Exhibit 2.3
PREIT CONTRIBUTION AGREEMENT
----------------------------
This PREIT CONTRIBUTION AGREEMENT (this "Contribution Agreement") is
made as of May 13, 2003, by and between PENNSYLVANIA REAL ESTATE INVESTMENT
TRUST, a Pennsylvania business trust ("PREIT"), and PREIT ASSOCIATES L.P., a
Delaware limited partnership ("PREIT Partnership").
RECITALS
--------
A. PREIT, PREIT Partnership, 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 of even date herewith (the "Merger Agreement") pursuant to
which, among other things, Crown will merge with and into PREIT (the "Merger"),
and PREIT Partnership and Crown Partnership shall consummate certain
transactions contemplated in connection with the Merger.
B. Contemporaneously with the execution and delivery of the Merger
Agreement and this Contribution Agreement, Crown and Crown Partnership entered
into a distribution agreement (the "Crown Partnership Distribution Agreement").
C. Pursuant to the Crown Partnership Distribution Agreement, one
business day prior to the Merger, Crown Partnership will distribute to Crown, in
complete liquidation of all of Crown's partnership interest in Crown
Partnership, Crown's Proportionate Interest (as hereinafter defined) in the
Crown Partnership Assets (as hereinafter defined), subject to Crown's
Proportionate Interest in the Crown Partnership Liabilities (as hereinafter
defined).
D. On the first business day following consummation of the transactions
contemplated by the Crown Partnership Distribution Agreement, the Merger will be
consummated.
E. Immediately following the Merger, PREIT (as successor to Crown
pursuant to the Merger) will contribute all of its right, title and interest in
the Crown Partnership Assets to PREIT Partnership in exchange for (i) a number
of units of Class A limited partnership interest of PREIT Partnership ("PREIT
Class A Units") corresponding to the number of PREIT common shares issued to the
former Crown common shareholders in the Merger, (ii) a number of preferred units
of partnership interests in PREIT Partnership ("PREIT Preferred Units")
corresponding to the number of PREIT preferred shares issued to the former Crown
preferred shareholders in the Merger, the rights, preferences, privileges and
voting power of which shall be identical in all material respects to the
existing Crown Senior Preferred OP Units, and (iii) the assumption by PREIT
Partnership of the obligations of PREIT (as successor to Crown pursuant to the
Merger) with respect to the Crown Partnership Liabilities and the obligations of
PREIT (as successor to Crown) under the Crown Partnership Distribution
Agreement.
F. Concurrently with the transactions contemplated by this Contribution
Agreement, pursuant to a contribution agreement between Crown Partnership and
PREIT Partnership (the "Crown Partnership Contribution Agreement"), (i) Crown
Partnership will contribute all of its remaining right, title and interest in
the Crown Partnership Assets, other than an 11% interest in the capital and a 1%
interest in the profits of each of Crown American Financing Partnership, L.P., a
Delaware limited partnership, and Washington Crown Center Associates, L.P., a
Pennsylvania limited partnership (collectively, the "Excluded Interest") to
PREIT Partnership, in exchange for (A) units of Class B limited partnership
interest of PREIT Partnership ("PREIT Class B Units"); (B) the assumption by
PREIT Partnership of all remaining obligations of Crown Partnership with respect
to the Crown Partnership Liabilities; and (C) PREIT Partnership's agreement to
indemnify and hold harmless Crown Partnership and certain related parties as
provided in the Crown Partnership Contribution Agreement, and (ii) Crown
Partnership and PREIT Partnership have agreed to an arrangement for the future
contribution by Crown Partnership of the Excluded Interest to PREIT Partnership
in exchange for additional PREIT Class B Units, subject to a potential cash
adjustment.
G. The parties desire to set forth the terms of the transactions
described in Recital E above.
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, agree as follows:
SECTION 1. Definitions.
-----------
The terms used herein have the definition specified or referred to in
this Contribution Agreement. Unless the context otherwise provides, terms
defined in the Merger Agreement, when used herein, shall have the same meanings
as set forth in that agreement.
"Crown Partnership Assets" shall mean all assets, properties, goodwill
and rights, wherever located, whether real, personal or mixed, tangible or
intangible, of Crown Partnership, including, without limitation, Crown
Partnership's interests in the properties identified on Schedule 2.2 included in
the Crown Disclosure Letter delivered pursuant to the Merger Agreement as being
owned directly by Crown Partnership, Crown Partnership's partnership interests
in the Limited Partnerships, Crown Partnership's ownership interests in the
General Partners, Crown Partnership's limited liability company interests in the
Limited Liability Companies, Crown Partnership's general partnership interest in
the Palmer Park Mall Venture, and Crown Partnership's stock in the TRSs.
"Crown Partnership Liabilities" shall mean all liabilities and
obligations of Crown Partnership, including any liability or obligation of any
kind, character or description, whether known or unknown, absolute or
contingent, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, other than
the Excluded Liabilities.
-2-
"Crown's Proportionate Interest" shall mean the percentage of the
economic value of Crown Partnership held by Crown as of the Crown Partnership
Distribution Closing Date (as defined in the Crown Partnership Distribution
Agreement), after giving effect to the 4th Amendment to CFSA and the 8th
Amendment to Crown Partnership Agreement, which percentage shall equal a
fraction (i) the numerator of which is the aggregate market value (as determined
in accordance with the following sentence) of the common and preferred units in
Crown Partnership held by Crown immediately prior to the consummation of the
transactions contemplated by the Crown Partnership Distribution Agreement, and
(ii) the denominator of which is the aggregate market value (as determined in
accordance with the following sentence) of all the outstanding common and
preferred units of Crown Partnership immediately prior to the consummation of
the transactions contemplated by the Crown Partnership Distribution Agreement.
The market value of the common and preferred units of Crown Partnership shall be
determined based upon the average trading price of Crown common shares and
preferred shares, respectively, over the five trading day period ending on the
day immediately prior to the Crown Partnership Distribution Closing Date, and
shall take into account, in the case of the Crown Partnership common units, the
"Partner Adjustment Factor," as defined in the Crown Partnership Agreement, as
amended by the Eighth Amendment thereto.
"Excluded Liabilities" shall mean (i) liabilities for "Claims" (as
defined in the Indemnification Agreement) that are the subject of the
Indemnification Agreement (whether or not PREIT or PREIT Partnership actually
receives indemnification thereunder) or for which the Indemnification Agreement
requires the Indemnifying Parties (as defined therein) to indemnify PREIT or
PREIT Partnership; (ii) liabilities owed by Crown Partnership to the limited
partners of Crown Partnership in their capacities as such; (iii) liabilities of
Crown Partnership for any breach of or failure by Crown Partnership to perform
any of its obligations pursuant to the Merger Agreement or any other agreements
contemplated thereby; and (iv) liabilities of Crown Partnership which accrue or
arise during the period following the Crown Partnership Distribution Closing
Date and which relate to such period, including for purposes of this clause (iv)
any increased costs of doing business for Crown Partnership from and after the
Crown Partnership Distribution Closing Date, whether or not attributable to the
transactions contemplated by the Merger Agreement and the other agreements
referenced therein.
"General Partners" shall mean the single purpose entities wholly owned
by Crown or Crown Partnership and identified on Schedule 2.2(a) included in the
Crown Disclosure Letter delivered pursuant to the Merger Agreement as the
general partners of the Limited Partnerships.
"Limited Liability Companies" shall mean the limited liability
companies identified on Schedule 2.2(a) included in the Crown Disclosure Letter
delivered pursuant to the Merger Agreement, in which Crown Partnership owns all
the issued and outstanding limited liability company ownership interests.
"Limited Partnerships" shall mean the limited partnerships identified
on Schedule 2.2(a) included in the Crown Disclosure Letter delivered pursuant to
the Merger Agreement, in which Crown Partnership owns a 99.5% limited
partnership interest and a General Partner owns a 0.5% general partnership
interest.
-3-
"Palmer Park Mall Venture" shall mean the Palmer Park Mall Joint
Venture identified on Schedule 2.2(a) included in the Crown Disclosure Letter
delivered pursuant to the Merger Agreement, in which, as of the closing of the
transactions under the Crown Partnership Distribution Agreement, Crown
Partnership will own a 49.9% general partnership interest and PR Palmer Park
Limited Partnership, a Pennsylvania limited partnership and an affiliate of
PREIT Partnership, will own a 50.1% general partnership interest.
"TRSs" shall mean Crown American GC, Inc., a Maryland corporation, and
Crown American Services Corporation, a Pennsylvania corporation, in which Crown
Partnership owns 100% of the issued and outstanding stock, each of which has
elected to be treated as a "taxable REIT subsidiary."
SECTION 2. Contribution; Assumption.
------------------------
On the PREIT Contribution Closing Date (as hereinafter
defined), PREIT shall contribute to PREIT Partnership, and PREIT Partnership
shall acquire from PREIT, all of PREIT's right, title and interest in and to the
Crown Partnership Assets (which, for avoidance of doubt, the parties acknowledge
and agree consists of Crown's Proportionate Interest in the Crown Partnership
Assets to be acquired by Crown pursuant to the Crown Partnership Distribution
Agreement and subsequently to be acquired by PREIT pursuant to the Merger) and
all benefits and advantages to be derived therefrom, and PREIT Partnership shall
assume all of the Crown Partnership Liabilities to be assumed by PREIT pursuant
to the Merger. PREIT makes no representations or warranties regarding the Crown
Partnership Assets or the Crown Partnership Liabilities, and such assets and
liabilities are hereby transferred on an "AS IS, WHERE IS" basis, and shall not
provide the basis for any claim by PREIT Partnership against PREIT. In addition,
on the PREIT Contribution Closing Date, PREIT Partnership shall assume and agree
to perform all of PREIT's obligations (as successor to Crown) under the Crown
Partnership Distribution Agreement, including without limitation PREIT's
obligations with respect to indemnifying Crown Partnership and the other parties
named as "Indemnified Parties" therein.
SECTION 3. Consideration.
-------------
On the PREIT Contribution Closing Date, in consideration for
the contribution described in Section 2 above, PREIT shall receive from PREIT
Partnership (i) a number of PREIT Class A Units equal to the number of PREIT
common shares issued to the former Crown common shareholders in the Merger, and
(ii) a number of PREIT Preferred Units equal to the number of PREIT preferred
shares issued to the former Crown preferred shareholders in the Merger (such
PREIT Class A Units and PREIT Preferred Units, collectively, the "Units").
SECTION 4. Representations and Warranties by PREIT.
---------------------------------------
4.1 PREIT hereby represents and warrants to PREIT Partnership that,
except as disclosed in the Merger Agreement or the PREIT Disclosure Letter:
-4-
(a) Organization; Authority. PREIT is a Pennsylvania business
trust duly existing and in good standing under the laws of the Commonwealth of
Pennsylvania.
(b) Due Authorization. The execution, delivery and performance
of this Contribution Agreement and all other documents and agreements to be
executed by PREIT in connection with the transactions contemplated by this
Contribution Agreement have been duly and validly authorized by all necessary
action of PREIT. This Contribution Agreement constitutes a valid and binding
obligation of PREIT, enforceable against PREIT in accordance with its terms.
4.2 Survival of Representations and Warranties. All representations and
warranties made in this Contribution Agreement by PREIT shall survive the
execution of this Contribution Agreement and the closing of the transactions
contemplated by this Contribution Agreement (the "PREIT Contribution Closing").
SECTION 5. Representations and Warranties by PREIT Partnership.
---------------------------------------------------
5.1 PREIT Partnership hereby represents and warrants to PREIT that,
except as disclosed in the Merger Agreement or the PREIT Disclosure Letter:
(a) Organization; Authority. PREIT Partnership is a Delaware
partnership duly existing and in good standing under the laws of the State of
Delaware.
(b) Due Authorization. The execution, delivery and performance
of this Contribution Agreement and all other documents and agreements to be
executed by PREIT Partnership in connection with the transactions contemplated
by this Contribution Agreement have been duly and validly authorized by all
necessary action of PREIT Partnership. This Contribution Agreement constitutes a
valid and binding obligation of PREIT Partnership, enforceable against PREIT
Partnership in accordance with its terms.
(c) Units. All Units to be issued and delivered pursuant to
Section 3 hereof will be, at the time of issuance and delivery in accordance
with the terms of this Contribution Agreement, duly authorized and validly
issued by PREIT Partnership.
5.2 Survival of Representations and Warranties. All representations and
warranties made in this Contribution Agreement by PREIT Partnership shall
survive the execution of this Contribution Agreement and the PREIT Contribution
Closing.
SECTION 6. Closing; Closing Deliveries; Transfer Deliveries.
------------------------------------------------
6.1 Time of Closing. The PREIT Contribution Closing shall take place
immediately following the Effective Time of the Merger (the "PREIT Contribution
Closing Date") at the offices of Hogan & Hartson L.L.P., 555 13th Street, N.W.,
Washington, D.C.
-5-
6.2 Responsibility for Documents and Instruments. PREIT shall obtain or
cause to be obtained all documents and instruments required to be delivered by
parties other than PREIT or PREIT Partnership in order to consummate the
transactions contemplated by this Contribution Agreement. PREIT shall prepare,
or cause to be prepared, all documents and instruments necessary to transfer
title to the Crown Partnership Assets that are transferred hereby to PREIT
Partnership. PREIT Partnership shall prepare, or cause to be prepared, all
documents and instruments necessary to issue the Units to PREIT.
6.3 Representations and Warranties True as of Closing Date. The
representations and warranties of each of the parties contained in this
Contribution Agreement shall be true at and as of the PREIT Contribution Closing
Date in all material respects, with the same effect as though such
representations and warranties were made as of such date.
6.4 Closing Certificates. PREIT and PREIT Partnership shall each have
executed and delivered to the other a certificate dated as of the PREIT
Contribution Closing Date (the "Closing Certificate") and signed by an
authorized officer, as the case may be, certifying that its representations and
warranties set forth in this Contribution Agreement remain true and correct in
all material respects.
6.5 Other Closing Documents. In addition to the certificates and other
documents referred to in this Section 6 of this Contribution Agreement, the
parties shall also execute and deliver, or cause to be executed and delivered,
all agreements, documents and instruments necessary or appropriate to effect the
transactions contemplated by this Contribution Agreement, which agreements,
documents and instruments may include, but shall not be limited to, one or more
lease assignments, assignment and assumption agreements, deeds, certificates of
title, bills of sale, FIRPTA and other affidavits, or other documents or
instruments.
6.6 Conditions of Closing. In addition to the other matters set forth
in this Section 6 of this Contribution Agreement, consummation of the
transactions contemplated by this Contribution Agreement shall be conditioned
upon the closing of the Merger.
SECTION 7. Transfer Expenses.
-----------------
Transfer taxes, if any, as well as the cost of title insurance and
other expenses of the transfer shall be paid by PREIT Partnership. PREIT
Partnership shall be responsible for all title insurance premiums and title
company charges and recording costs payable in connection with this Contribution
Agreement or the transaction contemplated hereby. Otherwise, each party shall be
responsible for all expenses incurred by it in connection with this Contribution
Agreement and the transactions contemplated hereby, including, without
limitation, the fees and expenses of such party's accountants, attorneys and
other advisors, except as otherwise provided in the Merger Agreement.
SECTION 8. General Provisions.
------------------
8.1 Notices. All notices, requests, claims, demands and other
communications under this Contribution Agreement shall be in writing and shall
be delivered personally, 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:
-6-
(a) if to PREIT or PREIT Partnership, to:
Pennsylvania Real Estate Investment Trust
200 South Broad Street
Philadelphia, PA 19102
Attention: Bruce Goldman
General Counsel
Fax No.: (215) 546-7311
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attention: J. Warren Gorrell, Jr.
Stuart A. Barr
Fax No.: (202) 637-5910
and
Drinker Biddle & Reath LLP
One Logan Square
18th & Cherry Streets
Philadelphia, PA 19103-6996
Attention: Howard A. Blum
Fax No.: (215) 988-2757
(b) if to Crown or Crown Partnership, to:
Crown American Realty Trust
Pasquerilla Plaza
Johnstown, PA 15901
Attention: Ronald J. Hamilton
Fax No.: (814) 536-9525
-7-
with a copy (which shall not constitute notice) to:
Spitzer & Feldman
405 Park Avenue
New York, NY 10022
Attention: M. James Spitzer, Jr.
Fax No.: (212) 838-7472
and
Reed Smith LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: David L. DeNinno
Fax No.: (412) 288-3218
and
Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004-2498
Attention: Joseph C. Shenker
Gary Israel
Fax No.: (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). Prior to
the PREIT Contribution Closing Date, any notice under this Contribution
Agreement shall also be given to Crown and Crown Partnership in accordance with
the notice provisions in the Merger Agreement.
8.2 Entire Agreement. This Contribution Agreement and the Merger
Agreement, to the extent its terms are incorporated herein, constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings with respect to the subject matter hereof.
8.3 Counterparts. This Contribution Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original copy of this
Contribution Agreement, and all of which, when taken together, shall be deemed
to constitute but one and the same agreement.
8.4 Governing Law. This Contribution 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. Nothing contained herein or in any other document
contemplated hereunder shall prevent or delay any party from seeking, in any
court of competent jurisdiction, specific performance or other equitable
remedies in the event of any breach or intended breach by any party of any of
their respective obligations hereunder.
8.5 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 Contribution 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 masculine pronouns
include the 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.
-8-
8.6 Amendments, Modifications and Waiver. The parties may amend or
modify this Contribution Agreement in any respect, provided that any such
amendment or modification shall be in writing signed by each of the parties
hereto; provided, that, prior to the Merger, no amendment, modification or
waiver shall be made without the express written consent by Crown and Crown
Partnership and, following the Merger, no amendment, modification or waiver
shall be made without the express written consent of Crown Partnership, which
consent shall not be unreasonably withheld or delayed. The waiver by any party
of any provision of this Contribution 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.
8.7 Severability. The invalidity or unenforceability of any particular
provision, or part of any provision, of this Contribution Agreement shall not
affect the other provisions or parts hereof, and this Contribution Agreement
shall be construed in all respects as if such invalid or unenforceable
provisions or parts were omitted.
8.8 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.
8.9 Termination. This Contribution Agreement shall terminate and be of
no further force and effect automatically upon termination of the Merger
Agreement; provided, that nothing contained herein shall limit or affect the
rights of the parties to the Merger Agreement in connection with termination
thereof.
8.10 Intended Third Party Beneficiaries. It is expressly acknowledged
and agreed that Crown and Crown Partnership are intended third party
beneficiaries under this Contribution Agreement.
-9-
IN WITNESS WHEREOF, each of the parties hereto has executed this
Contribution Agreement, all as of the date first written above.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
By: Bruce Goldman
------------------------------------------------
Name: Bruce Goldman
Title: Executive Vice President
and General Counsel
PREIT ASSOCIATES, L.P.
By: Pennsylvania Real Estate Investment Trust, as
general partner
By: Bruce Goldman
------------------------------------------------
Name: Bruce Goldman
Title: Executive Vice President
and General Counsel