Exhibit 2.11
FORM OF
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT ("Agreement") is entered into as of
_____________ ___, ____, and effective on the Effective Time (as defined in the
Merger Agreement), by and among Pennsylvania Real Estate Investment Trust
("PREIT Trust") and PREIT Associates, L.P. ("PREIT Partnership"), on the one
hand, and Mark E. Pasquerilla ("MEP"), Crown Investments Trust ("CIT"), Crown
American Investment Company ("CAIC"), Crown Delaware Holding Company ("CDHC")
and Crown American Properties, L.P. ("Crown Partnership") (MEP, CIT, CAIC and
CDHC are referred to herein collectively as the "Non-Compete Group"), on the
other hand.
WHEREAS, PREIT Trust, PREIT Partnership, Crown Realty Trust ("Crown
Trust") and Crown Partnership have entered into an Agreement and Plan of Merger
dated as of May 13, 2003 (the "Merger Agreement"), pursuant to which, among
other things, (a) Crown Trust will be merged with and into PREIT Trust, with
PREIT Trust as the surviving real estate investment trust (the "Merger"), and
(b) Crown Partnership and PREIT Partnership will consummate certain transactions
contemplated in connection with the Merger (together with the Merger, the
"Merger Transactions"), in each case upon the terms and subject to the
conditions set forth in the Merger Agreement;
WHEREAS, the Non-Compete Group has unique knowledge about the business,
assets, operations and affairs of Crown Trust, Crown Partnership and the Crown
Subsidiaries to be acquired by PREIT and PREIT Partnership in the Merger
Transactions (collectively, the "Crown Entities");
WHEREAS, the Crown Entities are engaged in the businesses of owning,
operating, investing in, acquiring, constructing, managing, developing,
re-developing and leasing shopping mall and other retail real estate properties
and providing various services with respect thereto;
WHEREAS, PREIT Trust, PREIT Partnership and their respective Affiliates
are engaged in substantially similar businesses, including, without limitation,
owning, operating, investing in, acquiring, constructing, managing, developing,
re-developing and leasing shopping mall, shopping center and other retail real
estate, and multifamily properties and providing various services with respect
thereto; and
WHEREAS, in an effort to protect the legitimate business interests of
PREIT Trust, as the surviving entity in the merger with Crown Trust and PREIT
Partnership (collectively, the "PREIT Entities") in view of the Non-Compete
Group's unique knowledge about the business, assets, operations and affairs of
the Crown Entities, and in order to induce PREIT Trust and PREIT Partnership to
consummate the transactions contemplated by the Merger Agreement, MEP and the
other members of the Non-Compete Group have agreed to and desire to enter into
this Agreement prohibiting them from taking certain actions, directly or
indirectly, as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:
1. Definitions: Certain capitalized terms used herein shall have the
meanings set forth below. Capitalized terms used herein and not defined herein
are used as defined in the Merger Agreement.
(a) "Affiliate" means with respect to a Person, any other
Person which directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with such Person; provided, that as used herein "Affiliate" shall not
include PREIT or any of its Affiliates.
(b) "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association,
trust, unincorporated organization or other entity.
(c) "Restricted Area" means all areas within twenty-five (25)
miles of any property owned or operated by any of the PREIT Entities or
any of the Crown Entities (or any successor to any of the PREIT
Entities or the Crown Entities or any entity through which any of the
PREIT Entities or the Crown Entities may conduct business in the
future) now or at any time during the Restricted Period.
(d) "Restricted Activities" means (i) the businesses of
owning, operating, investing in, acquiring, constructing, managing,
developing, re-developing and leasing shopping malls, shopping centers
or multifamily real estate properties in excess of ten (10) units each
or providing tenant services with respect thereto, competitive with the
activities and/or services in which the PREIT Entities are engaged at
the Effective Time of the Merger, (ii) construction or tenant
improvement services competitive with such activities and/or services
provided by the PREIT Entities, whether directly or through contractors
or subcontractors hired by the PREIT Entities for such purpose,
competitive with the activities and/or services in which the PREIT
Entities are engaged at the Effective Time of the Merger, and (iii)
providing assistance to any person or entity attempting to engage in
any of the activities and/or services set forth in (i) and (ii) above.
Notwithstanding the above, if the PREIT Entities dispose of, in one or
a series of transactions, the multifamily component of their business
in its entirety (as in existence on the Closing Date of the Merger),
then owning, operating, investing in, acquiring, constructing,
managing, developing, re-developing and leasing multifamily properties
and providing tenant services with respect thereto shall be excluded
from the definition of "Restricted Activities."
2
(e) "Restricted Period" means a term equal to eight (8) years
beginning on the Closing Date of the Merger Transactions.
2. Non-competition. During the Restricted Period, (a) none of the
members of the Non-Compete Group or any of their Affiliates shall engage in
Restricted Activities in the Restricted Area, and (b) none of the members of the
Non-Compete Group or any of their Affiliates shall serve as an officer,
director, partner, member, employee, consultant, contractor, joint venturer, or
agent of, or own, directly or indirectly, any equity interest in any Person that
engages in Restricted Activities within the Restricted Area; provided, however,
that (i) MEP may serve as an officer, director, partner, member, employee,
consultant, contractor, joint venturer, stockholder, or agent of the PREIT
Entities and may serve as a director of any Person that is not engaged in nor
has any stated business plan to be engaged in Restricted Activities in the
Restricted Area as of the date when MEP would become a director of such Person;
provided, however, that, if MEP becomes a director of such Person, and such
Person subsequently engages in Restricted Activities, MEP shall recuse himself
from participation in the activities of the board of directors of such Person on
all matters in connection with the Restricted Activities of such Person, (ii)
the Non-Compete Group may make passive investments in a class of equity
securities of any Person that is engaged in Restricted Activities in the
Restricted Area, so long as such investment does not exceed with respect to any
Person in the aggregate for all of the members of the Non-Compete Group and any
of their Affiliates five percent (5%) of the voting power of the voting equity
securities of such Person or five percent (5%) of the outstanding equity
securities of such Person, (iii) the Non-Compete Group may own, operate, invest
in, manage, re-develop and lease Oak Ridge Mall and the properties being
conveyed to CIT pursuant to the Exchange Agreement, (iv) the Non-Compete Group
may engage in activities that are directly related to the operation of hotels
and convention centers, (v) if the Non-Compete Group engages in Restricted
Activities within an area, which was not a Restricted Area prior to the time of
such engagement, the Non-Compete Group shall be permitted to engage in such
Restricted Activities within such area and (vi) if the Non-Compete Group makes
an investment in a class of equity securities of any Person that is engaged in
Restricted Activities within an area which was not a Restricted Area prior to
the time of such investment, the Non-Compete Group shall be permitted to make
and maintain such investment notwithstanding that such investment may exceed
five percent (5%) of the voting power of the voting equity securities of such
Person or five percent (5%) of the outstanding equity securities of such Person.
Without limiting the generality of this paragraph, during the Restricted Period
no member of the Non-Compete Group or any of their Affiliates shall serve as a
consultant to any person or entity if such consulting services reasonably could
be expected to help such person or entity (or the Affiliates of such person or
entity) engage in Restricted Activities in the Restricted Area.
3
3. Non-solicitation.
(a) Business Contacts. During the Restricted Period, none of
the members of the Non-Compete Group or any of their Affiliates shall
solicit any Business Contact of the PREIT Entities or the Crown
Entities (or any successor to any of the PREIT Entities or the Crown
Entities or any other entity through which any of the PREIT Entities or
the Crown Entities may conduct business during the Restricted Period)
(i) for the purpose of inducing or otherwise intending to cause such
Business Contact to alter or end its business relationship with any of
the PREIT Entities or any of the Crown Entities (or any successor to
any of the PREIT Entities or the Crown Entities or any entity through
which any of the PREIT Entities or the Crown Entities may conduct
business in the future) or to become a Business Contact of any other
person or entity with respect to the Restricted Activities; or (ii) for
the purpose of interfering with the PREIT Entities' or the Crown
Entities' business relationship with such Business Contact; or (iii)
for the purpose of causing such Business Contact to lease, sell, or
acquire space in the Restricted Area from any member of the Non-Compete
Group or any Person engaged in the Restricted Activities within the
Restricted Area, other than (x) in connection with the ownership,
operation, investment, redevelopment and leasing of Oak Ridge Mall and
the properties being conveyed to CIT pursuant to the Exchange Agreement
and (y) engaging in activities that are directly related to the
operation of the hotels and convention centers. For purposes of this
Paragraph 3(a), "Business Contact" shall mean any Person that was a
tenant of the properties of the PREIT Entities or the Crown Entities at
any time during the twelve (12) months immediately preceding the
commencement of the Restricted Period.
(b) Employees. Except for (i) employees of the Crown Entities
who do not become employees of PREIT or one of its Affiliates on the
Closing Date of the Merger (ii) employees of the Crown Entities who are
terminated by PREIT or one of its Affiliates after the Merger and (iii)
employees of the PREIT Entities who are terminated by any PREIT Entity,
during the Restricted Period, neither the members of the Non-Compete
Group nor any of their Affiliates shall solicit or recruit, or assist
any other Person in the solicitation or recruitment, of any employee of
any of the PREIT Entities or any of the Crown Entities (or any
successor to any of the PREIT Entities or the Crown Entities or any
entity through which any of the PREIT Entities or the Crown Entities
may conduct business in the future) or any person that was an employee
of the PREIT Entities or the Crown Entities at any time within the
twelve (12) months preceding the commencement of the Restricted Period
for the purpose of causing such employee to leave the employment of any
of the PREIT Entities or any of the Crown Entities (or any successor to
any of the PREIT Entities or the Crown Entities or any entity through
which any of the PREIT Entities or the Crown Entities may conduct
business in the future).
4
4. Enforcement.
(a) Reasonable and Necessary Restrictions. Each member of the
Non-Compete Group acknowledges that the restrictions, prohibitions and
other provisions hereof, including, without limitation, the Restricted
Area and the Restricted Period, are reasonable, fair and equitable in
terms of duration, scope and geographic area, are necessary to protect
the legitimate business interests of the PREIT Entities (including the
interest of PREIT Trust and PREIT Partnership in the goodwill of the
Crown Entities acquired by PREIT Trust and PREIT Partnership in the
Merger Transactions), and are a material inducement to PREIT Trust and
PREIT Partnership to consummate the transactions contemplated by the
Merger Agreement.
(b) Specific Performance. Each member of the Non-Compete Group
acknowledges that the obligations undertaken pursuant to this Agreement
are unique, and that PREIT Trust and PREIT Partnership will have no
adequate remedy at law if any member of the Non-Compete Group fails to
perform any of his or its obligations hereunder. Each member of the
Non-Compete Group therefore confirms that the right of PREIT Trust and
PREIT Partnership to specific performance of the terms of this
Agreement is essential to protect the rights and interests of PREIT
Trust and PREIT Partnership. Accordingly, in addition to any other
remedies that PREIT Trust or PREIT Partnership may have at law or in
equity, PREIT Trust and PREIT Partnership shall have the right to have
all obligations, covenants, agreements and other provisions of this
Agreement specifically performed by each member of the Non-Compete
Group, and each of PREIT Trust and PREIT Partnership shall have the
right to obtain preliminary and permanent injunctive relief to secure
specific performance and to prevent a breach or contemplated breach of
this Agreement by any of the members of the Non-Compete Group.
(c) Severability and Modification. The covenants contained in
this Agreement shall be construed as a series of separate and severable
covenants. Each member of the Non-Compete Group agrees that if in any
proceeding, the tribunal refuses to enforce fully any covenants
contained herein because such covenants cover too extensive a
geographic area or too long a period of time or for any other reason
whatsoever, any such covenant shall be considered divisible both as to
duration and geographic area so that each month of a specified period
shall be deemed a separate period of time and each county in each
particular state a separate geographic area, resulting in an intended
requirement that the longest lesser period of time or largest lesser
geographic area found by such tribunal to be a reasonable restriction
shall remain an effective restrictive covenant specifically enforceable
against the Non-Compete Group.
(d) No Defense. The existence of any claim or cause of action
of any member of the Non-Compete Group against the Crown Entities or
the PREIT Entities, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by PREIT Trust or
PREIT Partnership of the covenants contained in this Agreement.
5
5. Miscellaneous Provisions.
(a) Binding Effect. Subject to any provisions hereof
restricting assignment, all covenants and agreements in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors, assigns, heirs, and personal
representatives.
(b) Assignment. None of the parties hereto may assign any of
his or its rights under this Agreement or attempt to have any other
person or entity assume any of his or its obligations hereunder, except
that PREIT Trust and PREIT Partnership may assign any of their rights,
interests and obligations under this Agreement to any successor person
or entity to PREIT Trust or PREIT Partnership in connection with a
merger, consolidation, reorganization, business combination, sale of
all or substantially all of PREIT Trust's or PREIT Partnership's
assets, or other similar corporate transaction to which PREIT Trust
and/or PREIT Partnership is a party.
(c) Integration; Amendment. This Agreement constitutes the
entire agreement between the parties hereto with respect to the matters
set forth herein and supersede and render of no force and effect all
prior oral or written agreements, commitments and understandings among
the parties with respect to the matters set forth herein. Except as
otherwise expressly provided in this Agreement, no amendment,
modification or discharge of this Agreement shall be valid or binding
unless set forth in writing and duly executed by each of the parties
hereto.
(d) Waivers. No waiver by a party hereto shall be effective
unless made in a written instrument duly executed by the party against
whom such waiver is sought to be enforced, and only to the extent set
forth in such instrument. Neither the waiver by any of the parties
hereto of a breach or a default under any of the provisions of this
Agreement, nor the failure of any of the parties, on one or more
occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder shall thereafter be construed
as a waiver of any subsequent breach or default of a similar nature, or
as a waiver of any such provisions, rights or privileges hereunder.
(e) Governing Law; Jurisdiction. This Agreement, the rights
and obligations of the parties hereto, and any claims or disputes
relating thereto, shall be governed by and construed in accordance with
the internal laws of the State of New York.
(f) Headings. Section and subsection headings contained in
this Agreement are inserted for convenience of reference only, shall
not be deemed to be a part of this Agreement for any purpose, and shall
not in any way define or affect the meaning, construction or scope of
any of the provisions hereof.
6
(g) Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the person or entity may require.
(h) Execution in Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be deemed an original,
and all such counterparts shall constitute one and the same agreement.
Any counterpart to which original or facsimile signatures of all
parties are attached shall constitute an original of this Agreement.
(i) 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
and
Drinker Biddle & Reath LLP
One Logan Square
18th & Cherry Streets
Philadelphia, PA 19103-6996
Attention: Howard A. Blum, Esq.
Facsimile: (215) 988-2757
7
if to any member of the Non-Compete Group:
Crown American Properties, L.P.
Pasquerilla Plaza
Johnstown, PA 15901
Attention: Ronald H. 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)
[signature page follows]
8
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first set forth above.
------------------------------------------
Mark E. Pasquerilla
CROWN INVESTMENTS TRUST
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
CROWN AMERICAN INVESTMENT
COMPANY
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
CROWN DELAWARE HOLDING COMPANY
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
CROWN AMERICAN PROPERTIES, L.P.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
PENNSYLVANIA REAL ESTATE
INVESTMENT TRUST
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
PREIT ASSOCIATES, L.P.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------