CONTRIBUTION AGREEMENT
relating to
Northeast Tower Center, Philadelphia, Pennsylvania
Roosevelt Blvd. Co., Inc.
Ronald Rubin, George Rubin, Gerald Broker, Leonard B. Shore
Joseph Coradino, Lewis M. Stone, Pat Berns, Edward Glickman,
Douglas Grayson and Judith Garfinkel
Pennsylvania Real Estate Investment Trust
PREIT Associates, L.P.
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS......................................... 2
SECTION 2. CONTRIBUTIONS....................................... 2
SECTION 3. CONSIDERATION....................................... 4
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE
CONTRIBUTORS........................................ 5
4.1 As to the Contributors.............................. 5
4.2 As to the Project Partnership....................... 10
4.3 As to the Shopping Center........................... 18
SECTION 5. REPRESENTATIONS AND WARRANTIES REGARDING PREIT...... 23
5.1 Organization........................................ 23
5.2 Power and Authority................................. 24
5.3 No Conflicts........................................ 24
5.4 Capitalization...................................... 25
5.5 PREIT Reports....................................... 26
5.6 Litigation.......................................... 26
5.7 Material Adverse Change............................. 26
5.8 Brokers............................................. 27
SECTION 6. CERTAIN COVENANTS AND AGREEMENTS.................... 27
6.1 Conduct of Business................................. 27
6.2 Reasonable Efforts.................................. 28
6.3 Notifications....................................... 29
6.4 Operation of Shopping Center........................ 29
6.5 Transfer of Shares or Retained Interests............ 30
6.6 Bankruptcy Claim.................................... 30
SECTION 7. CLOSING; CLOSING CONDITIONS; CLOSING DELIVERIES..... 31
7.1 Time of Closing..................................... 31
7.2 Closing Conditions.................................. 31
7.3 Deliveries at the Closing........................... 35
SECTION 8. CLOSING ADJUSTMENTS................................. 37
8.1 Adjustment for Breaches by the Contributors......... 37
8.2 Casualty or Condemnation............................ 37
SECTION 9. INDEMNIFICATION..................................... 38
9.1 Indemnification by Contributors..................... 38
9.2 Indemnification by PREIT............................ 39
9.3 Limitations on Liability............................ 39
9.4 Procedure For Indemnification - Third Party Claims.. 41
9.5 Procedure for Indemnification - Other Claims........ 42
9.6 Distributions of Class A Units by Contributors...... 42
9.7 Right of Set-Off.................................... 43
9.8 Indemnification Payments............................ 43
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SECTION 10. TERMINATION AND ABANDONMENT......................... 43
10.1 Termination......................................... 43
10.2 Procedure for Termination; Effect of
Termination......................................... 44
SECTION 11. GENERAL PROVISIONS.................................. 45
11.1 Survival of Representations and Warranties.......... 45
11.2 Costs and Expenses.................................. 45
11.3 Notices............................................. 46
11.4 Access to Information; Confidentiality.............. 47
11.5 Public Announcements................................ 47
11.6 No Solicitation..................................... 47
11.7 Entire Agreement.................................... 48
11.8 Counterparts........................................ 48
11.9 Governing Law....................................... 48
11.10 Section Headings, Captions and Defined Terms........ 48
11.11 Amendments, Modifications and Waiver................ 48
11.12 Severability........................................ 48
11.13 Liability of Trustees, etc.......................... 48
11.14 Sears Power Plant................................... 49
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CONTRIBUTION AGREEMENT
relating to
Northeast Tower Center, Philadelphia, Pennsylvania
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made as of the 30th
day of July, 1997, by and among ROOSEVELT BLVD. CO., INC., a Pennsylvania
corporation ("RBC, Inc."), RONALD RUBIN, GEORGE RUBIN, GERARD BROKER, LEONARD
B. SHORE, JOSEPH CORADINO, LEWIS M. STONE, PAT BERNS, EDWARD GLICKMAN, DOUGLAS
GRAYSON and JUDITH GARFINKEL (collectively the "Limited Partners" and together
with RBC, Inc. the "Contributors," and, each, a "Contributor"), PENNSYLVANIA
REAL ESTATE INVESTMENT TRUST, an unincorporated association in business trust
form created under Pennsylvania law pursuant to a Trust Agreement dated
December 27, 1960, as last amended and restated on December 16, 1987
("PREIT"), and PREIT ASSOCIATES, L.P., a Delaware limited partnership (the
"Partnership").
Background
The Contributors are affiliates of The Rubin Organization, Inc., a
Pennsylvania corporation ("TRO").
This Contribution Agreement is part of a larger transaction described
in the TRO Contribution Agreement of even date herewith (the "TRO Contribution
Agreement") among PREIT, TRO, The Rubin Organization-Illinois, Inc. and the
shareholders of TRO.
The Partnership has been formed by PREIT and PREIT Property Trust, a
Pennsylvania business trust ("PREIT Subsidiary"), pursuant to the terms of the
Agreement of Limited Partnership dated as of June 30, 1997 (the "Partnership
Agreement") of PREIT Associates, L.P. between PREIT, as general partner, and
PREIT Subsidiary, as limited partner.
Subject to the terms and conditions of this Agreement and the TRO
Contribution Agreement, the parties intend that the Contributors will
contribute, in exchange for Class A limited partner interests in the
Partnership ("Class A Units"), all of their partner interests (the
"Interests") in each of Roosevelt Associates, L.P., a Pennsylvania limited
partnership ("RA, L.P."), and Roosevelt II Associates, L.P., a Pennsylvania
limited partnership ("RAII, L.P." and together with RA, L.P., the "Project
Partnerships") other than an eleven (11%) percent capital interest and profits
interest in each of the Project Partnerships (the "Retained Interests") which
shall be retained by Ronald Rubin (7.96%) and George Rubin (3.04%) (Ronald
Rubin and George Rubin are herein collectively referred to as the
"Rubins"), subject to the terms and conditions set forth herein. RAII, L.P.
holds fee title to Parcels 1, 4, 6, and 9 as shown on the plan entitled
"Relocation of Lot Lines", Drawing Number 5.01, dated April 20, 1994, last
revised December 22, 1994, prepared by Langan Engineering and Environmental
Services, Inc. [Parcel 9 was subsequently eliminated and became part of Parcel
1], as modified by "Relocation of Lot Lines Parcels 1 and 2", Drawing Number
5.05, dated January 26, 1995, prepared by Langan Engineering and Environmental
Services, Inc., and "Relocation of Lot Lines Parcels 6 and 7", dated November
11, 1994, prepared by Langan Engineering and Environmental Services, Inc.
(collectively the foregoing plans are hereinafter referred to as the "Plan"),
which comprise, together with Parcel 3 as shown on the Plan, the property of
which the shopping center known as the Northeast Tower Center, Philadelphia,
Pennsylvania (the "Shopping Center") is a part and RA, L.P. holds a leasehold
interest in Parcel 3 as shown on the Plan.
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. DEFINITIONS.
Unless otherwise defined herein, capitalized terms used herein shall
have the same meanings as ascribed to such terms in the TRO Contribution
Agreement.
SECTION 2. CONTRIBUTIONS.
(a) Contributions at Closing. Subject to the terms and conditions of
this Agreement, at the Closing (as defined in Section 7.1), the Contributors
shall contribute to the Partnership, and the Partnership shall acquire from
the Contributors, free and clear of all Encumbrances (other than applicable
securities law restrictions and subject to the terms and conditions of the
limited partnership agreements for the Project Partnerships), the Interests
(other than the Retained Interests) and all benefits and advantages to be
derived therefrom, including, without limitation, all right, title and
interest associated with the Interests (other than the Retained Interests) in
and to the capital accounts of the Contributors, rights of the Contributors to
distributions made after the Closing and allocable shares of the Contributors
with respect to profits and losses.
(b) Option to Acquire Retained Interests.
(i) Each of the Rubins hereby grants to the
Partnership the irrevocable right and option to acquire all of the Retained
Interests owned by him, free and clear of all
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Encumbrances (other than applicable securities law restrictions and subject to
the terms and conditions of the limited partnership agreements for the Project
Partnerships), in exchange for the number of Class A Units specified in
Schedule A hereto as being issuable at the Second Closing, upon written notice
to such effect being given by the Partnership to either or both Rubins, as the
case may be, at least ten days prior to the closing of the exercise of such
option. Such option may be exercised by the Partnership at any time prior to
the third anniversary of the Closing Date.
(ii) If the option granted pursuant to the preceding
paragraph has not been exercised prior to the third anniversary of the Closing
Date, then on the first business day following the third anniversary of the
Closing Date, the Partnership shall be obligated to acquire from the Rubins, and
the Rubins shall be obligated to transfer to the Partnership, all Retained
Interests, free and clear of all Encumbrances (other than applicable securities
law restrictions and subject to the terms and conditions of the limited
partnership agreements for the Project Partnerships), in exchange for the number
of Class A Units specified in Schedule A as being issuable at the Second
Closing.
(iii) The closing for the transfer of the Retained
Interests to the Partnership in accordance with paragraphs (b)(i) or (ii) above
is referred to herein as the Second Closing. The date of the Second Closing
shall be the date specified in subparagraph (b)(ii) above or the closing date
specified in the notice of exercise of the option pursuant to subparagraph
(b)(i).
(c) The Bradlees Property. In the event the Contributors (or any of
them or any of their affiliates or family members) shall acquire the right to
purchase Parcel 2 on the Plan (the "Bradlees Property") and in the further
event the Bradlees Property is then subject to a lease or an agreement to
lease with Walmart or another tenant acceptable to the Partnership, the
Contributors agree to cause the Bradlees Parcel to be offered for sale to a
third party and shall grant to the Partnership a right of first refusal
exercisable within twenty (20) days after receipt of written notice from the
Contributors to purchase the Bradlees Property on the same terms and
conditions which are acceptable to the third party purchaser. In the event the
Contributors (or any of them or any of their affiliates or family members)
shall acquire the right to purchase the Bradlees Property and the Bradlees
property is not then subject to a lease as set forth above, the Contributors
(or their affiliates or family members) shall grant to the Partnership the
irrevocable right and option exercisable within twenty (20) days after receipt
of written notice setting forth all material terms to succeed to such
Contributor's right to acquire the Bradlees
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Property by taking an assignment of the purchase agreement. Upon the closing
of the exercise of any such option, the Partnership shall acquire fee title to
the Bradlees Property for a purchase price equal to the Appraised Value. In
the event the purchase price payable for the Bradlees Property is greater than
the Appraised Value, the Contributors shall pay to the seller of the Bradlees
Property the difference between the purchase price and the Appraised Value. In
the event the purchase price for the Bradlees Parcel is less than the
Appraised Value, the Partnership shall pay such difference to the
Contributors.
(d) Rubin II, Inc.
(i) At the Closing, Ronald Rubin shall contribute
to the Partnership, and the Partnership shall acquire, that number of common
shares of Rubin II, Inc., a Pennsylvania corporation ("RII, Inc."), that shall
(A) represent eighty-nine (89%) percent of the then-issued and outstanding
shares of capital stock in RII, Inc. and (B) possess the power to direct the
vote of an amount of voting securities of RII, Inc. sufficient to elect a
majority of the board of directors of RII, Inc. (such contributed RII, Inc.
common shares, the "Contributed RII Shares"). The parties acknowledge that
RII, Inc. is merely a fee title trustee of Parcel 3.
(ii) At the Second Closing, the Partnership shall
have the option (but not the obligation) to acquire, and upon written notice
of exercise of such option from the Partnership given prior to the Second
Closing, Ronald Rubin shall be obligated to contribute to the Partnership,
free and clear of all Encumbrances (other than applicable securities law
restrictions), all of the common shares of RII, Inc. other than the
Contributed RII Shares.
(iii) The contributions referred to in this
subparagraph (d) shall be made without the payment by the Partnership of any
consideration other than the Class A Units which are otherwise issuable
hereunder.
SECTION 3. CONSIDERATION.
(a) In consideration for the contributions described in Section 2,
subject to the terms and conditions of this Agreement, at the Closing, the
Partnership shall issue to the Contributors that number of Class A Units as is
set forth in Schedule A hereto (which is incorporated by reference herein) as
being issuable at the Closing and, at the Second Closing, the Partnership
shall issue to the Rubins that number of Class A Units as is set forth in
Schedule A as being issuable at the Second Closing. Upon the closing of an
exercise of any option specific in Section 2(c), the Partnership shall issue
to the applicable Contributors the number of Class A Units specified in
Section 2(c).
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(b) Notwithstanding anything to the contrary set forth herein, the
Partnership shall deliver to the Contributor who is not an "accredited
investor," as such term is defined under Regulation D promulgated pursuant to
the 1933 Act, in lieu of any Class A Units which would otherwise be issuable
to such Contributor pursuant to Section 3(a) of this Agreement (and Schedule A
hereto), an amount of cash equal to the product of (i) the number of Class A
Units otherwise issuable to such Contributor pursuant to Schedule A of this
Agreement and (ii) $23.40.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS.
Each Contributor hereby represents and warrants to PREIT and the
Partnership as follows (provided that to the extent a representation or
warranty set forth in Section 4 relates solely to the business, affairs or
status of a Contributor, such representation and warranty shall be deemed to
be made solely by the applicable Contributor to which such representation and
warranty relates):
4.1 As to the Contributors.
(a) Organization. RBC, Inc. is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization and has all corporate power to carry on its business as
presently conducted, to own and lease the assets and properties which it owns
and leases and to perform all its obligations under each agreement and
instrument to which it is a party or by which it is bound. RBC, Inc. is duly
qualified to do business as a foreign corporation and is in good standing
under the laws of each jurisdiction in which its ownership or leasing of
assets or properties or the nature of its activities requires such
qualification except where the failure to be so qualified would not have a
material adverse effect on the condition (financial or otherwise), assets,
results of operations or business of RBC, Inc. (a "Material Adverse Effect").
(b) Power and Authority. RBC, Inc. has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and under the other agreements and documents
required to be delivered by it prior to or at the Closing (collectively, and
together with all documents and agreements required to be delivered by the
other Contributors on or prior to the Second Closing, the "Contributor
Transaction Documents"). The execution, delivery and performance by RBC, Inc.
of this Agreement and the other Contributor Transaction Documents to which it
is a party have been duly authorized by all necessary corporate action on the
part of RBC, Inc. This Agreement has been duly and validly executed and
delivered by each Contributor and constitutes a legal, valid and binding
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obligation of each Contributor enforceable against it or him in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally or by general equitable principles. When executed and delivered as
contemplated herein, each of the other Contributor Transaction Documents to
which a Contributor is a party shall, assuming due authorization, execution
and delivery thereof by the other parties thereto, constitute a legal, valid
and binding obligation of such Contributor enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally or by general equitable principles.
(c) No Conflicts; etc. Except as described in
Section 4.1(c) of the disclosure letter delivered by the Contributors to PREIT
on the date hereof (the "Contributor Disclosure Letter"), the execution and
delivery by the Contributors of this Agreement do not, and the performance by
the Contributors of all of the Contributor Transaction Documents will not
(with or without the passage of time or the giving of notice), directly or
indirectly:
(i) contravene, violate or conflict with (A) the
articles of incorporation, bylaws (or other organizational documents) of RBC,
Inc. or (B) any Law applicable to any Contributor, or by or to which any assets
or properties of any Contributor is bound or subject;
(ii) violate or conflict with, result in a
breach of, constitute a default or otherwise cause any loss of benefit under, or
give to others any rights (including rights of termination, amendment,
foreclosure, cancellation or acceleration) in or with respect to, any
Authorization or Contract to which any Contributor is a party or by which any
Contributor or any assets or properties thereof is bound or affected; or
(iii) result in, require or permit the creation
or imposition of any Encumbrance upon or with respect to any Contributor, the
Interests, the Contributed RII Shares or any of the Contributors' other assets
or properties.
(d) Except as set forth in Section 4.1(d) of the
Contributor Disclosure Letter, the execution and delivery by the Contributors of
this Agreement does not, and the execution and delivery by the Contributors of
the other Contributor Transaction Documents, and the performance by the
Contributors of all of the Contributor Transaction Documents will not, require
any Contributor to obtain any authorization of, or to make any filing,
registration or declaration with or notification to, any court, government or
governmental agency or instrumentality
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(federal, state, local or foreign) or to obtain the consent, waiver or
approval of, or give any notice to, any other Person.
(e) Except as set forth in Section 4.1(e) of the
Contributor Disclosure Letter, there are no actions, proceedings or
investigations pending or, to the knowledge of the Contributors, threatened,
that question any of the transactions contemplated by this Agreement or which,
if adversely determined, would have a Material Adverse Effect or could
materially and adversely affect any Contributor's ability to enter into or
perform its obligations under this Agreement.
(f) Litigation; Orders.
(i) Except as set forth in Section 4.1(f) of
the Contributor Disclosure Letter, there are no, and since January 1, 1996,
there have not been any, claims, actions, suits, proceedings (arbitration or
otherwise) or, to the knowledge of the Contributors, investigations involving
or affecting any Contributor or any of their assets or properties or any of
their directors, officers, partners or shareholders in their capacities as
such, before or by any court, government or governmental agency or
instrumentality (federal, state, local or foreign), or before an arbitrator of
any kind. To the knowledge of the Contributors, no such claim, action, suit,
proceeding or investigation is presently threatened or contemplated. There are
no unsatisfied judgments, penalties or awards against or affecting any
Contributor or any of their assets or properties.
(ii) There is no material Order to which any
Contributor or any of their assets or properties is subject. No officer,
director, partner, shareholder or, to the knowledge of the Contributors,
employee of any corporate Contributor is subject to any Order that prohibits
such officer, director, partner, shareholder or employee from engaging in or
continuing any conduct, activity or practice relating to its business. The
Contributors have each complied in all respects with the terms and conditions
of each Order applicable to them.
(g) Undisclosed Liabilities. Except as set forth in
Section 4.1(g) of the Contributor Disclosure Letter, there are no liabilities or
obligations of the Contributors or RII, Inc. of any nature (whether absolute,
accrued, contingent, liquidated or unliquidated or otherwise) except the
obligations under the Limited Partnership Agreement dated April 2, 1993,
governing RA, L.P. and the Limited Partnership Agreement dated April 13, 1994,
governing RAII, L.P (collectively, the "Project Partnership Agreements").
(h) The Interests; The Contributed RII Shares.
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(i) Section 4.1(h) of the Contributor Disclosure
Letter contains an accurate and complete description of the Interests that have
been issued of record. Except as described therein, to the knowledge of the
Contributors, no Person has any partnership or other interest in the Project
Partnerships or any right to receive any distributions from the Project
Partnerships or be allocated any profits or losses of the Project Partnerships.
Each Contributor owns, beneficially and of record, the portion of the Interests
described in Schedule A hereto, free and clear of all Encumbrances other than
the Project Partnership Agreements. The Persons listed in Section 4.1(h) of the
Contributor Disclosure Letter are the sole partners in the Project Partnerships.
The issued and outstanding partnership interest in the Project Partnerships have
been issued by the Project Partnerships in compliance with the Project
Partnership Agreements, and such interests were not issued by the Project
Partnerships in violation of any federal or state securities laws.
(ii) Except for this Agreement and except as
provided in the Project Partnership Agreements or in leases with tenants (any
such rights in leases shall be customary in projects comparable to the Shopping
Center and shall not prejudice the value of the Shopping Center as calculated in
Schedule A hereto), there are no rights, subscriptions, warrants, options,
rights of first refusal, conversion rights or agreements of any kind outstanding
to purchase or to otherwise acquire any partnership interest or other securities
or obligations of any kind convertible into any partnership interest or other
securities or any participation interests of any kind in the Shopping Center (or
any portion thereof) or the Project Partnerships.
(iii) Upon execution and delivery by the
Contributors and the Partnership of the assignment and assumption agreement
contemplated by Section 7.3, the Partnership will acquire good and valid title
to the Interests, free and clear of all Encumbrances (except for applicable
securities law restrictions and for the Project Partnership Agreements).
(iv) The Contributors have delivered to the
Partnership on the date hereof true and complete copies of the Project
Partnership Agreements, as amended to date.
(v) Ronald Rubin owns, beneficially and of
record, all of the outstanding common shares of RII, Inc. There are no
shareholder, partnership or other agreements affecting the right of Ronald Rubin
to convey the Contributed RII Shares to the Partnership as contemplated herein.
Ronald Rubin has the absolute right, power and capacity to sell, assign,
transfer, contribute and deliver all of the Contributed RII Shares to the
Partnership, free and clear of all Encumbrances (except for restrictions imposed
generally by applicable securities laws), as
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contemplated herein. Upon delivery to the Partnership of the certificates for
the Contributed RII Shares at the Closing as contemplated herein, the
Partnership will acquire good and valid title to the Contributed RII Shares,
free and clear of all Encumbrances (except for applicable securities law
restrictions). No Person has any preemptive or other similar rights with
respect to any capital stock or other securities of RII, Inc., and except for
this Agreement, there are no offers, options, warrants, rights, agreements or
commitments of any kind (contingent or otherwise) relating to the issuance,
conversion, registration, voting, sale or transfer of any equity interests or
other securities of RII, Inc. or obligating RII, Inc. or any other Person to
purchase or redeem any such equity interests or other securities. The
outstanding capital stock of RII, Inc. consists of 1,000 common shares. Each
such share has been duly authorized, is validly issued and outstanding, fully
paid and non-assessable.
(i) Brokers. No Person acting on behalf of any Contributor
or any of their respective affiliates or under the authority of any of the
foregoing is or will be entitled to any brokers' or finders' fee or any other
commission or similar fee, directly or indirectly, from any of such parties in
connection with any of the contribution transactions contemplated by this
Agreement.
(j) Accurate Disclosure. All documents and other papers
delivered by or on behalf of any Contributor in connection with the transactions
contemplated by this Agreement are accurate and complete in all material
respects.
(k) Knowledge. For purposes of this Agreement, "to the
knowledge of the Contributors" and correlative terms means the actual knowledge
of Ronald Rubin, Larry Trachtman and Douglas Grayson and the officers and other
senior management of RBC,Inc. and Ronald Rubin, George Rubin, Leonard Shore,
Joseph Coradino, Lewis Stone, Pat Berns, Edward Glickman and Judith Garfinkel,
after reasonable inquiry.
(l) Investment Representations.
(i) Each Contributor acknowledges that the
Class A Units to be issued pursuant to Section 3 and Schedule A hereto will
not be registered under the 1933 Act on the grounds that the issuance of such
units is exempt from registration pursuant to Section 4(2) of the 1933 Act
and/or Regulation D promulgated under the 1933 Act, and that the reliance of
the Partnership on such exemptions is predicated in part on the Contributors'
representations, warranties and acknowledgements set forth in this section.
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(ii) Each of the Contributors other than Douglas
Grayson is an accredited investor as defined in Regulation D promulgated under
the 1933 Act. The Class A Units issued in accordance with this Agreement will be
acquired by each Contributor that is acquiring Class A Units hereunder for its
or his own account, not as a nominee or agent, and without a view to resale or
other distribution within the meaning of the 1933 Act, and the rules and
regulations thereunder, and none of the Contributors will distribute any of such
units in violation of the 1933 Act.
(iii) Each Contributor (v) acknowledges that the
Class A Units, when issued, will not be registered under the 1933 Act and such
units will have to be held indefinitely by it or him unless they are
subsequently registered under the 1933 Act or an exemption from registration is
available, (w) is aware that any sales of such units made under Rule 144 of the
Securities and Exchange Commission under the 1933 Act may be made only in
limited amounts and in accordance with the terms and conditions for that Rule
and that in such cases where the Rule is not applicable, compliance with some
other registration exemption will be required, (x) is aware that Rule 144 may
not be available for use by any Contributor for resale of the units, (y) is
aware that the Partnership is under no obligation to register, and has no
current intention of registering any of such units under the 1933 Act and (z)
acknowledges that such Contributor has received and read a private placement
memorandum relating to the offer of Class A Units.
(iv) Each Contributor is well versed in
financial matters, has had dealings over the years in securities, including
"restricted securities," and is fully capable of understanding the type of
investment being made in the Class A Units and the risks involved in connection
therewith.
4.2 As to the Project Partnerships.
(a) Organization. Each Project Partnership is a
partnership duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania and each Project Partnership has all
partnership power to carry on its business as presently conducted, to own and
lease the assets and properties which it owns and leases and to perform all
its obligations under each agreement and instrument to which it is a party or
by which it is bound. Each Project Partnership is duly qualified to do
business as a foreign partnership and is in good standing under the laws of
each jurisdiction in which its ownership or leasing of assets or properties or
the nature of their activities requires such qualification except where the
failure to be so qualified would not have a material adverse effect on the
condition (financial or otherwise), assets, results of operations or business
of such Project Partnership.
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(b) No Conflicts. Except as described in Section 4.2(b) of
the Contributor Disclosure Letter, the execution and delivery by the
Contributors of this Agreement do not, and the execution and delivery by the
Contributors of the other Contributor Transaction Documents and the performance
by the Contributors of all of the Contributor Transaction Documents will not
(with or without the passage of time or the giving of notice), directly or
indirectly:
(i) contravene, violate or conflict with (A)
either Project Partnership Agreement, or (B) any Law applicable
to the Project Partnerships or to the Shopping Center;
(ii) violate or conflict with, result in a
breach of, constitute a default or otherwise cause any loss of benefit under,
or give to others any rights (including rights of termination, amendment,
foreclosure, cancellation or acceleration) in or with respect to any material
Authorization or Contract to which either Project Partnership is a party or by
which either Project Partnership or the Shopping Center is bound or affected;
or
(iii) result in, require or permit the
creation or imposition of any Encumbrance upon or with respect to either of
the Project Partnerships, the Shopping Center or any other material assets or
properties of either of the Project Partnerships.
(c) Except as set forth in Section 4.2(c) of the
Contributor Disclosure Letter, the execution and delivery by the Contributors of
this Agreement do not, and the performance by the Contributors of all of the
Contributor Transaction Documents will not, require the Project Partnerships to
obtain any authorization of, or to make any filing, registration or declaration
with or notification to, any court, government or governmental agency or
instrumentality (federal, state, local or foreign) or to obtain the consent,
waiver or approval of, or give any notice to, any other Person.
(d) Compliance with Laws.
(i) Except as disclosed in Section 4.2(d) of
the Contributor Disclosure Letter, the Project Partnerships are, and, to the
knowledge of the Contributors, at all times since their respective inceptions
have been, in compliance in all material respects with all Laws that are or
were applicable to either of them or to the conduct or operation of its
business or the use of the Shopping Center. The Project Partnerships have not
received, and there is no basis upon which the Project Partnerships may expect
to receive, any notice, order or other communication from any government or
governmental agency or instrumentality (federal, state, local or foreign) of
any
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alleged, actual or potential material violation of or material failure to
comply with any Law applicable to either of the Project Partnerships or the
Shopping Center, and no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a material
violation by either of the Project Partnerships, or a material failure by
either of the Project Partnerships, to comply with, any Law applicable to
either of the Project Partnerships or the Shopping Center.
(ii) Each Project Partnership is in possession
of all Authorizations required as of the date hereof to own, lease or operate
its assets and properties or to carry on its business. Each Project Partnership
shall obtain, as and when required by applicable law, all required
Authorizations not presently in its possession, recognizing that the Shopping
Center is an ongoing construction project as of the date of this Agreement. The
Authorizations currently in effect are in full force and effect without any
default or violation thereunder by either of the Project Partnerships or, to the
knowledge of the Contributors, by any other party thereto. Each Project
Partnership is in compliance with all existing Authorizations applicable to it
or to the conduct or operation of its business or the use of any of its assets
or properties, and no such Authorization shall be affected by the transactions
contemplated hereby. Neither Project Partnership nor, to the knowledge of the
Contributors, any partner therein has received any notice that any such
Authorization currently in effect may be revoked or may not in the ordinary
course be renewed upon its expiration or that by virtue of the transactions
contemplated hereby that any such Authorization may be revoked or may not be
granted, renewed or issued to either of the Project Partnerships.
(e) Litigation; Orders.
(i) Except as set forth in Section 4.2(e) of the
Contributor Disclosure Letter, there are no, and since the respective inceptions
of the Project Partnerships there have not been any, claims, actions, suits,
proceedings (arbitration or otherwise) or, to the knowledge of the Contributors,
investigations involving or affecting either of the Project Partnership or any
of their respective assets or properties or, to the knowledge of the
Contributors, any of their respective partners in their capacities as such,
before or by any court, government or governmental agency or instrumentality
(federal, state, local or foreign) or before an arbitrator of any kind (each, a
"Claim") other than Claims customarily arising in connection with the ownership
and operation of shopping centers similar to the Shopping Center that are
covered by insurance or are within the limits of current insurance deductibles.
To the knowledge of the Contributors, no such Claim is presently threatened or
contemplated. There are no unsatisfied judgments,
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penalties or awards against or affecting either of the Project Partnerships or
any of their respective assets or properties.
(ii) Except as set forth in Section 4.2(e) of
the Contributor Disclosure Letter, there is no Order to which either of the
Project Partnerships or any of their respective assets or properties is subject.
No partner or employee of either of the Project Partnerships is subject to any
Order that prohibits such partner or employee from engaging in or continuing any
conduct, activity or practice relating to its business. Each of the Project
Partnerships has complied in all respects with the terms and conditions of each
Order applicable to it.
(f) Cost Reports. Section 4.2(f) of the Contributor
Disclosure Letter includes the cost report reflecting the costs and liabilities
of constructing the Shopping Center as of the date of this Agreement (the "Cost
Report") incurred by each of the Project Partnerships. As of the date hereof, no
financial statements have been prepared for either of the Project Partnerships.
(g) Undisclosed Liabilities.
(i) As of the date hereof, there are no
liabilities of either of the Project Partnerships of a nature required to be
reflected in a balance sheet prepared in accordance with GAAP except: (x) those
described in Section 4.2(g) of the Contributor Disclosure Letter; (y) those
reflected or reserved against in the Cost Report; or (z) current liabilities
incurred in the ordinary course of business consistent with past practice after
the date of the Cost Report and which are neither material in amount nor
inconsistent with any of the representations or warranties made herein.
(ii) As of the Closing, there shall be no
liabilities of either of the Project Partnerships of any nature (whether
absolute, accrued, contingent, liquidated, unliquidated or otherwise) except the
liabilities that are taken into account in the calculation of Attributable Debt
pursuant to Schedule A hereto.
(h) Title to Property; Encumbrances. Each of the Project
Partnerships has good and valid title to, or has a valid, subsisting and
unchallenged leasehold interest in or right to use, all personal property owned,
used or leased by them. Each of the Project Partnerships owns all the personal
property (whether tangible or intangible) that is reflected as owned in its
books and records, free and clear of all Encumbrances other than liens for
current taxes not yet due, the Encumbrances set forth in Section 4.2(h) of the
Contributor Disclosure Letter and Encumbrances arising after the date hereof in
the ordinary course of business.
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(i) Taxes.
(i) All Taxes due from or required to be
remitted by either of the Project Partnerships with respect to taxable periods
ending on or prior to, and the portion of any interim period up to, the Closing
Date have been fully and timely paid or, to the extent not yet due or payable,
have been adequately provided for on the Cost Report referred to in Section
4.2(f) of the Contributor Disclosure Letter or on the books and records of the
applicable Project Partnership. There are no levies, liens or other Encumbrances
relating to Taxes existing or pending, or to the best knowledge of the
Contributors, threatened with respect to any of the assets of either of the
Project Partnerships.
(ii) Except as disclosed in Section 4.2(i) of
the Contributor Disclosure Letter, all federal, state, local and foreign returns
and reports relating to Taxes, or extensions relating thereto, required to be
filed by or with respect to either of the Project Partnerships have been timely
and properly filed, and all such returns and reports are correct and complete.
(iii) No issues have been raised with any
representative or employee of either of the Project Partnerships (and are
currently pending) by the IRS or any other taxing authority in connection with
any of the returns and reports referred to in subsection (ii) above and no
waivers of statutes of limitations have been given or requested with respect to
any such returns and reports or with respect to any Taxes.
(iv) Section 4.2(i) of the Contributor
Disclosure Letter identifies all federal, state, local and foreign income,
franchise and sales and use tax returns of or with respect to either of the
Project Partnerships which have been examined since their respective dates of
inception, or which are currently under examination, by the IRS or by other
taxing authorities, or with respect to which the applicable statute of
limitations (including all extensions and tolling periods) has not yet run.
Except as and to the extent shown therein, all deficiencies asserted or
assessments made as a result of such examinations have been fully paid, and
there are no other unpaid deficiencies asserted or assessments made by any
taxing authority against either of the Project Partnerships.
(j) Absence of Certain Changes and Events.
(i) The parties acknowledge that the Shopping
Center is not fully developed or constructed and the Shopping Center will not be
substantially completed until approximately December 15, 1999. Except as
described in Section 4.2(j) of the Contributor Disclosure Letter and except as
contemplated or
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disclosed herein, since their respective dates of inception, each Project
Partnership has conducted its business and activities only in the usual and
ordinary course consistent with past practice and consistent with the
development and construction of a retail shopping center, and there has not
been any:
(A) declaration or payment of any distribution
or payment in respect of any interest in either of the Project Partnerships to
the extent that such payment or distribution relates to an obligation or
liability of such Project Partnership after Closing or any issuance, repurchase
or redemption of any such interest;
(B) amendment to either of the Project
Partnership Agreements;
(C) damage, destruction or loss to any material
asset or property of either of the Project Partnerships, whether or not covered
by insurance, that has not been fully repaired, restored or replaced;
(D) except for current trade debt incurred in
the ordinary course of business consistent with past practice and except for the
Permitted Refinancing (as hereinafter defined), borrowing or incurring of any
indebtedness, obligation or liability, contingent or otherwise by either of the
Project Partnerships;
(E) sale (other than sales of inventory in the
ordinary course of business), assignment, conveyance, lease (other than to
tenants for occupancy of space in the Shopping Center), or other disposition of
any asset or property of either of the Project Partnerships other than in the
ordinary course of development and construction of the Shopping Center;
(F) cancellation or waiver of any material
claims or rights of either of the Project Partnerships; or
(G) agreement or commitment, whether or not in
writing, to do any of the foregoing.
(k) Books and Records. The books and records of the
Project Partnerships, including financial records and books of account, are
complete and accurate in all material respects and have been maintained in
accordance with sound business practices. To the extent such books and records
constitute financial records or books of account, they fairly present revenues,
expenses, assets and liabilities, all in a manner that will allow the
preparation of financial statements that comply with GAAP.
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(l) FIRPTA. Neither Project Partnership is a "foreign
person" within the meaning of Section 1445(f) of the Code or a "foreign partner"
within the meaning of Section 1446 of the Code.
(m) List of Properties, Contracts, etc. Section 4.2(m) of
the Contributor Disclosure Letter contains a complete and accurate list as of
the date hereof of each item described below, and the Contributors have
delivered to PREIT (or given PREIT access to) true and complete copies of each
document (or summaries of oral agreements) described below.
(i) Each of the following types of Contracts,
whether oral or written, to which either or both of the Project Partnerships or,
to the Contributors' knowledge, any of their respective general partners (in
their capacities as such) is a party or by which they or any of their respective
assets are bound:
(A) All Contracts that:
(I) involve performance of services or
sale or lease of goods, materials or space by either of
the Project Partnerships or any of their respective
general partners of an amount or value in excess of
$25,000 in any annual period or $100,000 in the aggregate;
(II) involve performance of services
or sale or lease of goods, materials or space to either of
the Project Partnerships or any of their respective
general partners of an amount or value in excess of
$25,000 in any annual period or $100,000 in the aggregate;
(III) are not in the ordinary course
of business and involve expenditures or receipts by either
of the Project Partnerships or any of their respective
general partners of more than $25,000;
(IV) are not terminable by either of
the Project Partnerships or any of their respective
general partners without penalty or premium upon less than
60 days' notice; or
(V) are otherwise material to the
business, operations, financial condition or prospects of
either of the Project Partnerships or to the ownership,
operation or management of the Shopping Center.
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(B) All Authorizations held by either
of the Project Partnerships that relate to any of the
assets or properties owned, used or leased by either of
the Project Partnerships;
(C) All outstanding loans and advances
by either of the Project Partnerships to any partner,
officer or employee of either of the Project Partnerships;
and
(D) Other than trade debt incurred in
the ordinary course of business, all notes, debt
instruments, other evidences of indebtedness, letters of
credit and guaranties (whether written or oral) issued by
or for the benefit of either of the Project Partnerships
and all loan and other agreements relating thereto.
(n) Contracts.
(i) Except as described in Section 4.2(n) of the
Contributor Disclosure Letter and subject to the terms and conditions of Section
7.2(a)(ii) below, each Contract of a type required to be identified in Section
4.2(m)(i)(A) of the Contributor Disclosure Letter was made in the ordinary
course of business, is in full force and effect and is valid, binding and
enforceable against the parties thereto in accordance with its terms. Except as
described in Section 4.2(n) of the Contributor Disclosure Letter, the Project
Partnerships and their respective general partners have each performed in all
material respects all obligations required to be performed by them under each
such Contract to which any of them is a party or by which any of them is bound,
and, to the knowledge of the Contributors, no condition exists or event has
occurred which with notice or lapse of time would constitute a default
thereunder or a basis for delay, non-performance, termination, modification or
acceleration of maturity or performance by any party thereto.
(ii) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to either of the Project Partnerships or any of their respective general
partners (in their capacity as such) under any of the Contracts referred to in
subparagraph (i) above. All of such Contracts that relate to the provision of
services or goods by either of the Project Partnership or any of their
respective general partners (in their capacity as such) have been entered into
in the ordinary course of business and have been entered into without the
commission of any act or any consideration having been paid or promised that is
or would be in violation of any Law.
(iii) Except as set forth in Section 4.2(n) of
the Contributor Disclosure Letter, without limiting the generality of the
foregoing, the Project Partnership Agreements
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are in full force and effect and each of the parties thereto has performed all
obligations required to be performed by it under such agreements.
4.3 As to the Shopping Center.
(a) Title
(i) Based solely on Owner's Policy Nos. 485954
and 485957 issued by First American Title Insurance Company (the "Title
Policy"), as of the date hereof RAII, L.P. and RII, Inc. own fee simple title to
the Shopping Center, free and clear of all Encumbrances except as set forth in
Section 4.3(a) of the Contributor Disclosure Letter (the "Title Policy
Encumbrances"). To the knowledge of the Contributors, there have been no changes
in the state of such title as reflected in the Title Policy other than Title
Policy Encumbrances and those encumbrances required to complete the development
and construction of the Shopping Center that are of a nature customary for
development projects similar to the Shopping Center (collectively, the
"Permitted Encumbrances").
(ii) RA, L.P. is the tenant under a valid and
subsisting lease of Parcel 3 dated April 25, 1994 by and between RII, Inc., as
Declarant under a Declaration and Agreement of Trust dated April 25, 1994, as
landlord, and RA, L.P., as tenant, a Memorandum of which was recorded in the
Department of Records of the City of Philadelphia May 20, 1994 in Deed Book VCS
577, Page 387; and RA, L.P. is the sublandlord under a valid and subsisting
sublease dated April 25, 1994, by and between RA, L.P., as sublandlord, and Home
Depot USA, Inc., as subtenant.
(iii) The Project Partnerships are the owners
of, or the lessees under subsisting leases of, or otherwise have the right to
use the personal property used by the Project Partnerships in the operation of
the Shopping Center. All of such property that is reflected on the records of
either of the Project Partnerships as owned by either of the Project
Partnerships is free and clear of all Encumbrances, except for Permitted
Encumbrances.
(iv) Except as set forth in Section 4.3(a) of
the Contributor Disclosure Letter and except as provided in tenant leases, there
are no rights of first refusal on, or options to purchase, any portion of the
Shopping Center or any right to participation interests (whether of profits,
sale or refinancing proceeds, or calculated based on fair market value) with
respect to any portion of the Shopping Center in favor of any tenant, lender or
any other Person other than either of the Project Partnerships or RII, Inc. None
of the tenant leases provides for any such right or option except that one or
more of
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such leases may provide for a purchase option in favor of the tenant but only
in respect of the space leased to such tenant.
(v) To the knowledge of the Contributors, no
eminent domain, condemnation, incorporation, annexation or moratorium or similar
proceeding has been commenced or threatened by an authority having the power of
eminent domain to condemn any part of the Shopping Center. To the Contributors'
knowledge, as of the date hereof, there are no pending or threatened
governmental rules, regulations, plans, studies, or court orders or decisions,
which do or could materially adversely affect the use or value of the Shopping
Center as a retail shopping center.
(b) Mortgage Obligations.
(i) The Shopping Center is subject as of the
date hereof to the mortgage(s) securing obligation(s) in the amount(s) set forth
in Section 4.3(b) of the Contributor Disclosure Letter (such obligations and any
other obligations incurred to refinance such obligations, the "Loan
Obligations") and is subject as of the date hereof to no other mortgage. Section
4.3(b) of the Contributor Disclosure Letter sets forth the original principal
amount, approximate outstanding principal amount, interest rate, term and other
material economic provisions of each of the Loan Obligations.
(ii) The documents identified in Section 4.3(b)
of the Contributor Disclosure Letter, true and correct copies of which have been
delivered to PREIT (or to which PREIT has been given access), constitute all of
the material documents evidencing, defining or securing the Loan Obligations
(the "Loan Documents").
(iii) The Project Partnerships and RII, Inc.
have complied with the Loan Documents, and there are no events of default
thereunder now outstanding. To the Contributors' knowledge, no event has
occurred, which with the passage of time or the giving of notice or both, could
ripen into an event of default under the terms of the Loan Documents.
(c) Leases.
(i) The Rent Roll attached to Section 4.3(c) of
the Contributor Disclosure Letter (the "Rent Roll") lists each of the leases in
existence as of the date hereof with respect to any portion of the Shopping
Center.
(ii) Except as set forth in Section 4.3(c) of
the Contributor Disclosure Letter, as of the date hereof, there are no leases,
licenses or other rights of occupancy in force which affect the Shopping Center
or any portion thereof other than the leases listed in the Rent Roll. The
Contributors have
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made available to PREIT copies of all of the leases (including all amendments)
listed on the Rent Roll. Except as set forth on the Rent Roll, no uncured
event of default of either of the Project Partnerships or, to the knowledge of
the Contributors, any tenant has occurred and is continuing under any lease of
premises within the Shopping Center, no tenant has asserted a defense to or
offset or claim against its rent or the performance of its obligations under
its lease, and no tenant has asserted a default on the part of either of the
Project Partnerships which would give it the right to terminate its lease or a
setoff against rent.
(iii) With respect to the leases involving the
Shopping Center, except as set forth in Section 4.3(c) of the Contributor
Disclosure Letter or in the leases, as of the date hereof:
(A) there are no proposed modifications to
any such lease that would reduce:
(I) the space leased to any tenant;
(II) the amount of any tenant's rent;
or
(III) the term of any lease;
(B) no free rent or other concession is
due any tenant;
(C) Neither Project Partnership is
required to provide tenant improvements or refurbishments with respect any such
lease other than tenant improvements that either Project Partnership may be
required to construct if an expansion option provided in a lease is exercised;
(D) no tenant has an option to terminate
its lease prior to its stated expiration date;
(E) except for (x) security deposits or
(y) the first full month's rent, whether or not the term of a lease has
commenced, no prepayments of rent more than thirty (30) days in advance have
been made under any such lease;
(F) no rent or security deposit under any
such lease has been assigned or encumbered, except as security for the Loan
Documents;
(G) there are no agreements or
understandings, written or oral, with any tenant other than as set forth in its
lease or on the Rent Roll; and
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(H) all brokerage commissions and other
compensation or fees payable by reason of the leases have not been paid in full.
Attached to Section 4.3(c) of the Contributor Disclosure Letter is a list of
brokers commissions due with respect to the Shopping Center and the status of
such commissions.
(d) Zoning. The zoning classification for the Shopping
Center is C-3 Commercial, and the contemplated uses of the Shopping Center are
in compliance with the applicable zoning ordinances and regulations.
(e) Compliance with Laws and Recorded Declarations. The
Project Partnerships have complied in all material respects with all Laws
(including, without limitation, the Americans with Disabilities Act of 1990) and
requirements of insurance bodies applicable to the ownership, leasing, use and
operation of the Shopping Center, including, without limitation, parking,
dimensional and building setback requirements, and have performed all work and
secured all required consents and approvals, or will do so in a timely fashion,
and obtained and fully paid, or will do so in a timely fashion, for all
Authorizations and any other items and documents required by applicable Law, by
contract, or as a condition of any approval granted by or agreement entered into
with any applicable municipal authority, required of either of the Project
Partnerships for the completion, ownership, leasing, use and occupancy of the
Shopping Center, including, but not limited to, final certificates of occupancy
for each of the current tenancies in the Shopping Center other than where
construction of tenant improvements for new tenancies is not yet completed or
timely applications remain pending or where the tenants are required to obtain
such consents, approvals or authorizations under the leases. All such existing
Authorizations and other items and documents are in full force and effect.
Neither of the Project Partnerships has taken any action that would (or failed
to take any action, the omission of which might) result in the revocation or
suspension of any such Authorization or other item or document, and neither of
the Project Partnerships has received any notice of any violation from any
federal, state or municipal entity or notice of an intention by any such
governmental entity to revoke any certificate of occupancy or other
Authorization issued by it in connection with the ownership, use and occupancy
of the Shopping Center that in each case has not been cured or otherwise
resolved to the satisfaction of such governmental entity. Except as set forth in
Section 4.3(e) of the Contributor Disclosure Letter, to the Contributors'
knowledge, (i) any and all charges and other assessments under declarations and
like agreements and special assessments to which the Shopping Center or either
of the Project Partnerships is subject have been paid to date, and (ii) all
consents and approvals required to be obtained under such declarations and like
agreements with respect to the Shopping
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Center have been obtained or are in the process of being obtained.
Notwithstanding anything to the contrary contained herein, the Contributors do
not represent or warrant compliance by any of the tenants with respect to Laws
or that the Contributors are obtaining any Authorizations that are required to
be obtained by any tenants, but the Contributors shall enforce the leases and
obligations of tenants thereunder.
(f) Environmental Matters.
(i) Except as described in Section 4.3(f) of
the Contributor Disclosure Letter, the Contributors have no knowledge of any
fact, condition or circumstance that would suggest that the environmental
reports listed in Section 4.3(f) of the Contributor Disclosure Letter (which
constitute all environmental reports relating to the Shopping Center received
by the Contributors) contains any misstatement of material fact or omits to
state any material fact. To the knowledge of the Contributors, except for
matters set forth in Section 4.3(e) of the Contributor Disclosure Letter,
there are no conditions on, beneath or arising from, and there are no
Hazardous Substances migrating from, the Shopping Center which might under any
Environmental Law (A) give rise to liability or the imposition of a statutory
lien upon either of the Project Partnerships or RII, Inc. or (B) require any
Response, Removal or Remedial Action by either of the Project Partnerships or
RII, Inc.
(ii) To the knowledge of the Contributors, no
wastes generated by any Contributor or the Project Partnerships have ever been
directly or indirectly sent, transferred, transported to, treated, stored or
disposed of at any site listed or formally proposed for listing on the National
Priority List promulgated pursuant to CERCLA or to any site listed in any state
list of sites requiring or recommended for investigation or clean-up.
(g) Reassessments. The Shopping Center has not been fully
assessed and the Contributors have been informed that the Shopping Center will
be reassessed upon its completion. To the Contributors' knowledge, there are no
special assessments or other actions or proceedings that could reasonably be
expected to give rise to an increase in real property taxes or assessments
against the Shopping Center.
(h) Property Improvements. PREIT acknowledges that the
Shopping Center is currently under construction and that the improvements to be
built thereon are not complete. Except as disclosed in any engineering studies
or reports obtained by or delivered by the Contributors to PREIT as set forth in
Section 4.3(h) of the Contributor Disclosure Letter, the Shopping Center is, to
the extent completed, in good condition and repair, ordinary wear and tear
excepted, consistent with a shopping
-22-
center project that is still under construction, and has not suffered any
casualty or other material damage which has not been repaired in all material
respects. To the Contributors' knowledge, there is no material latent or
patent structural, mechanical or other significant defect, soil condition or
deficiency in the improvements constructed on the Shopping Center, or any
other defects, soil conditions or deficiencies which, in the aggregate, would
materially adversely affect the value of the Shopping Center as a whole.
(i) Employees and Service Contracts.
(i) Section 4.3(i) of the Contributor Disclosure
Letter sets forth a complete and correct list of all existing and proposed union
or collective bargaining agreements to which any Contributor or either of the
Project Partnerships is a party with respect to or affecting the Shopping
Center.
(ii) Section 4.3(i) of the Contributor
Disclosure Letter sets forth a complete and correct list of all persons who are
employed by either of the Project Partnerships or their respective partners in
connection with the management, operation or maintenance of the Shopping Center,
setting forth, with respect to each of them, his or her name, position or
duties, regular wages or salary, accrued vacation pay and bonus and other
benefits to which he or she is entitled. Each of such persons is an
employee-at-will and none of such persons is covered by a written employment
agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES REGARDING PREIT AND THE PARTNERSHIP.
PREIT hereby represents and warrants to the Contributors as follows:
5.1 Organization.
(a) PREIT is an unincorporated association in business
trust form duly organized and validly existing under the laws of the
Commonwealth of Pennsylvania. PREIT has all necessary trust power to carry on
its business as presently conducted, to own and lease the assets and properties
that it owns and leases and to perform all its obligations under each agreement
and instrument to which it is a party or by which it is bound.
(b) The Partnership is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware
and has all necessary partnership power to carry on its business as presently
conducted, to own and lease the assets and properties that it owns and leases
and to perform
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all its obligations under each agreement and instrument to which it is a party
or by which it is bound.
5.2 Power and Authority. Each of PREIT and the Partnership has all
requisite trust or partnership power to execute, deliver and perform its
obligations under this Agreement and under all other agreements and documents
required to be delivered by it prior to or at the Closing (collectively, the
"Buyer Transaction Documents"). The execution, delivery and performance by PREIT
and the Partnership of this Agreement and the other Buyer Transaction Documents
have been duly authorized by all necessary corporate or partnership action. This
Agreement has been duly and validly executed and delivered by PREIT and the
Partnership and constitutes the legal, valid and binding obligation of PREIT and
the Partnership enforceable against each of them in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors rights generally or by
general equitable principles. When executed and delivered as contemplated
herein, each of the other Buyer Transaction Documents shall, assuming due
authorization, execution and delivery thereof by the other parties thereto,
constitute the legal, valid and binding obligation of each of PREIT and the
Partnership that is a party thereto enforceable against it in accordance with
its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors rights generally
or by general equitable principles.
5.3 No Conflicts.
(a) Except as described in Section 5.3 of the disclosure
letter delivered by PREIT to the Contributors on the date hereof (the "PREIT
Disclosure Letter"), the execution and delivery by PREIT and the Partnership of
this Agreement do not, and the execution and delivery by PREIT and the
Partnership of the other Buyer Transaction Documents and the performance by
PREIT and the Partnership of all of the Buyer Transaction Documents will not (in
each case, with or without the passage of time or the giving of notice),
directly or indirectly:
(i) contravene, violate or conflict with (A) the
trust or partnership agreement (or other organizational documents) of PREIT or
the Partnership or (B) any Law applicable to PREIT or the Partnership, or by or
to which any assets or properties of PREIT or the Partnership is bound or
subject; or
(ii) violate or conflict with, result in a
breach of, constitute a default or otherwise cause any loss of benefit or give
to others any rights (including rights of termination, amendment, foreclosure,
cancellation or acceleration) in or with respect to any material Authorization
or
-24-
material Contract to which PREIT or the Partnership is a party or by which
either PREIT or the Partnership is bound or affected; or
(iii) result in, require or permit the creation
or imposition of any material Encumbrance upon or with respect to either PREIT
or the Partnership or any of their respective assets or properties.
(b) Except for filings with the Securities and Exchange
Commission and except as disclosed in Section 5.3(a) of the PREIT Disclosure
Letter, the execution and delivery by PREIT and the Partnership of this
Agreement do not, and the execution and delivery by PREIT and the Partnership of
the other Buyer Transaction Documents and the performance by PREIT and the
Partnership of all of the Buyer Transaction Documents will not, require PREIT or
the Partnership to obtain any material Authorization of or make any material
filing, registration or declaration with or notification to any court,
government or governmental agency or instrumentality (federal, state, local or
foreign) or to obtain the material consent, waiver or approval of, or give any
material notice to, any Person.
(c) Except as disclosed in filings with the Securities and
Exchange Commission made by PREIT, there are no actions, proceedings or
investigations against or involving PREIT or the Partnership pending or, to the
best knowledge of PREIT, threatened, that question any of the transactions
contemplated by this Agreement or the validity of any of the Buyer Transaction
Documents or which, if adversely determined, could have a material adverse
effect on the consolidated financial condition, assets, business or results of
operations of PREIT or could materially and adversely affect PREIT's or the
Partnership's ability to enter into or perform its obligations under the Buyer
Transaction Documents.
5.4 Capitalization.
(a) On the date hereof, the outstanding beneficial
interests in PREIT consist of 8,679,598 PREIT Shares, and the outstanding
partnership interest in the Partnership are as described in Section 5.4(a) of
the PREIT Disclosure Letter. Except for 483,875 PREIT Shares reserved for
issuance pursuant to outstanding stock options and except as contemplated in the
TRO Contribution Agreement, in the Amended Partnership Agreement or in the
Employment Agreements referred to in the TRO Contribution Agreement, and except
as disclosed in Section 5.4(a) of the PREIT Disclosure Letter, as of the date of
this Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character (including, without limitation,
voting agreements or arrangements known to PREIT) relating to the issuance of
beneficial interests in PREIT or partnership interest in the Partnership. As of
the Closing, the outstanding partner
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interests in the Partnership shall consist of the interests outstanding on the
date hereof, the Class A Units to be issued as contemplated in the TRO
Contribution Agreement, this Agreement and the EPD Purchase Agreements.
(b) All Class A 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 Agreement, duly authorized and validly issued by the
Partnership. Assuming the accuracy of the representations and warranties of the
Contributors set forth herein, such issuance will be exempt from registration
under the 1933 Act as an offering described in Section 4(2) of such Act and/or
pursuant to Regulation D promulgated thereunder.
5.5 PREIT Reports. PREIT has delivered to the Contributors copies of
PREIT's (a) Proxy Statement dated November 15, 1996, (b) Annual Report on Form
10-K for the fiscal year ending August 31, 1996, as amended by its Report on
10-K/A-1 dated December 2, 1996, and (c) Quarterly Reports on Form 10-Q for the
quarters ended November 30, 1996, February 28, 1997 and May 31, 1997, all of
which have been filed by PREIT with the Securities and Exchange Commission (the
"PREIT Reports"). The audited consolidated financial statements and unaudited
interim financial statements of PREIT included in such reports have been
prepared in accordance with GAAP consistently applied (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
condition and results of operations of PREIT as at the dates thereof and for the
periods then ended, subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments and any other adjustments described
therein. The PREIT Reports do not contain any untrue statements of a material
fact or omit to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
5.6 Litigation. Except as disclosed in filings with the Securities and
Exchange Commission, there are no claims, actions, suits, proceedings
(arbitration or otherwise) or, to the best knowledge of PREIT, investigations
involving or affecting PREIT or any of its subsidiaries or any of their assets
or properties or any of their trustees, directors, officers, partners or
shareholders in their capacities as such, before or by any court, government or
governmental agency or instrumentality (federal, state, local or foreign) or
before any arbitrator of any kind, in each case of a nature that is required to
be disclosed in PREIT's 1934 Act reports.
5.7 Material Adverse Change. Except as disclosed in filings with the
Securities and Exchange Commission, since May 31, 1997 and through the date
hereof, there has not been any
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material adverse change in the condition (financial or otherwise), assets,
results of operations or business of PREIT on a consolidated basis.
5.8 Brokers. Except for Lehman Brothers, Inc., whose fees shall be paid
by PREIT, no Person acting on behalf of PREIT or the Partnership or any of their
affiliates or under the authority of any of the foregoing is or will be entitled
to any brokers' or finders' fee or any other commission or similar fee, directly
or indirectly, from any of such parties in connection with any of the
transactions contemplated by this Agreement.
SECTION 6. CERTAIN COVENANTS AND AGREEMENTS
6.1 Conduct of Business.
(a) Except as expressly provided herein, between the date
hereof and the Closing, except with the prior written consent of PREIT, RBC,
Inc. shall, and the Contributors shall cause each of the Project Partnerships
to:
(i) carry on its business in, and only in, the
usual, regular and ordinary course, consistent with past practice and consistent
with the development and construction of a retail shopping center and the
provisions hereof and in compliance with all applicable Laws, Authorizations and
Contracts;
(ii) pay and discharge all of its debts,
liabilities and obligations as they become due and pay all debt service
payments, real estate taxes, payables and other liabilities arising from the
construction or operation of the Shopping Center that in the ordinary course of
business would have been paid prior to the Closing Date (with the exception of
those liabilities and obligations which the Contributors are contesting in good
faith and for which the Contributors have established adequate reserves on the
Project Partnerships' books);
(iii) keep in full force and effect insurance
comparable in amount and scope of coverage to insurance now carried by it;
(iv) maintain its facilities and assets in the
same state of repair, order and condition as they were on the date hereof,
reasonable wear and tear excepted;
(v) maintain its books of account and records in
the usual, regular and ordinary manner and use diligent efforts to maintain in
full force and effect all of its Authorizations;
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(vi) not take any action, fail to take any
action or permit to occur any event that would cause or constitute a material
breach of or inaccuracy in any representation or warranty set forth herein if
made immediately after such event or at the Closing or that would have been
required (or result in any situation that would be required) to be disclosed
hereunder had such action or inaction been taken or failed to have occurred or
had such event occurred prior to the date hereof;
(vii) except as described in Section 6.1(a) of
the Contributor Disclosure Letter and the TRO Contribution Agreement, not make
any change in its authorized or issued capital stock or partnership interest,
grant any stock option or other right to purchase its shares of capital stock,
partnership interest or other securities, issue or make any commitment to issue
any of its securities, including any securities convertible into capital stock
or partnership interest, grant any registration rights or purchase, redeem,
retire or make any other acquisition of any shares of its capital stock,
partnership interest or other securities;
(viii) not amend or grant any waivers under
either of the Project Partnership Agreements;
(ix) not enter into any agreement or
understanding to do or engage in any of the foregoing actions; and
(x) construct and operate the Shopping Center in
the ordinary course in a manner consistent with past practice, maintaining the
Shopping Center in a reasonable state of repair, order and condition consistent
with a development project which is still under construction. Without limiting
the foregoing, the Project Partnerships shall not defer any required maintenance
or repair unless such maintenance or repair would otherwise be deferred in the
ordinary course of business.
6.2 Reasonable Efforts. Upon the terms and subject to the condition
hereof, between the date hereof and the Closing Date, each of the parties hereto
shall use its reasonable efforts to take, or cause to be taken, all appropriate
action and to do, or cause to be done, all things necessary, proper or advisable
under applicable Law to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, (i) using its or
his reasonable efforts to make all required regulatory filings and applications
and to obtain all Authorizations and consents, approvals, amendments and waivers
from parties to Contracts as are necessary for the consummation of the
transactions contemplated by this Agreement and (ii) using its reasonable
efforts to cause the conditions to the consummation of the acquisition of the
Interests to be satisfied.
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6.3 Notifications. Each party hereto shall give prompt notice to the
other parties upon becoming aware of: (i) any fact or condition that causes or
constitutes (or that reasonably could be expected to cause or constitute) a
breach of its representations and warranties set forth herein, or the
occurrence, or failure to occur, of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a breach of or any
inaccuracy in any of its representations and warranties contained in this
Agreement had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition; (ii) any material failure of
it or any of its officers, directors, employees or agents, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; (iii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and (iv) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge, threatened against,
relating to or involving or otherwise affecting any Contributor, either of the
Project Partnerships or PREIT, as the case may be, or any of the transactions
contemplated by this Agreement.
6.4 Operation of Shopping Center.
(a) RBC, Inc. shall take all actions, and the Contributors
shall cause the Project Partnerships to take all actions necessary, so that as
of the Closing Date:
(i) Payments of rent or other monies due from
Shopping Center tenants (except reimbursements under leases for site
improvements or improvements to tenants' space) that fall due after the Closing
Date and are received prior to the Closing Date shall continue to be held in the
applicable Project Partnership bank account, as the case may be, or by the
managing agent through the Closing Date;
(ii) All security deposits under leases and all
interest required to be paid thereon pursuant to the terms of such leases shall
continue to be held in the applicable Project Partnership bank account, as the
case may be, or by the managing agent as the case may be, on the Closing Date;
and
(iii) All debt service payments, real estate
taxes and payments due under service contracts and service providers in respect
of the operation of the Shopping Center that in the ordinary course of business
would have been paid prior to the Closing Date shall have been paid prior to the
Closing Date by or on behalf of either of the Project Partnerships.
(b) No delinquent rent payments shall be apportioned on the
Closing Date. All rent receivables shall remain the
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property of the appropriate Project Partnership, as the case may be.
(c) Notwithstanding anything to the contrary as set forth
in this Agreement, the Contributors shall be entitled to cause the Project
Partnerships either to extend the current construction loans (pursuant to
extension options currently provided for in the loan agreements) or to refinance
their construction loans prior to Closing provided that the new loan(s)
expressly permits the transfer of the interests contemplated herein and provided
that such transfer will not result in any acceleration of indebtedness or other
penalties and further provided that the Partnership approves the terms of the
refinancing, including, but not limited to, the amount of the refinancing, and
the loan documents evidencing and securing the refinancing, which approval shall
not be unreasonably withheld (the "Permitted Refinancing").
6.5 Transfer of Shares or Retained Interests. Between the date hereof
and the Second Closing, except as expressly contemplated herein, except with the
prior written consent of PREIT: (i) neither of the Rubins shall sell, assign,
transfer or otherwise encumber all or any portion of the Retained Interests or
any rights of either of them relating to the Retained Interests, and (ii) Ronald
Rubin shall not sell, assign, transfer or otherwise encumber any shares of
capital stock of RII, Inc. or any rights of Ronald Rubin in such shares. Each of
the Rubins shall take all action necessary or appropriate to provide that the
Retained Interests and shares of capital stock of RII, Inc. owned by him shall,
in the event of his death prior to the date of the Second Closing, pass by the
laws of descent and distribution only to a member of his family (as defined
under the Philadelphia Code Section 19-1402(8) and in Philadelphia Realty
Transfer Tax Regulation Section 503(b)(6)(i)(C)). Any such heir who acquires an
interest in any portion of the Retained Interests or capital stock of RII, Inc.
shall acquire such interest subject to the terms and conditions of this
Agreement.
6.6 Bankruptcy Claim. As of the date hereof, RAII, L.P. has asserted a
$2,436,932.63, plus interest, claim against Bradlees Department Store in the
bankruptcy proceedings involving Bradlees. If as of the Closing such claim has
not been liquidated, the Contributors shall be entitled to cause RAII, L.P. to
distribute all rights to such claim to one or more of the Contributors
immediately prior to the Closing. If as of Closing either Project Partnership
has any potential future liability to Bradlees or to the trustee in the Bradlees
bankruptcy proceedings, the Contributors shall execute and deliver a pledge
agreement in form and substance reasonably satisfactory to PREIT by which they
shall pledge to the Partnership (in order to secure their indemnification
undertakings with respect to Section 9.1(c)) such number of Class A Units issued
to them hereunder as
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shall be equal to 100% of the maximum amount of all such potential liabilities.
SECTION 7. CLOSING; CLOSING CONDITIONS; CLOSING DELIVERIES.
7.1 Time of Closing. The closing (the "Closing") of the acquisition by
the Partnership pursuant to this Agreement of the Interests (other than the
Retained Interests) and the other contributions to the Partnership contemplated
herein shall take place at the time and place specified in Schedule A hereto on
the Closing Date (as defined in Schedule A hereto).
7.2 Closing Conditions.
(a) Conditions Precedent to PREIT's and the Partnership's
Obligations. The obligation of PREIT and the Partnership to consummate the
acquisition of the Interests and to take the other actions required to be taken
by them at the Closing is subject to the fulfillment by or at the Closing of
each of the following conditions, any or all of which may be waived by PREIT in
its sole discretion:
(i) Condition of Title. RAII, L.P. and RII, Inc.
shall own fee simple title to the Shopping Center and such title shall be good
and marketable and insured as such by First American Title Insurance Company,
Commonwealth Land Title Insurance Company, Lawyers Title Insurance Corporation
or Chicago Title Insurance Company, as selected by the Partnership (the "Title
Insurance Company"), free and clear of all Encumbrances other than Permitted
Encumbrances and the existing leases set forth on the Rent Roll or as such
leases may have changed in the ordinary course of the operation of the Shopping
Center and the mortgage securing the Permitted Refinancing. The following owners
title insurance policies (or a marked-up title commitment reflecting the
effectiveness of such issuance) shall have been issued and delivered to the
Partnership (unless such insurance is not issued or effective solely due to the
Partnership's failure to pay the premiums therefor) a vested owners title
insurance policy or policies with "non-imputation" and fairways endorsements for
the value of the Interests in the Project Partnerships as determined in
accordance with Schedule A hereto.
(ii) Tenant Estoppels. The Contributors shall
have used their reasonable efforts to cause the tenants in the Shopping Center
to execute and deliver to the Partnership estoppel certificates in form and
substance reasonably satisfactory to PREIT. The Contributors shall keep the
Partnership reasonably apprised as to the status of receipt of the estoppel
certificates. The failure to obtain and deliver any or all of the estoppel
certificates shall not constitute a default by the Contributors hereunder or
allow PREIT or the Partnership to terminate this Agreement provided the
Contributors
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have used reasonable efforts to obtain the estoppel certificates. The
Contributors' liability under the representations and warranties under
Sections 4.2(m)(i) and 4.3(c) as to a particular tenant shall terminate if the
Partnership subsequently receives an estoppel certificate for the applicable
tenant which confirms the Contributor's representations under Sections 4.2
(e)(i) and 4.3 (c) (provided, if the Partnership receives an estoppel
certificate which confirms some but not all of the matters which are the
subject of the representations and warranties under Sections 4.2(m)(i) and
4.3(c), then as to such tenant, (x) if the estoppel certificate was received
prior to Closing, the representations and warranties set forth in Sections
4.2(m)(i) and 4.3(c) shall be deemed to omit such matters stated on the
estoppel certificate as to such matters provided the certifications contained
in such estoppel remain true and correct until the Closing Date and (y) if
received after Closing, the representations and warranties under Sections
4.2(m)(i) and 4.3(c) shall cease to survive as to such matters but shall
continue to survive as to matters not contained in such Estoppel Certificate.)
(iii) Survey, Etc. The Partnership shall have
received, at the Partnership's sole cost and expense, updated environmental and
engineering reports and surveys for the Shopping Center certified to the
Partnership and the Title Insurance Company, in form reasonably satisfactory to
PREIT and the Title Insurance Company, and such reports and surveys shall not
disclose any material adverse condition not disclosed in the original reports
and surveys for the Shopping Center delivered to PREIT or to which PREIT was
given access prior to the date of this Agreement.
(iv) No Mortgage Defaults. All payments of
principal and interest on all Loan Obligations shall be current and no Loan
Obligation shall be in default. The Contributors shall have used their
reasonable efforts to cause the holder of each Loan Obligation to issue to the
Partnership a letter or certification confirming the principal balance of such
Loan Obligation, the date of the last payment and that, to its knowledge, there
are no events of default thereunder. The failure to obtain or deliver such
letter or certification shall not constitute a default by the Contributors
hereunder or allow PREIT or the Partnership to terminate this Agreement provided
that the Contributors have used reasonable efforts to obtain such letter or
certificate. In the event the letter or certification from the holder of each
Loan Obligation contains a certification containing information which confirms
the Contributors' representations under Section 4.3(b) above, the Contributors'
liability for such representation shall terminate upon delivery of the letter or
certificate to the Partnership provided the certifications contained in such
estoppel remain true and correct until the Closing Date.
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(v) Representations and Warranties. Except as
otherwise expressly provided herein, each of the representations and warranties
of the Contributors set forth in this Agreement that is qualified by materiality
shall be true and correct, and each of the representations and warranties of the
Contributors set forth in this Agreement that is not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, provided that the failure of one or more representations and warranties to
be true and correct as of the Closing Date shall not entitle PREIT to decline to
close if the Damages therefrom do not exceed 50% of the value referred to in
Section 7.2(a)(xiv) and if the other conditions of this Section 7.2(a) shall be
satisfied.
(vi) Performance of Covenants. All of the
agreements, covenants and obligations that any Contributor is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
shall have been duly performed and complied with in all material respects. The
Contributors shall have delivered each of the documents required to be delivered
by them pursuant to Section 7.3(a) hereof.
(vii) Legal Matters. The performance of the
Buyer and Contributor Transaction Documents and the consummation of the Closing
shall not, directly or indirectly (with or without notice or lapse of time),
violate, contravene, conflict with or result in a violation of any Law and shall
not violate any Order of any court or governmental body of competent
jurisdiction, and no suit, action, investigation or legal or administrative
proceeding shall have been brought or threatened by any Person (other than by
PREIT or the Partnership) that questions the validity or legality of this
Agreement or the transactions contemplated hereby.
(viii) Consents and Approvals. Each consent,
approval, ratification, waiver or other authorization of any Person necessary,
in the reasonable opinion of PREIT, for the consummation of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect, and no such consent, approval, ratification, waiver or other
authorization: (x) shall have been conditioned upon the modification,
cancellation or termination of any Contract, right or Authorization of PREIT,
the Partnership or either of the Project Partnerships or (y) shall impose on
PREIT, either of the Project Partnerships or the Partnership any condition,
provision or requirement not presently imposed upon the Contributors or either
of the Project Partnerships or any condition that would be more restrictive
after the Closing on either of the Project Partnership or the Partnership than
the conditions presently imposed on the Contributors or either of the Project
Partnerships.
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(ix) Opinion of Counsel. PREIT shall have
received an opinion of counsel for the Contributors, dated the Closing Date, in
form and substance reasonably satisfactory to PREIT and its counsel.
(x) TRO Closing. The TRO Closing shall have
occurred.
(xi) Casualty or Condemnation. There shall not
have occurred any damage or destruction to, or condemnation of, any portion of
the Shopping Center that is reasonably likely to have a material adverse effect
on the operations or profitability of the Shopping Center.
(xii) Material Adverse Change. There shall not
have been since the date hereof any event, circumstance, condition or
contingency that has resulted in a material adverse effect on the business,
assets, financial condition or results of operations of either of the Project
Partnerships or that is reasonably likely to result in such an change.
(xiii) Compliance Certificate. The Contributors
shall have obtained (to the extent such certifications or letters are made
available in such jurisdiction prior to substantial completion of the Shopping
Center) a certification or letter from the appropriate governmental officer
having jurisdiction to the effect that the Shopping Center and its use are in
compliance with applicable fire, health, safety and zoning ordinances, rules and
regulations.
(xiv) Adjustment for Breaches. The aggregate
amount of all Damages arising from breaches entitling PREIT and the Partnership
to an adjustment to the aggregate consideration as specified in Section 8.1
shall not exceed 50% of the value of what the Contributors would receive
pursuant to Section 4 of Schedule A absent such adjustment. None of the
Contributors and neither of the Project Partnerships shall have violated any
criminal or other material Law and the consummation of the Closing shall not
violate or conflict with any material Law.
(b) Conditions Precedent to the Contributors' Obligations.
The obligation of the Contributors to consummate the contribution of the
Interests contemplated by this Agreement and to take the other actions required
to be taken by them at the Closing is subject to the fulfillment by or at the
Closing of each of the following conditions, any or all of what may be waived by
the Contributors in their sole discretion:
(i) Representations and Warranties. Each of the
representations and warranties of PREIT set forth in this Agreement that is
qualified by materiality shall be true and
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correct, and each of the representations and warranties of PREIT set forth in
this Agreement that is not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date.
(ii) Performance of Covenants. Each of the
agreements, covenants and obligations that PREIT or the Partnership is required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing shall have been duly performed and complied with in all material
respects. PREIT shall have delivered each of the documents required to be
delivered by it pursuant to Section 7.3(b) hereof.
(iii) Legal Matters. The performance of the
Buyer and Contributor Transaction Documents and the consummation of the Closing
shall not, directly or indirectly (with or without notice or lapse of time),
violate, contravene, conflict with or result in a violation of any Law and shall
not violate any Order of any court or governmental body of competent
jurisdiction, and no suit, action, investigation or legal or administrative
proceeding shall have been brought or threatened by any Person that questions
the validity or legality of this Agreement or the transactions contemplated
hereby.
(iv) TRO Closing. The TRO Closing shall have
occurred.
(v) Opinion. The Contributors shall have
received an opinion of counsel for PREIT, dated the Closing Date, in form and
substance reasonably satisfactory to the Contributors and their counsel.
(vi) Adjustment for Breaches. The aggregate
amount of all Damages arising from breaches entitling PREIT and the Partnership
to an adjustment to the aggregate consideration as specified in Section 8.1
shall not exceed 50% of the value of what the Contributors would receive
pursuant to Section 4 of Schedule A absent such adjustment; provided that if
PREIT exercises the PREIT Option (as defined below), this condition shall be
deemed to have been satisfied.
7.3 Deliveries at the Closing. At the Closing, in addition to the other
actions contemplated elsewhere herein:
(a) The Contributors shall deliver or cause to be
delivered to the Partnership:
(i) each of the instruments, agreements or
documents listed on Schedule A-1 hereto, in each case in a form reasonably
satisfactory to the Contributors and the Partnership,
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duly executed by each of the signatories thereto other than PREIT or the
Partnership;
(ii) certificates, dated the Closing Date and
executed by the president of RBC, Inc. to the effect that the conditions set
forth in Sections 7.2(a)(v) and (vi) have been satisfied;
(iii) certificates of good standing of a recent
date for RBC, Inc., RII, Inc., RA, L.P. and RAII, L.P. certified by the
Secretary of State or corresponding certifying authority of the state of
incorporation or organization of RBC, Inc., RII, Inc., RA, L.P. and RAII, L.P.
and of each state in which RBC, Inc., RII, Inc., RA, L.P. and RAII, L.P. are
qualified to do business as a foreign corporation or foreign partnership;
(iv) copies of the resolutions of the board of
directors of RBC, Inc. and its shareholders authorizing the transactions
contemplated under this Agreement and the Contributor Transaction Documents to
which RBC, Inc. is a party;
(v) all consents and approvals under the Project
Partnership Agreements necessary or appropriate in connection with the
transactions contemplated herein;
(vi) stock certificates representing the
Contributed RII Shares, duly endorsed for transfer or with stock powers affixed
thereto executed in blank in proper form for transfer; and
(vii) such other documents and instruments as
the Partnership or PREIT may reasonably request to effectuate or evidence the
transactions contemplated by this Agreement.
(b) The Partnership shall deliver or cause to be delivered
to the Contributors the following:
(i) the Class A Units to be delivered at Closing
as contemplated by Section 3 and Schedule A hereto;
(ii) copies of resolutions of the board of
trustees of PREIT authorizing the transactions contemplated hereunder and under
the Buyer Transaction Documents;
(iii) a certificate, dated the Closing Date,
executed by the chief executive officer and chief financial officer of PREIT, to
the effect that the conditions set forth in Sections 7.2(b)(i) and (ii) have
been satisfied; and
(iv) each of the instruments, agreements and
documents listed on Schedule A-1, in a form reasonably satisfactory to the
Contributors and the Partnership, duly
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executed by each of the Partnership or PREIT that is a signatory thereto.
(c) Each party shall deliver or cause to be delivered, as
the case may be, to the other parties hereto such other documents, instruments,
certificates and opinions as may be required by this Agreement.
SECTION 8. CLOSING ADJUSTMENTS.
8.1 Adjustment for Breaches by the Contributors. It is the intent of
the parties that breaches of the representations and warranties of the
Contributors set forth in this Agreement (as brought down to the Closing Date
in the certificate referred to in Section 7.3(a)(ii), which for this purpose
will be deemed to state, inter alia, that the Contributors' representations
and warranties in this Agreement were true and correct as of the Closing Date
as if made on the Closing Date) that are discovered prior to Closing shall, in
addition to giving PREIT and the Partnership the right, under certain
circumstances described in Section 7.2, not to close hereunder, cause the
consideration otherwise deliverable pursuant to Section 4 of Schedule A to be
adjusted downward by the aggregate value of all Damages arising from such
breaches; provided, however, that if such downward adjustment would reduce by
more than 50% the value of the aggregate consideration the Contributors would
receive pursuant to Section 4 of Schedule A absent such adjustment, PREIT
shall have the right and option (but not the obligation) to notify the
Contributors in writing that the downward adjustment pursuant to this Section
8.1 shall be equal to 50% of the value of such aggregate consideration (the
"PREIT Option"). In determining the value of any breaches, there shall be
taken into account any insurance recovery that may be available to PREIT or
the Partnership, and any insurance proceeds received by the Contributors prior
to the Closing that are assigned to the Partnership at Closing.
8.2 Casualty or Condemnation.
(a) If, prior to the Closing Date, there shall be any damage
or destruction to all or any portion of the Shopping Center by fire or other
casualty, the Contributors shall give prompt notice thereof to PREIT. Unless
such damage or destruction is reasonably likely to result in a material
adverse effect on the operations or profitability of the Shopping Center, such
damage or destruction shall not entitle PREIT or the Partnership to terminate
this Agreement; provided, however, that the number of Class A Units
deliverable pursuant to Section 3 and Schedule A shall be reduced by the value
of all material damage or destruction to the extent that such damage or
destruction is not fully insured by insurance carried by either of the Project
Partnerships or reimbursed by tenants.
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(b) If prior to the Closing Date, condemnation or eminent
domain proceedings are commenced against the Shopping Center, the Contributors
shall give prompt notice thereof to PREIT. Unless the taking contemplated by
such condemnation or eminent domain proceeding is reasonably likely to result in
a material adverse effect on the operations or profitability of the Shopping
Center as a whole, such condemnation or eminent domain proceeding shall not
entitle PREIT or the Partnership to terminate this Agreement; provided, however,
that the number of Class A Units deliverable pursuant to Section 3 and Schedule
A hereto shall be reduced by the excess, if any, of the sum of the Deemed
Closing Value, Non-Credit Tenant Value and Post-Adjustment Value (each as
defined in Schedule A hereto) over the aggregate condemnation proceeds received
or to be received by either of the Project Partnerships in respect of such
condemnation. PREIT shall have the right to participate in the negotiation of
the award to be made for such taking, and neither the Contributors nor either of
the Project Partnerships shall agree to any proposed award or execute a deed in
lieu of condemnation without PREIT's prior written consent. The applicable
percentage of any condemnation award payable with respect to the taking of all
or any portion the Shopping Center shall be assigned to the Partnership.
SECTION 9. INDEMNIFICATION.
9.1 Indemnification by Contributors. Subject to the limitations on
liability set forth in Section 9.3, each Contributor shall indemnify, defend and
hold harmless PREIT and the Partnership (collectively, "Buyer Indemnified
Persons") against and in respect of any and all losses, costs, expenses
(including, without limitation, costs of investigation and reasonable defense
and attorneys' fees), claims, damages, obligations, liabilities or diminutions
in value, whether or not involving a third party claim (collectively,
"Damages"), arising out of, based upon or otherwise in respect of: (a) any
inaccuracy in or breach of any representation or warranty of such Contributor
made in or pursuant to this Agreement (including, without limitation, the
certificate referred in Section 7.3(a)(ii), which, for this purpose will be
deemed to have stated, inter alia, that the Contributors' representations and
warranties in this Agreement were true and correct as of the Closing Date as if
made on the Closing Date); (b) any breach or nonfulfillment of any covenant or
obligation of any Contributor contained in this Agreement; or (c) any of the
matters set forth on Schedule 9.1(c) hereto; provided, however, that to the
extent that Damages arising from breaches of representations and warranties were
taken into account in reducing the Deemed Closing Value, the Non-Credit Tenant
Value or the Post-Adjustment Value (as defined in Schedule A), such Damages
shall not be recoverable by Buyer Indemnified Persons pursuant to this
Agreement.
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9.2 Indemnification by PREIT. PREIT shall indemnify, defend and hold
harmless each Contributor against and in respect of any and all Damages arising
out of, based upon or otherwise in respect of: (a) any inaccuracy in or breach
of any representation or warranty of PREIT made in or pursuant to this
Agreement; (b) any breach or nonfulfillment of any covenant or obligation of
PREIT or the Partnership contained in this Agreement; or (c) claims relating
solely to actions taken by the Partnership (or its affiliates) as a partner in
either of the Project Partnerships after Closing as the result of events and
circumstances first occurring after Closing.
9.3 Limitations on Liability.
(a) No Contributor shall have any obligation to indemnify
any Buyer Indemnified Person against Damages pursuant to Section 9.1(a) of this
Agreement arising out of or based upon any inaccuracy in or breach of any
representation or warranty made in or pursuant to this Agreement unless and
until the aggregate of all such Damages suffered or incurred by the Buyer
Indemnified Persons exceeds $100,000; in which event the Buyer Indemnified
Persons shall be entitled to indemnification for the full amount of all Damages
suffered or incurred; provided, however, that the above limitation shall not be
applicable to any claim for Damages pursuant to Sections 9.1(b) or (c) or based
upon a breach of any representation or warranty made in or pursuant to Sections
4.1(a), 4.1(b), 4.1(c), 4.1(g), 4.1(h), 4.2(a), 4.2(b) or 4.2(g) (in the case of
a breach of any of the representations and warranties set forth in Section
4.2(g), other than due to the existence of liabilities of a nature not required
to be reflected in financial statements prepared in accordance with GAAP of
which the Contributors had no knowledge prior to Closing).
(b) Following Closing, (i) the Contributors shall not be
obligated to indemnify Buyer Indemnified Persons against Damages pursuant to
Section 9.1 to the extent that such indemnification payment (other than
indemnification payments in respect of fraud or intentional misrepresentation),
when aggregated with all prior indemnification payments (other than
indemnification payments in respect of fraud or intentional misrepresentation)
by or on behalf of the Contributors to Buyer Indemnified Persons or reasonably
paid by or on behalf of the Contributors to third parties for the benefit of
Buyer Indemnified Persons pursuant to this Agreement, would exceed the Aggregate
Value (as hereafter defined) and (ii) each Contributor other than Ronald Rubin,
George Rubin and RBC, Inc. shall not be obligated to indemnify Buyer Indemnified
Persons against Damages pursuant to Section 9.1 to the extent that such
indemnification payment, when aggregated with all prior indemnification payments
by or on behalf of such Contributor to Buyer Indemnified Persons or reasonably
paid by or on behalf of such Contributor to third parties for the benefit of
Buyer Indemnified Persons pursuant to
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this Agreement, would exceed the Proportionate Aggregate Value (as defined
below) attributable to such Contributor; provided, however, that the
limitation of this subclause (ii) shall not apply to the extent an indemnity
claim is brought with respect to a breach of a representation and warranty
made solely by such Contributor and not by such Contributor and other
Contributors or with respect to a matter involving fraud or intentional
misrepresentation by such Contributor. The "Aggregate Value" means an amount
equal to the value of all Class A Units theretofore issued pursuant to Section
3 (it being acknowledged that for this purpose units that would have been
issued but for an exercise of the set-off rights specified in Section 9.7
shall be deemed to have been issued), such value to be calculated by
multiplying the number of units times the per share Value (as defined in the
Amended Partnership Agreement) of a PREIT Share as of the date of issuance of
such units.
(c) Following Closing, the liability of each Contributor
for each indemnity claim pursuant to Section 9.1 shall be limited to that
fraction of the aggregate Damages incurred by Buyer Indemnified Persons with
respect to such claim that is equal to the quotient whose numerator equals the
portion of the Aggregate Value attributable to units theretofore distributed to
such Contributor (for this purpose units that would have been issued but for an
exercise of the set-off rights specified in Section 9.7 shall be deemed to have
been issued) (the "Proportionate Aggregate Value") and the denominator of which
equals the Aggregate Value; provided, however, that the foregoing shall not
limit the liability of Ronald Rubin, George Rubin or RBC, Inc., each of whom
shall be jointly and severally liable for 100% of the aggregate Damages incurred
(subject to the cap on aggregate Damages set forth above in subclause (i) of
Section 9.3(b)) and provided further that the foregoing limitation shall not
apply to the extent that an indemnity claim is brought with respect to a breach
of a representation and warranty made solely by such Contributor and not by such
Contributor and other Contributors or with respect to a matter involving fraud
or intentional misrepresentation by such Contributor.
(d) No claim arising out of or based upon any inaccuracy
in or breach of any representation or warranty made in or pursuant to this
Agreement shall be made unless a claim arises and written notice is delivered to
the indemnifying party within the Basic Claims Period (as defined below);
provided that any such claim arising out of or based upon any inaccuracy in or
breach of any representation or warranty made in or pursuant to Sections 4.1(a),
4.1(b) or 4.1(h) may be made at any time. For purposes hereof, "Basic Claims
Period" means the period beginning on the date hereof and ending on the date
five months after the fiscal year end for the first full fiscal year of PREIT
after the Closing under this Agreement.
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(e) Disclosures made after the date hereof and any
knowledge that is acquired about the accuracy or inaccuracy of or compliance
with any representation, warranty, covenant or obligation set forth herein shall
not in any manner affect rights to indemnification hereunder based on any such
representation, warranty, covenant or obligation or be deemed in any manner to
amend the Contributor Disclosure Letter. The waiver by PREIT of any condition
based on the accuracy of any representation or warranty, or compliance with any
covenant or obligation, will not affect any right to indemnification based on
such representations, warranties, covenants and obligations unless otherwise
expressly agreed in writing by PREIT. To the extent that any claim for
indemnification may be made under Section 9.1(a) and Section 9.1(c), then such
claim shall be deemed for all purposes to have arisen only under Section 9.1(c)
and not under Section 9.1(a).
(f) Each party's rights under this Section 9 shall be its
sole remedy against the other parties in respect of the subject matter hereof,
subject to a party's rights, if any, to seek and obtain specific performance.
(g) No party may assert a claim for indemnification
pursuant to this Section 9 unless the Closing has occurred or this Agreement has
been terminated pursuant to Section 10.
9.4 Procedure For Indemnification - Third Party Claims.
(a) Within thirty days after receipt by an indemnified
party of notice of the commencement of any proceeding against it to which the
indemnification in this Section 9 relates, such indemnified party shall, if a
claim is to be made against an indemnifying party under Section 9, give notice
to the indemnifying party of the commencement of such proceeding, but the
failure to so notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any indemnified party, except to the
extent that the indemnifying party demonstrates that the defense of such
proceeding is materially prejudiced by the indemnified party's failure to give
such notice.
(b) If any proceeding referred to in paragraph (a) above
is brought against an indemnified party and it gives notice to the indemnifying
party of the commencement of such proceeding, the indemnifying party will be
entitled to participate in such proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such proceeding and the
indemnified party determines in good faith that joint representation would be
inappropriate, or (ii) the indemnifying party fails to provide reasonable
assurance to the indemnified party of its financial capacity to defend such
proceeding and provide indemnification with respect to such proceeding), to
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assume the defense of such proceeding with counsel reasonably satisfactory to
the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such proceeding,
the indemnifying party will not, as long as it diligently conducts such
defense, be liable to the indemnified party under Section 9 for any fees of
other counsel or any other expenses with respect to the defense of such
proceeding, in each case subsequently incurred by the indemnified party in
connection with the defense of such proceeding, other than reasonable costs of
investigation. If the indemnifying party assumes the defense of a proceeding,
(A) it will be conclusively established for purposes of this Agreement that
the claims made in that proceeding are within the scope of and subject to
indemnification; (B) no compromise or settlement of such claims may be
effected by the indemnifying party without the indemnified party's consent
unless (1) there is no finding or admission of any violation of Law by the
indemnified party (or any affiliate thereof) or any violation of the rights of
any Person and no effect on any other claims that may be made against the
indemnified party, and (2) the sole relief provided is monetary damages that
are paid in full by the indemnifying party. The indemnified party will have no
liability with respect to any compromise or settlement of the claims
underlying such proceeding effected without its consent. If notice is given to
an indemnifying party of the commencement of any proceeding and the
indemnifying party does not, within ten days after the indemnified party's
notice is given, give notice to the indemnified party of its election to
assume the defense of such proceeding, the indemnifying party will be bound by
any determination made in such proceeding or any compromise or settlement
effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, with respect to those issues, by notice to
the indemnifying party, assume the exclusive right to defend, compromise, or
settle such proceeding, but the indemnifying party will not be bound by any
determination of a proceeding so defended or any compromise or settlement
effected without its consent.
9.5 Procedure for Indemnification - Other Claims. A claim for any
matter not involving a third party claim may be asserted by notice to the party
from whom indemnification is sought.
9.6 Distributions of Class A Units by Contributors. No Contributor
shall distribute or otherwise transfer to any other Person Class A Units issued
pursuant to this Agreement (or proceeds thereof other than contributions on such
units) unless
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such Person first executes and delivers to PREIT an agreement, in form and
substance reasonably satisfactory to PREIT, by which such Person would join in
and become a party to this Agreement for purposes of the indemnification
provisions hereof.
9.7 Right of Set-Off. PREIT and the Partnership shall have the right
to set-off, against any Class A Units which may be owed by PREIT or the
Partnership to any Contributor, any amount owed by any Contributor to any
Buyer Indemnified Person pursuant to Section 10 of the TRO Contribution
Agreement. To the extent that a Contributor contests an indemnification claim
of PREIT or the Partnership that would be the basis for the exercise of a
right to set off against any Class A Units owed to such Contributor, the
Partnership shall issue such Class A Units and deposit them with an escrow
agent reasonably satisfactory to such Contributor until the earlier to occur
of (i) resolution of such dispute by a final nonappealable order of a court of
competent jurisdiction or (ii) the mutual agreement of such Contributor and
PREIT that such units should be released from escrow.
9.8 Indemnification Payments. The Contributors shall be entitled to
use cash or Class A Units to make indemnification payments hereunder. In the
event Class A Units are used, each such unit shall be valued based on the per
share Value (as defined in the Amended Partnership Agreement) of a PREIT Share
as of the date such unit is tendered to PREIT as an indemnification payment
hereunder.
SECTION 10. TERMINATION AND ABANDONMENT.
10.1 Termination. This Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time prior to the Closing:
(i) by PREIT or the Contributors, if the Closing
has not occurred (other than through the failure of the party seeking to
terminate this Agreement to comply fully with its obligations under this
Agreement) on or before February 15, 2000, or such later date as the parties may
mutually agree upon in writing;
(ii) by mutual consent of PREIT and the
Contributors;
(iii) by the Contributors, on the one hand, or
PREIT and the Partnership, on the other hand, if a material breach (other than a
breach of representations and warranties that would not constitute a failure of
the condition set forth in Section 7.2(a)(xiv)) of any provision of this
Agreement has been committed by the other and such breach has not been waived;
or
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(iv) by PREIT, if any of the conditions in
Section 7.2(a) have not been satisfied as of the Closing Date or if satisfaction
of such a condition is or becomes impossible (other than through the failure of
PREIT or the Partnership to comply with its obligations under this Agreement)
and PREIT has not waived all such unsatisfied conditions before termination
pursuant to this subparagraph (iv); or
(v) by the Contributors if any of the conditions
in Section 7.2(b) have not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of any Contributor to comply with its obligations hereunder) and the
Contributors have not waived all such unsatisfied conditions before termination
pursuant to this subparagraph (v); or
(vi) by any party hereto if the TRO Contribution
Agreement is terminated prior to the consummation of the TRO Closing.
10.2 Procedure for Termination; Effect of Termination.
(a) A party terminating this Agreement pursuant to this
Section 10 shall give written notice thereof to each other party hereto,
whereupon this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned without further action by any party and all further
obligations of the parties under this Agreement will terminate; provided,
however, that if such termination is pursuant to Section 10.1(iii), the
terminating party's right to pursue all legal remedies (including damages and/or
specific performance) contemplated by Section 9 will survive such termination
unimpaired, except as limited by Section 10.2(b) below.
(b) Following a termination pursuant to Section 10.1(iii),
each Contributor other than Ronald Rubin, George Rubin and RBC, Inc. shall have
no liability for breaches of covenants, agreements, obligations, representations
or warranties set forth herein except to the extent that such Contributor (i)
breached a covenant, agreement or obligation set forth herein the performance of
which was within his power to control, (ii) made an intentional
misrepresentation, or (iii) is the only Contributor that made the representation
or warranty that was breached. Following a termination pursuant to Section
10.1(iii), neither Ronald Rubin, George Rubin, RBC, Inc., PREIT nor the
Partnership shall have any liability for breaches of covenants, agreements or
obligations set forth herein to the extent that such breaches arise from the
actions of, or failure to act, by Persons other than the parties hereto and
notwithstanding such party's best efforts to cause such Person to act in a
manner that would result in the satisfaction of such party's covenants,
agreements and obligations hereunder.
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SECTION 11. GENERAL PROVISIONS.
11.1 Survival of Representations and Warranties.
(a) All representations and warranties made by the parties
in this Agreement and in the certificates, documents and other agreements
delivered pursuant hereto shall survive the Closing, subject to the terms and
conditions of Section 9 above. Anything in this Agreement to the contrary
notwithstanding: (i) the representations and warranties of the Contributors and
the right of the Buyer Indemnified Persons to indemnification for breach
thereof, shall not be affected by any investigation of the Contributors or the
Project Partnerships made by PREIT or its agents or representatives; and (ii)
the representations and warranties of PREIT hereunder, and the right of the
Contributors to indemnification for breach thereof, shall not be affected by any
investigation of PREIT or its affiliates made by the Contributors or its agents
or representatives.
(b) In the event of any inconsistency between the
statements made in the body of this Agreement and those contained in the
Contributor Disclosure Letter (other than an express exception to a specifically
identified statement), those in this Agreement shall control.
11.2 Costs and Expenses. Except as otherwise expressly provided herein,
each party shall bear its own expenses in connection herewith. Except as
otherwise provided herein, any and all recording and filing fees and all costs
associated with obtaining the title insurance or endorsements thereto
contemplated herein in connection with the transactions contemplated herein
shall be borne by PREIT or the Partnership. The parties contemplate that the
transfer of the Interests in accordance with the procedures and the time periods
set forth in Schedule A will not be subject to transfer tax. In the event that
any party hereto makes or causes a transfer of Interests not in accordance with
the procedures and time periods set forth herein, then the party making or
causing such transfer shall be responsible for the payment of any transfer tax
and all title insurance premiums and title company charges and recording costs
due as a result thereof; provided, however, that if such transfer tax results
from the exercise by the Partnership of its options set forth in Section 2(b)(i)
or 2(d)(ii) prior to the third anniversary of the Closing Date, the Partnership
shall pay all such tax, premiums, charges and costs arising therefrom. In the
event that a determination is made by the applicable taxing authorities that the
transactions contemplated by this Agreement are subject to the real estate
transfer taxes imposed by either the City of Philadelphia and/or the
Commonwealth of Pennsylvania notwithstanding that neither party violated the
restrictions set forth in the previous sentence and the Partnership did not
exercise its options set forth in Section 2(b)(i) or 2(d)(ii),
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the Partnership, on the one hand, and the Contributors, on the other hand,
shall each pay one-half of any transfer taxes which are ultimately imposed on
such transactions.
11.3 Notices. All notices or other communications permitted or required
under this Agreement shall be in writing and shall be sufficiently given if and
when hand delivered to the persons set forth below or if sent by documented
overnight delivery service or registered or certified mail, postage prepaid,
return receipt requested, or by telegram, telex or telecopy, receipt
acknowledged, addressed as set forth below or to such other person or persons
and/or at such other address or addresses as shall be furnished in writing by
any party hereto to the others. Any such notice or communication shall be deemed
to have been given as of the date received, in the case of personal delivery, or
on the date shown on the receipt or confirmation therefor in all other cases.
To PREIT or the Partnership:
Pennsylvania Real Estate Investment Trust
455 Pennsylvania Avenue, Suite 135
Fort Washington, PA 19034
Attention: President and Special Committee
With a copy to:
Drinker Biddle & Reath LLP
1100 PNB Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
(215) 988-2700
Telecopy (215) 988-2757
Attention: Howard A. Blum, Esquire
To the Contributors:
c/o The Rubin Organization, Inc.
200 South Broad Street
Philadelphia, PA 19102
Attention: Ronald Rubin
With a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
Attention: Leonard M. Klehr, Esquire
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11.4 Access to Information; Confidentiality. Between the date of this
Agreement and the Closing Date, PREIT, on the one hand, and the Contributors, on
the other hand, will give to the other party and its officers, employees,
counsel, accountants and other representatives free and full access to and the
right to inspect, during normal business hours, all of the assets, records,
facilities, properties and Contracts relating to its business as the other party
may reasonably request. Each party shall acquire and hold all confidential
information that has been made available by another party hereto subject to the
terms and conditions of Section IV of the Letter Agreement dated as of April 16,
1997 (the "Letter Agreement") between TRO and PREIT, the terms of which section
are hereby incorporated by reference and which shall remain in force through the
Closing.
11.5 Public Announcements. Except as and to the extent required by Law
or by the rules of the American Stock Exchange, without the prior written
consent of the other party, the Contributors, on the one hand, and PREIT and the
Partnership, on the other hand, will not, and each will direct its
representatives not to, directly or indirectly, make any public comment,
statement or communication with respect to, or otherwise disclose or permit the
disclosure of any of the terms, conditions or other aspects of the transactions
contemplated hereby; provided, however, that PREIT may issue a press release, in
the form previously circulated by PREIT to TRO, regarding, among other things,
the execution of this Agreement; and further provided that PREIT and TRO may
each continue such communications with principals, partners, lenders, trustees,
attorneys, accountants, investment bankers, consultants engaged by PREIT and
TRO, including abstract companies, title companies, engineers and architects,
Claude de Botton and his affiliates, Kenneth N. Goldenberg and his affiliates,
EPD and its affiliates, and, if agreed in each case by PREIT and TRO, others as
may be legally required or necessary in connection with the consummation of the
transactions contemplated by this Agreement.
11.6 No Solicitation. Each Contributor shall not, each Contributor
shall cause its officers, employees, partners, representatives and agents not
to, directly or indirectly, continue, encourage, solicit, initiate or
participate in discussions or negotiations with, or provide any nonpublic
information to, any Person (other than PREIT and the Partnership and their
respective representatives in connection with the transactions contemplated by
this Agreement) concerning any sale of assets (other than in the ordinary course
of its business consistent with past practice) or shares of capital stock or
partnership interest of any Contributor or any merger, consolidation,
recapitalization, liquidation or similar transaction involving any Contributor
(collectively, an "Acquisition Transaction"). Each Contributor will promptly
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communicate to PREIT the terms of any inquiry or proposal that it or he may
receive in respect of an Acquisition Transaction.
11.7 Entire Agreement. This Agreement, together with the Schedules,
Contributor Disclosure Letter, and certificates referred to herein or delivered
pursuant hereto, constitute the entire agreement between the parties hereto with
respect to its subject matter and supersede all prior and contemporaneous
agreements and understandings with respect to the subject matter hereof.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of this
Agreement, and all of which, when taken together, shall be deemed to constitute
but one and the same Agreement.
11.9 Governing Law. This Agreement is made pursuant to, and shall be
construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania (and United States federal law, to the extent applicable),
irrespective of the principal place of business, residence or domicile of the
parties hereto, and without giving effect to otherwise applicable principles of
conflicts of laws.
11.10 Section Headings, Captions and Defined Terms. The section
headings and captions contained herein are for reference purposes only and shall
not in any way affect the meaning and interpretation of this Agreement. The
terms defined herein and in any agreement executed in connection herewith
include the plural as well as the singular, and the use of 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.
11.11 Amendments, Modifications and Waiver. The parties may amend or
modify this Agreement in any respect. Any such amendment or modification shall
be in writing. The waiver by any party of any provision of this Agreement shall
not constitute or operate as a waiver of any other provision hereof, nor shall
any failure to enforce any provision hereof operate as a waiver of such
provision or of any other provision.
11.12 Severability. The invalidity or unenforceability of any
particular provision, or part of any provision, of this Agreement shall not
affect the other provisions or parts hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions or
parts were omitted.
11.13 Liability of Trustees, etc. No recourse shall be had for any
obligation of PREIT hereunder, or for any claim based
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thereon or otherwise in respect thereof, against any past, present or future
trustee, shareholder, officer or employee of PREIT, whether by virtue of any
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being expressly waived and released by each
other party hereto.
11.14 Sears Power Plant. The former Sears Power Plant, which is located
between the Home Depot store and the Bradlees Store site, contains certain
Hazardous Substances. The Contributors shall have the right either to cause the
removal of the drums and barrels presently located inside the Power Plant and to
cause the encapsulation of the building (collectively, the "Remediation") to the
reasonable satisfaction of the Partnership or to subdivide the Power Plant from
the balance of the Shopping Center and transfer title to the parcel on which the
Power Plant is located to a third party or to an entity owned by one or more
Contributors. In the event the Contributors elect to retain title to the Power
Plant site, the parcel to be subdivided from the balance of the Shopping Center
shall be no larger than the footprint of the existing Power Plant building (the
Partnership hereby agreeing to consent to appropriate access, parking and other
such easements to the subdivided parcel as may be required for the development
and use of the Power Plant consistent with current zoning and to such other
conditions as shall be a requirement to the grant of subdivision approval so
long as such conditions do not require that the sudivided parcel be enlarged
beyond the footprint of the building and do not adversely affect the use or
value of the Shopping Center) and the subdivision and transfer of title must be
completed prior to the Closing Date. In the event the Contributors elect to
commence the Remediation and the Remediation is not completed prior to the
Closing Date or in the event the Contributors fail to subdivide the Power Plant
parcel and transfer title prior to the Closing Date, the terms of Paragraph C of
Schedule 9.1(c) shall be applicable.
IN WITNESS WHEREOF, each of the parties hereto has
executed this Agreement, all as of the date first written above.
RUBIN BLVD. CO., INC.
By: /s/ Ronald Rubin
- -------------------------
Name:
Title:
/s/ Ronald Rubin (SEAL) /s/ Leonard Shore (SEAL)
- ------------------------- ------------------------
Ronald Rubin Leonard Shore
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/s/ George Rubin (SEAL) /s/ Joseph Cardino (SEAL)
- ------------------------- ------------------------
George Rubin Joseph Coradino
/s/ Lewis Stone (SEAL) /s/ Pat Berns (SEAL)
- ------------------------- ------------------------
Lewis Stone Pat Berns
/s/ Edward Glickman (SEAL) /s/ Douglas Grayson (SEAL)
- ------------------------- ------------------------
Edward Glickman Douglas Grayson
/s/ Judith Garfinkel (SEAL) /s/ Gerald Broker (SEAL)
- ------------------------- ------------------------
Judith Garfinkel Gerald Broker
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PENNSYLVANIA REAL ESTATE
INVESTMENT TRUST
By: /s/ Jonathan B. Weller
--------------------------------
Name:
Title:
By: /s/ Jeffrey A. Linn
--------------------------------
Name:
Title:
PREIT ASSOCIATES, L.P.
By: Pennsylvania Real Estate
Investment Trust, its general
partner
By: /s/ Jonathan B. Weller
--------------------------------
Name:
Title:
By: /s/ Jeffrey A. Linn
--------------------------------
Name:
Title:
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