cash consideration received or to be received during the Initial
Period) by the undersigned in connection with the sale of the Oak Ridge Mall
(including a partial sale thereof) less (i) all direct costs and expenses
associated therewith, including, but not limited to, transfer taxes, brokerage
fees and transaction costs, (ii) any amounts paid by or on behalf of any of the
undersigned at the time of such sale in satisfaction of any debt secured by such
property and, (iii) in the case of a partial sale of the Oak Ridge Mall, any
portion of the consideration received by the undersigned in connection with such
sale which the undersigned reasonably expect to reinvest within one year from
the date of such sale in improvements or other expenditures reasonably necessary
to maintain and preserve the value of the remainder of the Oak Ridge Mall as a
result of such partial sale. For purposes of this definition, any non-monetary
consideration shall be valued at its fair market value on the date received.
"Permitted Transferee" shall mean, with respect to any holder of
Covered PREIT Securities subject to this Agreement:
(a) charitable institutions and organizations within the
meaning of Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended, that are the recipients of bona fide gifts by any of the
undersigned;
(b) if the holder is a natural person, (i) any member of the
holder's Immediate Family, (ii) any trust established solely for the
benefit of the holder and/or one or more members of the holder's
Immediate Family, (iii) any entity controlled by the holder and/or
members of the holder's Immediate Family, or (iv) any charitable
foundations established and maintained by or on behalf of the holder or
a member of the holder's Immediate Family;
(c) if the holder is a trust, the beneficiaries of such trust,
provided that the Covered PREIT Securities so Transferred shall be
subject to the restrictions on subsequent Transfers set forth in this
Agreement;
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(d) if the holder is a partnership, limited liability company,
joint venture, corporation, real estate investment trust, business
trust or other business entity, its partners, members, stockholders,
shareholders or other owners who (i) owned interests in such entity on
the date the entity acquired the applicable Covered PREIT Securities
and (ii) continue to own interests in such entity at the time of the
proposed Transfer; and
(e) any lender to which any of the holder's Covered PREIT
Securities are pledged in accordance with Section 3(a) hereof, provided
that such lender shall no longer be considered a Permitted Transferee
with respect to any such pledged Covered PREIT Securities following the
foreclosure by such lender upon its security interest in such Covered
PREIT Securities;
provided, however, that, in each such case, any Transfer complies with Article
12 of the First Amended and Restated Agreement of Limited Partnership of PREIT
Partnership, dated as of September 30, 1997 and as amended through _________,
2003 (as the same may be amended, restated or supplemented from time to time)
and, except for transferees specified in clause (e) above, the transferee with
respect to such Transfer agrees to be bound by the terms of this Agreement.
"Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
"PREIT Common Shares" shall mean the common shares of beneficial
interest, par value $1.00 per share, of PREIT Trust.
"PREIT OP Units" shall mean the common units of PREIT Partnership.
"Purchase Price" shall mean with respect to any Covered PREIT
Securities, the price at which such Covered PREIT Securities are sold.
"Registration Rights Agreement" shall mean that certain Registration
Rights Agreement dated as of ________ __, 2003 by and among PREIT Trust and the
undersigned.
"Subsequent Period" shall mean the period beginning immediately upon
the expiration of the Initial Period and ending sixty (60) months thereafter and
"Subsequent Annual Period" shall mean each consecutive twelve (12) month period
during the Subsequent Period commencing on the expiration of the Initial Period.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
"Two Week Post-Closing Period" shall mean the period beginning
on the date hereof and ending on the date that is two (2) weeks after the date
hereof.
2. Transfer Restrictions.
(a) Except for Transfers (as defined below) made to Permitted
Transferees, each of the undersigned agrees that if:
(i) any of the undersigned, during the Two Week Post-Closing
Period, offers, sells, contracts to sell, sells any option or
contract to purchase, purchases any option or contract to
sell, grants any option, right or warrant to purchase, pledges
or otherwise transfers or disposes of, directly or indirectly,
all or a portion of the economic consequences associated with
the ownership of any Covered PREIT Securities Beneficially
Owned by the undersigned (any such transaction, a "Transfer");
(ii) the undersigned and their Permitted Transferees, considered
collectively as one Beneficial Owner, during the Initial
Period, Transfer any of the Covered PREIT Securities
Beneficially Owned by them other than (A) pursuant to and in
accordance with Section 4 of the Registration Rights Agreement
or (B) in an amount that would not, after giving effect to
such Transfer and any other Transfers of Covered PREIT
Securities in the applicable period, exceed or violate the
volume limitations of Rule 144(e)(1) under the Securities Act
assuming the undersigned and their Permitted Transferees,
taken together, are a single Affiliate of PREIT Trust;
(iii) the undersigned and their Permitted Transferees, considered
collectively as one Beneficial Owner, during the Initial
Period, Transfer in the aggregate an amount of Covered PREIT
Securities having an aggregate Purchase Price of greater than
$16 million less the Oak Ridge Net Proceeds of Sale, if any;
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(iv) the undersigned and their Permitted Transferees, considered
collectively as one Beneficial Owner, during any Subsequent
Annual Period, Transfer in the aggregate more than 20% of the
Covered PREIT Securities Beneficially Owned by them
collectively (immediately after giving effect to the Merger
and the other transactions contemplated by the Merger
Agreement (the "Initial Amount")); provided that if, during
any Subsequent Annual Period, the undersigned, considered
collectively as one Beneficial Owner, Transfer less than 20%
of the Initial Amount (the amount by which the Initial Amount
exceeds the amount so transferred being referred to as the
"Carryover Amount"), then the undersigned, considered as one
Beneficial Owner, shall be permitted to Transfer during any
Subsequent Annual Period after such period a number of Covered
PREIT Securities equal to the Initial Amount plus the
Carryover Amount; or
(v) the undersigned and their Permitted Transferees, considered
collectively as one Beneficial Owner, during the Subsequent
Period, Transfer an amount of the Covered PREIT Securities
that would, after giving effect to such Transfer and any other
Transfers of Covered PREIT Securities in the Subsequent
Period, exceed or violate the volume limitations of Rule
144(e)(1) under the Securities Act assuming the undersigned
and their Permitted Transferees, taken together, are a single
Affiliate of PREIT Trust;
then the undersigned shall forfeit all right and interest to, and PREIT
Partnership shall be released from and shall never be obligated to pay, the
first $25 million of (i) "Tax Cost" (as defined in the Tax Protection Agreement)
and/or (ii) "Interest Expense" (as defined in the Tax Protection Agreement)
and/or (iii) amounts payable pursuant to Section 2(c)(iii) of the Tax Protection
Agreement, which are otherwise payable by PREIT Partnership pursuant to Sections
2(c), 2(d)(iii) and/or 3(d) of the Tax Protection Agreement (and PREIT
Partnership also shall not be obligated to pay any "Gross-Up Amount" (as defined
in the Tax Protection Agreement) with respect to such first $25 million of
payments, but any "Gross-Up Amount" not required to be paid shall not be counted
against the $25 million exculpation from PREIT Partnership's liability under the
Tax Protection Agreement); provided, that if any such Transfer shall be by means
of foreclosure, deed in lieu of foreclosure or similar means with respect to
Covered PREIT Securities pledged in accordance with Section 3(a) of this
Agreement (such Transfer, a "Foreclosure"), then, at the election of Mark E.
Pasquerilla (but subject to the last sentence of this Section 2(a)), either (a)
the undersigned shall suffer the foregoing remedy, or (b) (i) PREIT Trust shall
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no longer be required to perform its obligations under Section 1.6 of the Merger
Agreement and such obligations shall immediately cease, and (ii) if then a
trustee of PREIT Trust, Mark E. Pasquerilla shall promptly resign from the Board
of Trustees of PREIT Trust. Notification of the election by Mark E. Pasquerilla
contemplated by the proviso in the immediately preceding sentence shall be
delivered to PREIT pursuant to Section 7 below; provided, however, that if Mark
E. Pasquerilla fails to make such election within five (5) business days
following a Foreclosure, then PREIT may impose either of such penalties at the
sole election of PREIT.
(b) In the event of any Transfer, the undersigned shall promptly, and
in any event no later than one (1) business day following such Transfer, notify
PREIT of such Transfer pursuant to Section 7 below.
(c) As used herein, a "Transfer" shall be deemed to occur on the date
that the undersigned or the undersigned's Permitted Transferee first enters into
a contract to sell or grants an option to purchase or otherwise becomes
obligated (subject to applicable conditions) to sell, transfer or dispose of,
directly or indirectly, the applicable Covered PREIT Securities, and any
subsequent sale, transfer or disposition pursuant to such contract, option or
other obligation shall not be deemed to be a separate Transfer. The transfer of
Covered PREIT Securities to the estate of the undersigned upon the undersigned's
death, or to the estate of a Permitted Transferee upon the death of a Permitted
Transferee, shall not be deemed to be a Transfer for purposes of this Agreement,
but any Covered PREIT Securities included in the undersigned's estate will
remain subject to the restrictions imposed hereunder. Any Transfer by a
Permitted Transferee of Covered PREIT Securities acquired from the undersigned,
directly or indirectly, shall be deemed to be a Transfer by the undersigned.
(d) Any Permitted Transferee to whom any Covered PREIT Securities are
Transferred pursuant to this Agreement shall be subject to the terms and
conditions of this Agreement as if such Permitted Transferee were an original
party hereto (it being understood that all calculations made pursuant to Section
2 of this Agreement shall be made on a collective basis taking into account all
Covered PREIT Securities held by the undersigned and by all Permitted
Transferees who hold any of the Covered PREIT Securities).
None of the provisions in this Agreement shall survive the termination
of this Agreement in accordance with its terms; provided, however, that nothing
contained herein shall release any of the undersigned from any liability arising
from any breach of any of the undersigned's obligations in this Agreement.
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3. Pledges; Redemption Permitted.
(a) Pledges. Notwithstanding any restrictions contained in Section 2
hereof to the contrary, the undersigned (and the undersigned's Permitted
Transferees) shall be permitted at any time (including without limitation during
the Two Week Post-Closing Period and the Initial Period) to pledge, encumber or
otherwise grant a security interest in any Covered PREIT Securities Beneficially
Owned by the undersigned (or the undersigned's Permitted Transferees) to any
existing or future lender pursuant to a bona fide financing incurred for
investment or other purposes upon customary commercial terms; provided, however,
that immediately following a foreclosure by any such lender, such lender shall
cease to be a Permitted Transferee and such foreclosure shall constitute a
Transfer other than to a Permitted Transferee under Section 2(a) of this
Agreement.
(b) Foreclosures and Other Remedies. Notwithstanding any restrictions
contained in this Agreement to the contrary, any lender or other third party
transferee who may acquire any of the undersigned's (and the undersigned's
Permitted Transferees') Covered PREIT Securities pledged in accordance with
Section 3(a) hereof, as a result of a foreclosure by the lenders or the exercise
of any other remedies available to such lenders with respect to the pledge and
the related obligations of the undersigned, shall not be bound by the terms of
this Agreement.
(c) Redemptions. Notwithstanding any restrictions contained in Section
2 hereof to the contrary, the undersigned shall be permitted to exercise its
right to redeem any Covered PREIT OP Units owned by the undersigned subject to
any restrictions imposed on redemption pursuant to the PREIT Partnership
Agreement.
4. Permitted Exceptions. Notwithstanding any restrictions contained in
this Agreement to the contrary, any sale in accordance with Section 2.2(f) of
the Indemnification Agreement shall not constitute a Transfer for purposes of
Sections 2(a)(i), (ii) and (iii) of this Agreement and any transferee of such
Covered PREIT Securities shall not be bound by the terms of this Agreement.
5. Assignment; Binding on Successors and Assigns. This Agreement and
any of the rights, interests or obligations under this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by and against, the
parties hereto and their respective Permitted Transferees (except for those
identified in clause (e) of the definition of Permitted Transferee), successors
and assigns. Each Permitted Transferee (except for those identified in clause
(e) of the definition of Permitted Transferee) shall execute and deliver a copy
of this Agreement to PREIT and shall be bound by the terms and conditions of
this Agreement as if such Permitted Transferee were an original party hereto.
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6. Adjustment for Reorganization and Reclassification. For the purposes
of this Agreement, the minimum ownership amounts and value shall be adjusted
appropriately to reflect any subdivision or combination of Covered PREIT Common
Shares or Covered PREIT OP Units (including, without limitation, securities
convertible into or exercisable or exchangeable for Covered PREIT Common Shares
or Covered PREIT OP Units) and any adjustments arising as a result of any
reorganization, reclassification or similar events of PREIT Trust or PREIT
Partnership occurring after the date of the Merger Agreement.
7. Notices. All notices, requests, claims, demands and other
communication under this Agreement shall be in writing and shall be delivered
personally or sent by overnight courier (providing proof of delivery) to the
parties or sent by telecopy (providing confirmation of transmission) at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice from such party):
if to PREIT:
Pennsylvania Real Estate Investment Trust
The Bellevue
200 South Broad Street
Philadelphia, PA 19102
Attention: Bruce Goldman,
Executive Vice President and General Counsel
Facsimile: (215) 546-7311
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 13th Street, N.W.
Washington, D.C. 20004-1109
Attention: J. Warren Gorrell, Jr., Esq.
Stuart A. Barr, Esq.
Facsimile: (202) 637-5910
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and
Drinker Biddle & Reath LLP
One Logan Square
18th & Cherry Streets
Philadelphia, PA 19103-6996
Attention: Howard A. Blum, Esq.
Facsimile: (215) 988-2757
if to any of the undersigned or any Permitted Transferee:
Crown American Properties, L.P.
Pasquerilla Plaza
Johnstown, PA 15901
Attention: Ronald J. Hamilton
Facsimile: (814) 536-9525
with a copy (which shall not constitute notice) to:
Reed Smith LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: David L. DeNinno, Esq.
Facsimile: (412) 288-3218
and
Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004-2498
Attention: Joseph C. Shenker, Esq.
Facsimile: (212) 558-3588
All notices shall be deemed given when delivered personally, one day
after being delivered to a nationally recognized overnight courier or when
telecopied (with a confirmatory copy sent by such overnight courier).
8. Termination. This Agreement shall terminate at the end of the last
day of the Subsequent Period.
9. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York. This Agreement is
irrevocable and will be binding on the undersigned and the respective
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successors, heirs, personal representatives and Permitted Transferees (except
for those identified in clause (e) of the definition of Permitted Transferee) of
the undersigned. The undersigned has carefully read this Agreement and discussed
its requirements, to the extent the undersigned believed necessary, with its
counsel.
(signatures appear on the following page)
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IN WITNESS WHEREOF, each of the undersigned has duly executed and
delivered this Agreement, or caused this Agreement to be duly executed and
delivered on his or its behalf, as of the date first written above.
Very truly yours,
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Mark E. Pasquerilla
Crown American Properties, L.P.,
a Delaware limited partnership
By: Crown American Realty Trust,
its general partner
By:
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Name:
Title:
Crown Investments Trust,
a Delaware business trust
By:
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Name:
Title:
Crown American Investment Company,
a Delaware corporation
By:
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Name:
Title:
Crown Delaware Holding Company,
a Delaware Corporation
By:
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Name:
Title:
Acknowledged and Agreed:
Pennsylvania Real Estate Investment Trust
a Pennsylvania business trust
By:
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Name:
Title:
PREIT Associates, L.P.
a Delaware limited partnership
By: Pennsylvania Real Estate Investment Trust,
its general partner
By:
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Name:
Title: