Exhibit 2.9
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of November 18, 2003, by and among (i) Pennsylvania Real Estate
Investment Trust, a Pennsylvania business trust (the "Trust"), and (ii) each of
the persons identified on Schedule A attached hereto (each, a "Beneficial Owner"
and, collectively, the "Beneficial Owners").
WHEREAS, the Trust, PREIT Associates, L.P., a Delaware limited
partnership ("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, dated as of May 13, 2003 (the "Merger Agreement"), pursuant
to which (i) Crown will be merged with and into the Trust (the "Merger"), with
the Trust as the survivor of the Merger, and (ii) PREIT Partnership and Crown
Partnership will consummate certain transactions contemplated in connection with
the Merger, including the issuance by PREIT Partnership of 2,044,511 class B
units of limited partner interest in PREIT Partnership (such units, the "PREIT
OP Units") to the Beneficial Owners as set forth opposite their names on
Schedule A attached hereto;
WHEREAS, pursuant to Section 9.5 and the other related provisions of
the First Amended and Restated Agreement of Limited Partnership of PREIT
Partnership, dated as of September 30, 1997 and as amended through May 13, 2003
(as the same may be amended, restated or supplemented from time to time, the
"Partnership Agreement"), subject to the various limitations contained in the
Partnership Agreement and other instruments being delivered in connection with
the Merger, the Beneficial Owners are entitled to redeem their PREIT OP Units
for cash or, at the Trust's election, common shares of beneficial interest, par
value $1.00 per share, of the Trust ("Shares" and, such redemption right, the
"Redemption Right"); and
WHEREAS, the Trust has agreed to grant to the Beneficial Owners the
registration rights described herein with respect to Shares issued in connection
with the Merger and the Shares, if any, issuable in respect of the PREIT OP
Units.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, and for other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree, intending to be legally bound hereby, as follows:
1. Certain Definitions
In addition to the other terms defined in this Agreement, the
following terms shall have the following meanings:
"Commission" means the United States Securities and Exchange
Commission, or such other federal agency at the time having the principal
responsibility for administering the Securities Act.
"Effective Time" means the time that the Merger becomes
effective pursuant to the terms of the Merger Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the relevant time.
"NASD" means National Association of Securities Dealers, Inc.
"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 Beneficial Owners 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
Beneficial Owners 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 Beneficial Owners in connection
with such sale which the Beneficial Owners 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.
"Participation Threshold" means such number of Registrable
Securities having an aggregate proposed sales price of $16 million less the sum
of (A) the Oak Ridge Net Proceeds of Sale and (B) the aggregate sale price of
all Registrable Securities previously sold by the Beneficial Owners during the
Initial Period.
"Person" means an individual, a partnership (general or
limited), corporation, limited liability company, joint venture, business trust,
cooperative, association or other form of business organization, whether or not
regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate, a quasi-governmental entity, a government or any
agency, authority, political subdivision or other instrumentality thereof, or
any other entity.
"Registrable Securities" means (i) any Shares issued by the
Trust to the Beneficial Owners pursuant to the Merger, (ii) any Shares issued or
issuable by the Trust in order to redeem or acquire PREIT OP Units issued or
issuable in connection with the Merger and the transactions contemplated
thereby, and (iii) any additional Shares or other equity securities of the Trust
issued by the Trust in respect of Shares described in subclause (i) after the
issuance of such Shares, in connection with a stock dividend, stock split,
combination, exchange, reorganization, recapitalization or similar
reclassification of the Trust's securities; provided that, as to any particular
Registrable Securities, such securities shall cease to constitute Registrable
Securities when: (w) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of thereunder; (x) such securities shall
have been sold in satisfaction of all applicable conditions to the resale
provisions of Rule 144 under the Securities Act (or any similar provision then
in force); (y) such securities are eligible to be publicly sold without
limitation as to amount or manner of sale pursuant to Rule 144(k) under the
Securities Act (or any successor provision to such Rule); or (z) such securities
shall have ceased to be issued and outstanding. The term Registrable Securities
shall not include the PREIT OP Units or any other securities of PREIT
Partnership.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect from time to time.
2. Shelf Registration.
(a) At any time after the closing of the Merger, the
Beneficial Owners owning Registrable Securities then outstanding may unanimously
request in writing that the Trust effect a shelf registration under the
Securities Act registering for resale by the Beneficial Owners of all of the
Registrable Securities eligible for registration pursuant to a shelf
registration statement on Form S-3 (or any similar short-form registration
statement that is a successor to Form S-3) or, in the Trust's sole discretion,
any other appropriate form. The Trust shall use its commercially reasonable
efforts to prepare and file a shelf registration statement under the Securities
Act within forty-five (45) days of the receipt by the Trust of such request from
the Beneficial Owners. The Trust shall use commercially reasonable efforts to
cause such shelf registration statement to be declared effective as promptly as
shall be reasonably practicable after it has been filed. The Trust shall not be
required to effect more than one shelf registration pursuant to this Section 2.
Subject to Sections 2(c), 2(e) and 3(e) of this Agreement, the Trust shall use
its commercially reasonable efforts to keep such shelf registration statement
effective until all securities included in such registration statement have
ceased to constitute Registrable Securities and to undertake to file a second
registration statement, which may include a combined prospectus (as permitted
under Rule 429 of the Securities Act) covering the Registrable Securities
included in the earlier registration statement together with any Shares issued
or issuable by the Trust in connection with the contribution of any Reserved
PREIT OP Units (as defined in the Merger Agreement) pursuant to the put and call
provisions of the Crown Partnership Contribution Agreement (as defined in the
Merger Agreement) that are issued after the date of the initial registration
request pursuant to this Section 2.
(b) Notwithstanding Section 2(a) above, the Trust may defer
the filing of or effectiveness of any shelf registration statements required by
this Section 2 for a reasonable period of time not to exceed 105 days after a
request by the Beneficial Owners to effect such registration if (i) the Trust
is, at such time, in the process of pursuing an underwritten public offering of
equity securities and is advised by its managing underwriter(s) that such
offering would in its or their opinion be adversely affected by such filing or
(ii) the Trust in good faith determines that any such filing or the offering of
any Registrable Securities would materially impede, delay or interfere with any
proposed financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving the Trust which began
prior to the date on which a request for registration was made by the Beneficial
Owners hereunder.
(c) At any time when a shelf registration statement effected
pursuant to this Section 2 is effective, upon written notice from the Trust to
each Beneficial Owner that the Trust has determined in good faith that sale of
Registrable Securities pursuant to such shelf registration statement would
require disclosure of non-public material information not otherwise required to
be disclosed under applicable law having a material adverse effect on the Trust
(an "Information Blackout"), each Beneficial Owner shall suspend sales of
Registrable Securities pursuant to such shelf registration statement until the
earlier of:
(i) forty-five (45) days after the Trust notifies the
Beneficial Owners of such good faith determination, or
(ii) such time as the Trust notifies the Beneficial
Owners that such material information has been disclosed to the public
or has ceased to be material or that sales pursuant to such shelf
registration statement may otherwise be resumed (the number of days
from such suspension of sales by the Beneficial Owners until the day
when such sale may be resumed hereunder is hereinafter called a "Sales
Blackout Period").
(d) Notwithstanding the provisions of Section 2(c), there
shall be no more than two (2) Information Blackouts during any fiscal year of
the Trust and no Sales Blackout Period shall continue for more than forty-five
(45) consecutive days.
(e) Notwithstanding any other provisions contained herein to
the contrary, the Trust shall not be required to effect any shelf registration
or to keep any shelf registration statement effective pursuant to this Section 2
following the Demand Registration Rights Effective Date (as defined below) if
the Beneficial Owners (i) exercise their right to request a demand registration
pursuant to Section 3 below or (ii) notify the Trust in writing of their
election to preserve their future right to request a demand registration
pursuant to Section 3 below, as described in Section 3(e) below.
(f) The Trust shall bear all Registration Expenses in
connection with any shelf registration pursuant to this Section 2, whether or
not such shelf registration becomes effective; provided, however, that if the
Beneficial Owners request a shelf registration and subsequently withdraw their
request, then such Beneficial Owners shall either pay all Registration Expenses
incurred in connection with such shelf registration or forfeit the right to
request another shelf registration unless the withdrawal of such request is the
result of facts or circumstances relating to the Trust that arise after the date
on which such request was made and would have a material adverse effect on the
offering of the Registrable Securities.
3. Demand Registration.
(a) If on the date that is five years and nine months after
the closing of the Merger (the "Demand Registration Rights Effective Date"), the
Registrable Securities owned by the Beneficial Owners constitute at least 5% of
the Trust's then outstanding shares (after giving effect to the redemption of
any PREIT Class B Units held by the Beneficial Owners and the issuance of the
Trust's shares therefor), then, subject to Section 3(e) below, at any time
beginning on the Demand Registration Rights Effective Date the Beneficial Owners
owning Registrable Securities then outstanding may unanimously request in
writing that the Trust effect the registration under the Securities Act of the
Registrable Securities then outstanding pursuant to a registration statement on
Form S-3 (or any similar short-form registration statement that is a successor
to Form S-3), or in the Trust's sole discretion, any other appropriate form. The
Trust shall use commercially reasonable efforts to prepare and file a
registration statement under the Securities Act within sixty (60) days of the
receipt by the Trust of such request from the Beneficial Owners. The Trust shall
use commercially reasonable efforts to cause such registration statement to be
declared effective by the Commission as promptly as shall be reasonably
practicable after it has been filed, and the Trust shall use its commercially
reasonable efforts to keep such registration statement effective until the
earlier of (i) such time as all Registrable Securities included in such
registration statement have been disposed of pursuant to the distribution
thereunder or (ii) the 30th day following the effectiveness of such registration
statement. The Trust shall be obligated to effect only one such Demand
Registration for the Beneficial Owners.
(b) Notwithstanding Section 3(a) above, the Trust may defer
the filing of or effectiveness of the registration statement required by this
Section 3 for a reasonable period of time not to exceed 180 days after a request
by the Beneficial Owners to effect such registration if (i) the Trust is, at
such time, in the process of pursuing an underwritten public offering of equity
securities and is advised by the managing underwriter(s) that such offering
would in its or their opinion be adversely affected by such filing or (ii) the
Trust in good faith determines that any such filing or the offering of any
Registrable Securities would materially impede, delay or interfere with any
proposed financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving the Trust which began
prior to the date on which a request for registration was made by the Beneficial
Owners hereunder.
(c) If the Beneficial Owners intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Trust as part of their request made pursuant to Section
3(a) above. In such event, the right of any Beneficial Owner to include its
Registrable Securities in such registration shall be conditioned upon such
Beneficial Owner's participation in such underwriting and the inclusion of such
Beneficial Owner's Registrable Securities in the underwriting to the extent
provided herein. All Beneficial Owners proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Trust. Notwithstanding any other provision of this Section 3
to the contrary, if, in the case of a registration requested pursuant to Section
3(a) above, the managing underwriter for the offering advises the Beneficial
Owners and the Trust that marketing factors require a limitation of the number
of shares to be underwritten, then the Trust shall so advise all Beneficial
Owners of Registrable Securities that would otherwise be underwritten pursuant
hereto, and the number of Registrable Securities that may be included in the
underwriting shall be allocated pro rata among all Beneficial Owners thereof
desiring to participate in such underwriting (according to the number of
Registrable Securities requested to be sold by each Beneficial Owner). No
Registrable Securities requested by a Beneficial Owner to be included in a
registration pursuant to Section 3(a) shall be excluded from the underwriting
unless all securities other than Registrable Securities are first excluded.
(d) The Trust shall bear all Registration Expenses (as defined
in Section 7 below) in connection with any demand registration pursuant to this
Section 3, whether or not such registration statement becomes effective;
provided, however, that if the Beneficial Owners request a demand registration
and subsequently withdraw their request, then such Beneficial Owners shall
either pay all Registration Expenses incurred in connection with such demand
registration or forfeit the right to request another demand registration unless
the withdrawal of such request is the result of facts or circumstances relating
to the Trust that arise after the date on which such request was made and would
have a material adverse effect on the offering of the Registrable Securities.
(e) Notwithstanding any other provision contained herein to
the contrary, the Trust shall not be required to effect any demand registration
pursuant to this Section 3 unless prior to the expiration of the thirty (30) day
period commencing on the Demand Registration Rights Effective Date the
Beneficial Owners (which Beneficial Owners, as required by Section 3(a) above,
on the Demand Registration Rights Effective Date owned Registrable Securities
which constituted at least 5% of the Trust's then outstanding shares after
giving effect to the redemption of any PREIT Class B Units held by the
Beneficial Owners and the issuance of the Trust's shares therefor) unanimously
either (i) request in writing that the Trust immediately effect the registration
under the Securities Act of the Registrable Securities then outstanding in
accordance with Section 3(a) above or (ii) notify the Trust in writing of their
election to preserve the future right of the Beneficial Owners to request a
registration under the Securities Act of the Registrable Securities pursuant to
this Section 3 above; it being understood and agreed that, in the event the
Beneficial Owners elect to preserve the future right to request a demand
registration under the Securities Act of the Registrable Shares pursuant to this
Section 3 during such thirty (30) day period, the Trust's obligation to effect
any shelf registration or to keep any shelf registration statement effective
pursuant to Section 2 of this Agreement shall terminate immediately regardless
of whether or not the Beneficial Owners thereafter exercise their right to
request a demand registration pursuant to this Section 3.
4. Incidental or "Piggy-Back" Registration.
(a) If, at any time during the nine (9) month period beginning
on the Effective Time of the Merger (the "Initial Period"), the Trust proposes
to file a Registration Statement under the Securities Act covering an
underwritten offering by the Trust for its own account (other than a
Registration Statement on Form S-4 or S-8 or any successor thereto), then the
Trust shall promptly give written notice of such proposed filing to each of the
Beneficial Owners. Upon the written request of any Beneficial Owner received by
the Trust within 10 days after the delivery of such notice by the Trust (but in
any event prior to 10 days following the expiration of the Initial Period), the
Trust shall use commercially reasonable efforts to cause a registration
statement covering those Registrable Securities that each such Beneficial Owner
has requested to be registered up to, in the aggregate, the Participation
Threshold, to become effective under the Securities Act.
(b) The Trust shall not be required under this Section 4 to
include any of the Beneficial Owners' securities in an underwriting unless they
accept the terms of the underwriting as agreed upon between the Trust and the
underwriters selected by the Trust; provided, that the Beneficial Owners in no
event shall be subject to a lock-up period in excess of that provided for in
Section 5(a) below. If the managing underwriter for the offering shall advise
the Trust that marketing factors require a limitation of the number of shares to
be underwritten, then the Trust shall so advise all Beneficial Owners of
Registrable Securities which would otherwise be underwritten pursuant to this
Section 4 and the number of shares of Registrable Securities that may be
included in the underwriting shall be allocated in accordance with Section 4(c)
below.
(c) If the Trust shall, pursuant to Section 4(b), reduce the
amount of securities to be included in an offering, such reduction shall be made
as follows: (i) first, all securities other than those to be included by the
Trust for its own account and other than those which the Beneficial Owners seek
to include in the offering (but in any event not to exceed the Participation
Threshold) shall be excluded from the offering to the extent such limitation on
the number of shares included in the underwriting is required; and (ii) second,
if further limitation on the number of shares to be included in the underwriting
is required, the number of shares to be included by the Beneficial Owners shall
be reduced to 15% of the total number of shares to be included in such
incidental registration and the number of shares to be included by the Trust
shall be reduced to 85% of the total number of shares to be included in such
incidental registration; it being understood that any reduction in the number of
shares to be included in the incidental registration by the Beneficial Owners
shall be made pro rata among the Beneficial Owners in accordance with the number
of shares of Registrable Securities requested to be sold by each such Beneficial
Owner.
(d) The Trust shall bear all Registration Expenses in
connection with any incidental registration pursuant to this Section 4, whether
or not such incidental registration statement becomes effective.
(e) Notwithstanding anything in Section 5(a) below to the
contrary, in the event that (i) the Beneficial Owners participate in any
incidental registration pursuant to this Section 4 and (ii) the sum of the
aggregate net proceeds reasonably expected to be received by the Beneficial
Owners in connection with such incidental registration and the aggregate net
proceeds previously received by such Beneficial Owners from the sale of
Registrable Shares by such Beneficial Owners from and after the Effective Time
shall be equal to an amount less than $10 million in the aggregate, the duration
of the restriction on public sales or distributions of Registrable Securities by
the Beneficial Owners in connection with such incidental registration pursuant
to this Section 4 shall be reduced to apply only to the period commencing on the
tenth (10th) day prior to the date such underwritten offering commences and
ending no later than sixty (60) days following the closing of the underwritten
offering (or such shorter period as the managing underwriter or underwriters for
such underwritten offering may request); provided, however, that if the managing
underwriter or underwriters for such underwritten offering reasonably determine
that a longer period (but in any event not to exceed the period otherwise
required by Section 5(a) below) is necessary or appropriate in connection with
such offering, then the Beneficial Owners shall have the option to either (i)
comply with such longer requirement or (ii) forfeit their rights in connection
with such incidental registration pursuant to this Section 4; it being
understood and agreed that, in the event that the Beneficial Owners elect to
forfeit their rights in connection with an incidental registration pursuant to
clause (ii) above, (x) such Beneficial Owners shall not be subject to the
restrictions on sale contained in Section 5(a) below or this Section 4(e) in
connection with such offering, and (y) in the event such offering is not
consummated by the Trust, such Beneficial Owners would again be entitled to
request "piggy-back" registration of their Registrable Securities in accordance
with Section 4(a) above in connection with a subsequent offering.
5. Restrictions on Public Sale.
The Beneficial Owners shall:
(a) in the event the Trust is issuing equity securities to the
public in an underwritten offering, and, if requested by the managing
underwriter or underwriters for such underwritten offering, subject to Section
4(e) above, not effect any public sale or distribution of Registrable Securities
or any securities convertible into or exchangeable or exercisable for such
Registrable Securities, including a sale pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act, for a period commencing on
the tenth (10th) day prior to the date such underwritten offering commences
(such offering being deemed to commence for this purpose on the later of the
effective date for the registration statement for such offering or, if
applicable, the date of the prospectus supplement for such offering) and ending
90 days after the closing of such underwritten offering;
(b) not, during any period in which any of their Registrable
Securities are included in any effective registration statement: (i) effect any
stabilization transactions or engage in any stabilization activity in connection
with the Shares or other equity securities of the Trust in contravention of Rule
104 of Regulation M under the Exchange Act; or (ii) permit any Affiliated
Purchaser (as that term is defined in Rule 101 of Regulation M under the
Exchange Act) to bid for or purchase for any account in which any Beneficial
Owner has a beneficial interest, or attempt to induce any other person to
purchase, any Shares in contravention of Rule 102 of Regulation M under the
Exchange Act; and
(c) furnish each broker through whom the Beneficial Owners
offer Registrable Securities such number of copies of the prospectus as such
broker may require and otherwise comply with the prospectus delivery
requirements under the Securities Act.
6. Registration Procedures.
(a) In connection with any registration contemplated by
Sections 2, 3 or 4, the Trust shall:
(i) prepare and file with the Commission, within the
applicable time period, a registration statement, which registration
statement shall (x) be available for the sale of the Registrable
Securities in accordance with the intended method or methods of
distribution by the Beneficial Owners, and (y) comply as to form in all
material respects with the requirements of the applicable form and
include all financial statements required by the Commission to be filed
therewith; provided that, before filing a registration statement, the
Trust shall upon request furnish to the Beneficial Owners copies of
such registration statement as proposed to be filed and thereafter such
number of copies of such registration statement (including all exhibits
thereto), and any documents incorporated by reference after the initial
filing of any registration statement as the Beneficial Owners may
reasonably request on a case by case basis after each such filing in
order to facilitate the disposition of the Registrable Securities owned
by the Beneficial Owners, and shall revise the registration statement
as it specifically relates to the Beneficial Owners based on
information received by the Beneficial Owners as determined by the
Trust;
(ii) prepare and file with the Commission such
amendments, post-effective amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for
such period of time as is necessary to allow the distribution of the
Registrable Securities contemplated therein and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during the period
during which any such registration statement is required to be
effective; provided that, before filing any amendments or supplements
to such registration statement or the prospectus, the Trust shall upon
request furnish to the Beneficial Owners copies of such amendments and
supplements (in each case including all exhibits thereto) and the
prospectus (including each preliminary prospectus) as proposed to be
filed and thereafter such number of copies of such amendments,
supplements, prospectuses and any documents incorporated by reference
after the initial filing of any registration statement as the
Beneficial Owners may reasonably request on a case by case basis after
each such filing in order to facilitate the disposition of the
Registrable Securities owned by the Beneficial Owners, and revise such
documents as they specifically relate to the Beneficial Owners based on
information received by the Beneficial Owners as determined by the
Trust;
(iii) use its commercially reasonable efforts to
register or qualify the Registrable Securities covered by such
registration statement under the securities or "blue sky" laws of such
jurisdictions as the Beneficial Owners shall reasonably request, and do
any and all other acts and things which may be necessary or desirable
to enable the Beneficial Owners to consummate the offering and
disposition of Registrable Securities in such jurisdictions; provided,
however, that the Trust shall not be required to qualify generally to
do business as a foreign business trust, subject itself to taxation, or
consent to general service of process, in any jurisdiction wherein it
would not, but for the requirements of this Section 6, be obligated to
be qualified;
(iv) use its commercially reasonable efforts to cause
the Registrable Securities covered by such registration statement to be
registered with, or approved by, such other public, governmental or
regulatory authorities as may be necessary to facilitate the
disposition of such Registrable Securities in accordance with the
methods of disposition intended herein;
(v) notify each Beneficial Owner promptly and, if
requested by any Beneficial Owner, confirm such notification in
writing, (A) when a prospectus or any prospectus supplement has been
filed with the Commission, and, with respect to such registration
statement or any post-effective amendment thereto, when the same has
been declared effective by the Commission, (B) of any request by the
Commission for amendments or supplements to such registration statement
or related prospectus, or for additional information, (C) of the
issuance by the Commission of any stop order or the initiation of any
proceedings for such or a similar purpose (and the Trust shall use its
commercially reasonable efforts to obtain the withdrawal of any such
order at the earliest practicable moment), (D) of the receipt by the
Trust of any notification with respect to the suspension of the
qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose (and the Trust shall use its commercially reasonable
efforts to obtain the withdrawal of any such suspension at the earliest
practicable moment), (E) of the occurrence of any event that requires
the making of any changes to such registration statement or related
prospectus so that such documents will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading (and the
Trust shall, subject to Section 7, promptly prepare and furnish to the
Beneficial Owners a reasonable number of copies of a supplemented or
amended prospectus such that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading), and (F) of the Trust's determination that the filing of a
post-effective amendment to such registration statement shall be
necessary or appropriate. Each Beneficial Owner shall be deemed to have
agreed by acquisition of Registrable Securities that, upon the receipt
of any notice from the Trust of the occurrence of any event of the kind
described in clause (E) of this Section 6(a)(v), each Beneficial Owner
shall forthwith discontinue his or its offer and disposition of
Registrable Securities pursuant to the registration statement covering
such Registrable Securities until he or it shall have received copies
of a supplemented or amended prospectus which is no longer defective as
contemplated by clause (E) of this Section 6(a)(v) and, if so directed
by the Trust, shall deliver to the Trust, at the Trust's expense, all
copies (other than permanent file copies) of the defective prospectus
covering such Registrable Securities which are then in its possession;
(vi) otherwise use its commercially reasonable
efforts to comply with all applicable rules and regulations of the
Commission, as the same may hereafter be amended; and
(vii) cooperate with the Beneficial Owners to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold; and use commercially
reasonable efforts to cause the Registrar and Transfer Agent for the
Trust to issue, upon request of the Beneficial Owners, certificates for
such numbers of Registrable Securities registered in such names as the
Beneficial Owners may reasonably request at least two business days
prior to any sale of Registrable Securities.
(b) In connection with any registration contemplated by
Sections 3 or 4 only, the Trust shall:
(i) make available for inspection by the Beneficial
Owners and any attorney, accountant or other agent retained by the
Beneficial Owners (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the
Trust and its subsidiaries as shall be necessary to enable them to
conduct their due diligence review, and cause the officers, trustees
and employees of the Trust and its subsidiaries to supply all
information reasonably requested by any such Inspector in connection
with such review. In addition, the Trust shall use its commercially
reasonable efforts to make available, to discuss the Trust's business
with the Inspectors, the independent public accountants who have
certified its most recent annual financial statements, and shall
provide such opportunities as are necessary for the Inspectors to
discuss the Trust's business with the Trust's trustees and officers;
and
(ii) obtain an opinion from counsel to the Trust and
a "cold comfort" letter from an independent certified public accounting
firm of national recognition and standing who have certified the
Trust's financial statements included in the registration statement or
any amendment thereto, in customary form addressed to the managing
underwriter or underwriters, the Board of Trustees and to the selling
Beneficial Owners of Registrable Securities included in a registration
statement filed by the Trust.
(c) In connection with any registration contemplated by
Sections 2, 3 or 4, each Beneficial Owner shall:
(i) cooperate with the Trust in connection with the
preparation of the registration statement to be filed by the Trust
pursuant to this Agreement, and for so long as the Trust is obligated
to keep such registration statement effective, shall (a) respond within
five (5) business days to any request by the Trust to provide or verify
information regarding such Beneficial Owner or such Beneficial Owner's
Registrable Securities (including the proposed manner of sale) that may
be required to be included in such registration statement pursuant to
the rules and regulations of the Commission, and (b) provide in a
timely manner information regarding the proposed distribution by such
Beneficial Owner of the Registrable Securities and such other
information as may reasonably be requested by the Trust from time to
time in connection with the preparation of and for inclusion in a shelf
registration statement pursuant to Section 2 and any related
prospectus; and
(ii) if requested by the Trust, before using any
registration statement or any prospectus contained therein or any
amendment or supplement thereto, deliver to the Trust a certification
that he or it has reviewed the information contained therein and
representing and warranting to the Trust that the information relating
to such Beneficial Owner and his or its plan of distribution is as set
forth in the related prospectus, that the prospectus does not, as of
the time of such sale, contain any untrue statement of a material fact
relating to or provided by such Beneficial Owner or his or its plan of
distribution and that the prospectus does not, as of the time of such
sale, omit to state any material fact relating to such Beneficial Owner
or his or its plan of distribution required to be stated in the
prospectus or necessary to make the statements in such prospectus, in
the light of the circumstances under which they were made, not
misleading.
7. Registration Expenses.
Whether or not any registration statement prepared and filed
pursuant to Sections 2, 3 or 4 of this Agreement is declared effective by the
Commission, the Trust shall pay all of the following expenses ("Registration
Expenses") arising in connection with the registration pursuant to this
Agreement (except as specified in the following sentence): (a) all Commission
and any NASD registration and filing fees and expenses; (b) any and all expenses
incident to the Trust's performance of, or compliance with, this Agreement,
including, without limitation, any allocation of salaries and expenses of Trust
personnel or other general overhead expenses of the Trust, or other expenses for
the preparation of historical and pro forma financial statements or other data
prepared by the Trust; (c) all listing, transfer and/or exchange agent and
registrar fees; (d) fees and expenses in connection with the qualification of
the Registrable Securities under securities or "blue sky" laws; (e) printing and
delivery expenses; and (f) fees and out-of-pocket expenses of counsel for the
Trust and its independent certified public accountants and other persons,
including special experts, retained by the Trust. Notwithstanding the foregoing,
the Trust shall not be required to pay fees and out-of-pocket expenses of
counsel retained by the Beneficial Owners, or any discounts, commissions or fees
of selling brokers, dealers and underwriters relating to the distribution of the
Registrable Securities.
8. Indemnification; Contribution.
(a) The Trust hereby indemnifies and holds harmless, to the
fullest extent permitted by law, each Beneficial Owner, directors, officers,
partners, employees, agents of the Beneficial Owners, as applicable, and each
Person, if any, who controls any Beneficial Owner within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act, against all losses,
claims, damages, liabilities (or proceedings in respect thereof) and expenses
(under the Securities Act, common law and otherwise), joint or several, which
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the registration statement
contemplated hereby or in any prospectus, preliminary prospectus, any amendment
or supplement thereto or any document incorporated by reference relating thereto
or in any filing made in connection with the registration or qualification of
the offering under "blue sky" or other securities laws of jurisdictions in which
the Registrable Securities are offered, or any omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and the Trust shall reimburse such Beneficial Owners for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
proceeding, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, if used prior to the effective
date of such registration statement (unless such statement is corrected in the
final prospectus, and the Trust has previously furnished copies thereof to the
Beneficial Owners seeking such indemnification), or contained in the final
prospectus (as amended or supplemented if the Trust shall have filed with the
Commission any amendment thereof or supplement thereto) if used within the
period during which the Trust is required to keep the registration statement to
which such prospectus relates current, or the omission or alleged omission to
state therein a material fact necessary in order to make the statements therein
in light of the circumstances under which they were made, not misleading;
provided, however, that such indemnification shall not extend to any such
losses, claims, damages, liabilities (or proceedings in respect thereof) or
expenses that are caused by any untrue statement or alleged untrue statement
contained in, or by any omission or alleged omission from, information furnished
in writing to the Trust by such Beneficial Owner in such capacity specifically
and expressly for use in any such registration statement or prospectus.
(b) The Beneficial Owners hereby jointly and severally
indemnify and hold harmless, to the fullest extent permitted by law, the Trust,
its trustees, officers, employees, agents and each Person, if any, who controls
the Trust within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act, against any losses, claims, damages, liabilities (or
proceedings in respect thereof) and expenses resulting from any untrue
statement, or alleged untrue statement of a material fact, or any omission or
alleged omission of a material fact required to be stated, or necessary to make
the statements in the registration statement or prospectus, or any amendment
thereof or supplement thereto, not misleading; provided, however, that each
Beneficial Owner shall be liable hereunder if and only to the extent that any
such loss, claim, damage, liability (or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement, or alleged untrue
statement or omission or alleged omission, made in reliance upon and in
conformity with information pertaining to such Beneficial Owner which is
requested by the Trust and furnished in writing to the Trust by such Beneficial
Owner specifically and expressly for use in any such registration statement or
prospectus.
(c) Any Person seeking indemnification under the provisions of
this Section 8 shall, promptly after receipt by such Person of notice of the
commencement of any action, suit, claim or proceeding, notify in writing each
party against whom indemnification is to be sought of the commencement thereof;
provided, however, that the failure so to notify an indemnifying party shall not
relieve the indemnifying party from any liability which it or he may have under
this Section 8 (except to the extent that it has been prejudiced in any material
respect by such failure) or from any liability which the indemnifying party may
otherwise have. In case any such action, suit, claim or proceeding is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent it or he may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party shall have the right to employ its own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such suit, action, claim or proceeding, (ii) the indemnifying party shall not
have employed counsel (reasonably satisfactory to the indemnified party) to take
charge of the defense of such action, suit, claim or proceeding within a
reasonable time after notice of commencement of the action, suit, claim or
proceeding, or (iii) such indemnified party shall have reasonably concluded,
based on the advice of counsel, that there may be defenses available to it which
are different from or additional to those available to the indemnifying party
which, if the indemnifying party and the indemnified party were to be
represented by the same counsel, could result in a conflict of interest for such
counsel or materially prejudice the prosecution of the defenses available to
such indemnified party. If any of the events specified in clauses (i), (ii) or
(iii) of the preceding sentence shall have occurred or shall otherwise be
applicable, then the fees and expenses of one counsel selected by a majority in
interest of the indemnified parties shall be borne by the indemnifying party.
If, in any case, the indemnified party employs separate counsel, the
indemnifying party shall not have the right to direct the defense of such
action, suit, claim or proceeding on behalf of the indemnified party. Anything
in this paragraph to the contrary notwithstanding, an indemnifying party shall
not be liable for the settlement of any action, suit, claim or proceeding
effected without its prior written consent (which consent in the case of an
action, suit, claim or proceeding exclusively seeking monetary relief shall not
be unreasonably withheld or delayed). Such indemnification shall remain in full
force and effect irrespective of any investigation made by or on behalf of an
indemnified party.
(d) If the indemnification from the indemnifying party as
provided in this Section 8 is unavailable or is otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses. The relative fault of such
indemnifying party shall be determined by reference to, among other things,
whether any action in question, including any untrue (or alleged untrue)
statement of a material fact or omission (or alleged omission) to state a
material fact, has been made, or relates to information supplied by such
indemnifying party or such indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8(d) hereof, any legal or other
fees or expenses reasonably incurred by such party in connection with any such
investigation or proceeding.
The parties hereto acknowledge that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation other than as described above.
Notwithstanding the provisions of this Section 8(d), the Beneficial Owners shall
not be required to contribute any aggregate amount in excess of the amount by
which the total price at which the Registrable Securities of such Beneficial
Owners were offered to the public exceed the amount of any damages which such
Beneficial Owners have otherwise been required to pay or become liable to pay by
reason of such untrue statement or omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
If, however, indemnification is available under this Section
8, the indemnifying parties shall indemnify each indemnified party to the
fullest extent provided in Sections 8(a) through 8(d) hereof without regard to
the relative fault of said indemnifying party or indemnified party or any other
equitable consideration.
9. Rule 144 Compliance.
So as to enable each Beneficial Owner to sell Registrable
Securities pursuant to Rule 144 under the Securities Act, the Trust covenants
that it will use commercially reasonable efforts to (a) make and keep public
information available as those terms are understood and defined in Rule 144
under the Securities Act; (b) file with the Commission in a timely manner all
reports and other documents required to be filed by the Trust under the
Securities Act and the Exchange Act so long as the Trust remains subject to such
requirements and the filing of such reports and other documents is required for
the applicable provisions of Rule 144 under the Securities Act; and (c) furnish
to each Beneficial Owner so long as such Beneficial Owner owns Registrable
Securities promptly upon request a copy of the most recent annual or quarterly
report of the Trust and such other reports and documents so filed by the Trust
under the Exchange Act. In connection with any sale, transfer or other
disposition by any Beneficial Owner of any Registrable Securities pursuant to
Rule 144 under the Securities Act, the Trust shall cooperate with such
Beneficial Owner to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, and enable
certificates for such Registrable Securities to be for such number of shares and
registered in such names as the Beneficial Owner representative may reasonably
request in writing at least four (4) Business Days prior to any sale of
Registrable Securities hereunder.
10. Miscellaneous
(a) Notices. Except as otherwise provided below, whenever it
is provided in this Agreement that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties hereto, or whenever any of the parties hereto, desires
to provide to or serve upon any person any other communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person or sent by telecopy, addressed as follows:
if to the Trust:
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
if to any Beneficial Owner or the Beneficial Owner representative:
Mark E. Pasquerilla
Pasquerilla Plaza
Johnstown, PA 15901
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
(b) Entire Agreement. This Agreement represents the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes any and all prior oral and written agreements,
arrangements and understandings among the parties hereto with respect to such
subject matter. This Agreement can be amended, supplemented or changed, and any
provision hereof can be waived, only by a written instrument making specific
reference to this Agreement signed by the Trust on the one hand, and all of the
Beneficial Owners on the other hand.
(c) Assignment; Successors and Assigns. Except as set forth in
the next sentence, this Agreement and the rights granted hereunder may not be
assigned by any Beneficial Owner without the prior written consent of the Trust,
which may be granted or withheld by the Trust in its sole and absolute
discretion. Each Beneficial Owner will be permitted to assign its rights under
this Agreement to one or more entities controlled by it in connection with a
concurrent transfer of PREIT OP Units or Registrable Securities that is
permitted by the terms of the Partnership Agreement, so long as the Beneficial
Owner provides to the Trust at least five (5) business days' advance written
notice of the transfer, and the transferee executes and delivers to the Trust an
instrument, in form and substance acceptable to the Trust, agreeing to be bound
by the terms of this Agreement as if it were an original party hereto. This
Agreement shall inure to the benefit of and be binding upon all of the parties
hereto and their respective successors and permitted assigns.
(d) Headings. Section 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.
(e) Applicable Law. 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) Severability. If fulfillment of any provision of this
Agreement, at the time such fulfillment shall be due, shall transcend the limit
of validity prescribed by law, then the obligation to be fulfilled shall be
reduced to the limit of such validity; and if any clause or provision contained
in this Agreement operates or would operate to invalidate this Agreement, in
whole or in part, then such clause or provision only shall be held ineffective,
as though not herein contained, and the remainder of this Agreement shall remain
operative and in full force and effect.
(g) Equitable Remedies. The parties hereto agree that
irreparable harm would occur in the event that any of the agreements and
provisions of this Agreement were not performed fully by the parties hereto in
accordance with their specific terms or conditions or were otherwise breached,
and that money damages are an inadequate remedy for breach of this Agreement
because of the difficulty of ascertaining and quantifying the amount of damage
that will be suffered by the parties hereto in the event that this Agreement is
not performed in accordance with its terms or conditions or is otherwise
breached. It is accordingly hereby agreed that the parties hereto shall be
entitled to an injunction or injunctions to restrain, enjoin and prevent
breaches of this Agreement by the other parties and to enforce specifically the
terms and provisions hereof in any court of the United States or any state
having jurisdiction, such remedy being in addition to and not in lieu of, any
other rights and remedies to which the other parties are entitled to at law or
in equity.
(h) No Waiver. 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.
(i) Counterparts. To facilitate execution, this Agreement may
be executed in as many counterparts as may be required. It shall not be
necessary that the signature of or on behalf of each party appear on each
counterpart, but it shall be sufficient that the signature of or on behalf of
each party appear on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in any
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of or on behalf of all of the
parties.
(j) Trust Assets. The Beneficial Owner acknowledges that no
trustee, officer or shareholder of the Trust is liable to such holder in respect
of this Agreement and that such holder shall look only to the income and assets
of the Trust in respect of any payments or claims related to this Agreement.
(k) 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.
(l) Termination of CIT Registration Rights Agreement. By
execution and delivery hereof, Crown Investments Trust ("CIT") hereby agrees
that that certain Registration Rights Agreement, by and between Crown and CIT,
dated August 17, 1993, is hereby terminated and shall be null and void and of no
further force and effect, and the Trust (as successor by merger to Crown) shall
have no liability or obligation with respect thereto.
(SIGNATURES APPEAR ON FOLLOWING PAGE)
IN WITNESS WHEREOF, each of the parties hereto has duly
executed and delivered this Registration Rights Agreement, or has caused this
Registration Rights Agreement to be duly executed and delivered in their names
and on their behalf, as of the date first written above.
Trust:
Pennsylvania Real Estate Investment Trust
By: /s/ Bruce Goldman
--------------------------------------------------
Name: Bruce Goldman
Title: Executive Vice President & General Counsel
BENEFICIAL OWNERS:
/s/ Mark E. Pasquerilla
--------------------------------------------------------
Mark E. Pasquerilla,
on his own behalf and as Beneficial Owner Representative
Crown Investments Trust,
a Delaware statutory trust
By: /s/ Ronald J. Hamilton
-------------------------------------------------
Name: Ronald J. Hamilton
Title: Chief Financial Officer and Vice President
Crown American Investment Company,
a Delaware corporation
By: /s/ Ronald J. Hamilton
-------------------------------------------------
Name: Ronald J. Hamilton
Title: Chief Financial Officer and Vice President
Crown Delaware Holding Company,
a Delaware corporation
By: /s/ Ronald J. Hamilton
-------------------------------------------------
Name: Ronald J. Hamilton
Title: Chief Financial Officer and Vice President
Crown American Properties, L.P.
By: Crown American Realty Trust, as general partner
By: /s/ Terry L. Stevens
-------------------------------------------------
Name: Terry L. Stevens
Title: Executive Vice President and CFO
Schedule A
----------
Mark E. Pasquerilla and Affiliates
PREIT Common Share and Unit Ownership
Common Shares of Beneficial Interest
- -------------------------------------- -------------------------- ----------------- -------------------------
Owner Crown Shares(1) Exchange Ratio PREIT Shares
- -------------------------------------- -------------------------- ----------------- -------------------------
Mark E. Pasquerilla 33,220 .3589 11,923
- -------------------------------------- -------------------------- ----------------- -------------------------
Crown Investments Trust 2,914,721 .3589 1,046,093
- -------------------------------------- -------------------------- ----------------- -------------------------
Partnership Units
- --------------------- ---------------- ------------------ --------------- ----------------- -----------------
Partnership
Owner(2) Crown Units Adjustment Factor Adjusted Units Exchange Ratio PREIT Units(3)
- --------------------- ---------------- ------------------ --------------- ----------------- -----------------
Crown Investments
Trust 8,169,939 .6205602 5,069,939 .3589 1,819,601(4)
- --------------------- ---------------- ------------------ --------------- ----------------- -----------------
Crown American
Investment Company 1,786,459 .3507861 626,665 .3589 224,910(5)
- --------------------- ---------------- ------------------ --------------- ----------------- -----------------
- -----------------------
(1) Does not include 8,167 shares held by M. E. Pasquerilla in the 401(K) Plan,
68,355 shares held for the benefit of Mr. Pasquerilla in Rabbi Trusts
related to deferred compensation plans as follows: Crown American Associates
Key Executive Capital Incentive Plan 3,698 shares, Crown American
Properties, LP Key Executive Plan 63, 978 shares, and Crown American Hotels
Company Deferred Compensation Plan 679 shares; or 181,684 shares held by
Marenrico Partnership; and 10 shares held Leah Pasquerilla.
(2) Reflects owner of Crown American Properties, L.P. units. PREIT units will be
held by Crown American Properties, L.P.
(3) Includes the 341,297 units related to the retained interests.
(4) Alternate calculation of 8,169,939 multiplied by .22271905.
(5) Alternate calculation of 1,786,459 multiplied by .12589713.