CONTRIBUTION AGREEMENT
relating to
Blue Route Metroplex, Plymouth Meeting, Pennsylvania
Red Rose Commons, Lancaster, Pennsylvania
Christiana Strip Shopping Center, Christiana, Delaware,
and Howell Township, New Jersey
TRO Predevelopment, LLC
Pennsylvania Real Estate Investment Trust
PREIT Associates, L.P.
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS........................................... 2
SECTION 2. CONTRIBUTIONS......................................... 3
2.1 At Closing............................................ 3
2.2 Post-Closing.......................................... 3
SECTION 3. CONSIDERATION......................................... 3
3.1 At Closing............................................ 3
3.2 Post-Closing.......................................... 4
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE
CONTRIBUTOR........................................... 4
4.1 Organization.......................................... 4
4.2 Power and Authority................................... 4
4.3 No Conflicts.......................................... 5
4.4 Litigation; Orders; Development Contingencies......... 6
4.5 Undisclosed Liabilities............................... 7
4.6 Assigned Contracts.................................... 7
4.7 Contracts............................................. 9
4.8 Environmental Matters................................. 10
4.9 Brokers............................................... 10
4.10 Accurate Disclosure................................... 10
4.11 Knowledge............................................. 10
4.12 FIRPTA................................................ 11
4.13 Investment Representations............................ 11
SECTION 5. WARRANTIES AND REPRESENTATIONS AS TO
THE PRE-DEVELOPMENT PROPERTIES...................... 12
5.1 Blue Route Metroplex, Plymouth Meeting,
Pennsylvania.......................................... 12
5.2 Red Rose Commons, Lancaster, Pennsylvania............. 13
5.3 Christiana Strip Shopping Center, Christiana,
Delaware.............................................. 13
5.4 West Farms Road and Route 9, Howell Township,
New Jersey............................................ 14
SECTION 6. REPRESENTATIONS AND WARRANTIES REGARDING
PREIT............................................... 15
6.1 Organization.......................................... 15
6.2 Power and Authority................................... 15
6.3 No Conflicts.......................................... 16
6.4 Capitalization........................................ 17
6.5 PREIT Reports......................................... 17
6.6 Litigation............................................ 18
6.7 Material Adverse Change............................... 18
6.8 Brokers............................................... 18
-i-
SECTION 7. CERTAIN COVENANTS AND AGREEMENTS...................... 18
7.1 Conduct of Business................................... 18
7.2 Reasonable Efforts.................................... 20
7.3 Notifications......................................... 20
7.4 Rezoning of Christiana Site - Phase II................ 20
SECTION 8. CLOSING; CLOSING CONDITIONS; CLOSING DELIVERIES....... 21
8.1 Time of Closing....................................... 21
8.2 Closing Conditions.................................... 21
8.3 Deliveries at the Closing............................. 23
SECTION 9. [INTENTIONALLY OMITTED]............................... 24
SECTION 10. INDEMNIFICATION....................................... 24
10.1 Indemnification by the Contributor.................... 25
10.2 Indemnification by PREIT.............................. 25
10.3 Limitations on Liability.............................. 25
10.4 Procedure For Indemnification - Third Party
Claims................................................ 26
10.5 Procedure for Indemnification - Other Claims.......... 28
10.6 Indemnification Payments.............................. 28
SECTION 11. TERMINATION AND ABANDONMENT........................... 28
11.1 Termination........................................... 28
11.2 Procedure for Termination; Effect of
Termination........................................... 29
SECTION 12. GENERAL PROVISIONS.................................... 29
12.1 Survival of Representations and Warranties............ 29
12.2 Costs and Expenses.................................... 29
12.3 Condemnation.......................................... 30
12.4 Notices............................................... 30
12.5 Access to Information; Confidentiality................ 31
12.6 Public Announcements.................................. 31
12.7 No Solicitation....................................... 31
12.8 Entire Agreement...................................... 32
12.9 Counterparts.......................................... 32
12.10 Governing Law......................................... 32
12.11 Section Headings, Captions and Defined Terms.......... 32
12.12 Amendments, Modifications and Waiver.................. 32
12.13 Severability.......................................... 32
12.14 Liability of Trustees, etc............................ 33
12.15 Future Projects....................................... 33
12.16 Concord Pike.......................................... 34
-ii-
CONTRIBUTION AGREEMENT
relating to
Blue Route Metroplex, Plymouth Meeting, Pennsylvania
Red Rose Commons, Lancaster, Pennsylvania
Christiana Strip Shopping Center, Christiana, Delaware
and Howell Township, New Jersey
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made as of the 30th
day of July, 1997, by and among TRO PREDEVELOPMENT, LLC, a Delaware limited
liability company (the "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
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, The Rubin Organization, Inc. ("TRO"), The Rubin
Organization-Illinois, Inc. and the shareholders of TRO. The Contributor is an
affiliate of TRO, and its members are shareholders of TRO or affiliates of
such shareholders.
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 immediately following the
closing under the TRO Contribution Agreement (the "TRO Closing"), the
Contributor will assign, transfer and contribute to the Partnership, in
exchange for certain reimbursements under the TRO Contribution Agreement and
for Class A limited partner interests in the Partnership ("Class A Units"),
(i) all of the Contributor's rights to become an equity owner of one or more
partnerships or other entities that own, and otherwise to participate in the
development, leasing, management and ownership of, the Metroplex Site and RRC
Site (collectively, the "Goldenberg Properties") arising under that certain
letter agreement dated March 26, 1996 by and between The Rubin Organization,
Inc. and the Goldenberg Group (the
"Goldenberg Agreement"), and (ii) all of the Contributor's right, title and
interest in, to and under certain partnership agreements relating to the
Christiana Site and, in the event that the Howell Site is a BCRH Property as
of the Closing, certain purchase and/or ground lease agreements relating to
the Howell Site (each as defined in Schedule B-2 hereto).
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. In addition, the following capitalized terms shall have the
following definitions when used herein.
"Assigned Contracts" shall mean the Contracts listed under the
heading "Assigned Contracts" in Schedule B-1 hereto; provided, however, that
the Assigned Contracts shall not include items II, III, IV, V and VI on such
schedule unless and until the Howell Site constitutes a BCRH Property
hereunder. If the Howell Site becomes a BCRH Property after the Closing, the
Assigned Contracts shall include items II, III, IV, V and VI on such schedule,
together with any amendments thereto and supplements thereto and other
agreements relating to the Howell Site that have been approved in writing by
PREIT prior to the date on which the Howell Site becomes a BCRH Property
hereunder.
"BCRH Properties" shall mean the Metroplex Site, the RRC Site and the
Christiana Site. The Howell Site shall constitute a BCRH Property as of the
Closing hereunder if, in accordance with Section 5.20 of the TRO Contribution
Agreement, a contract, in form and substance satisfactory to PREIT, has not
been entered into prior to the TRO Closing giving Home Depot the right to
acquire the Howell Site. If such a contract is entered into and is in effect
as of the TRO Closing, the Howell Site shall not constitute a BCRH Property
hereunder unless and until, in accordance with Section 5.20 of the TRO
Contribution Agreement, the Partnership exercises its option to treat the site
as a BCRH Property hereunder. The BCRH Properties are more specifically
described on Schedule B-2 hereto.
"Pre-Development Properties" shall mean those properties set forth in
Schedule B-2 hereto and those properties, if any, added thereto with the
consent of PREIT given pursuant to Section 12.15 and any property that becomes
a Pre-Development Property pursuant to Section 12.16; provided, however, that
the Howell Site shall
-2-
not constitute a Pre-Development Property unless and until it constitutes a BCRH
Property hereunder.
"Third Party Contracts" shall mean those Contracts designated as
"Third Party Contracts" on Schedule B-1 hereto.
SECTION 2. CONTRIBUTIONS.
2.1 At Closing. Subject to the terms and conditions of this
Agreement, at the Closing (as defined in Schedule A hereto), the Contributor
shall sell, transfer, assign and contribute to the Partnership, free and clear
of all Encumbrances, all of the Contributor's right, title and interest in, to
and under the Assigned Contracts and the Partnership shall assume all
obligations of the Contributor arising after Closing under the Assigned
Contracts other than liabilities or obligations arising from a breach of or a
default under such Assigned Contracts prior to the Closing.
2.2 Post-Closing. If the Howell Site is not a BCRH Property as of the
Closing and if the Partnership subsequently elects pursuant to Section 5.20 of
the TRO Contribution Agreement to accept the Howell Site as a BCRH Property
(the "Post-Closing Election to Acquire") and Howell LLC has become a party
hereto, then, on the business day specified by the Partnership in its notice
of exercise of the Post-Closing Election to Acquire, Howell LLC shall sell,
transfer, assign and contribute to the Partnership, free and clear of all
Encumbrances, all right, title and interest of Howell LLC in, to and under the
Assigned Contracts specified in items II, III, IV, V and VI of Schedule B- 1
hereto, as theretofore amended and supplemented by Contracts executed after
the date hereof that have been approved in writing by the Partnership (as so
amended and supplemented, the "Howell Assigned Contracts"), and the
Partnership shall assume all obligations of Howell LLC under the Howell
Assigned Contracts arising after such contribution to the Partnership other
than liabilities or obligations arising from a breach of or a default under
such Assigned Contracts prior to Closing. The Contributor's interests in the
Assigned Contracts and the Howell Assigned Contracts which are assigned to the
Partnership pursuant to the terms and conditions of this Agreement are
sometimes hereinafter referred to collectively as the "Contract Interests."
SECTION 3. CONSIDERATION.
3.1 At Closing. In consideration for the contributions described in
Section 2.1, subject to the terms and conditions of this Agreement, the
Partnership shall issue to the Contributor, at the time specified in Schedule
A-2, that number of Class A Units, if any, specified in Schedule A-2 as being
issuable after Closing.
-3-
3.2 Post-Closing. In consideration for the contributions specified in
Section 2.2, subject to the terms and conditions of this Agreement, the
Partnership shall, at the closing of the contribution of the Howell Assigned
Contracts (the "Howell Closing"), (i) transfer and assign to Howell LLC, free
and clear of all Encumbrances, all membership interests in Howell LLC issued
to the Partnership at the TRO Closing and (ii) pay Howell LLC an amount of
cash equal to all reasonable out-of-pocket expenses theretofore paid or
incurred but not yet paid by Howell LLC, any TRO Shareholder or any TRO
Affiliate to third parties in connection with the acquisition and development
of the Howell Site to the extent not theretofore reimbursed out of cash flow
from the Howell Site (the amount of such predevelopment costs and expenses
being set forth in a statement delivered to the Partnership in response to a
request therefor in connection with the Partnership's preparation of the
Post-Closing Election to Acquire).
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTOR.
The Contributor hereby represents and warrants to PREIT and the
Partnership as follows (if there is a Howell Closing, the term "Contributor"
as used in this Section 4 shall be deemed to mean each of Howell LLC and TRO
Predevelopment, LLC and the term "Closing" shall be deemed to mean each of the
Closing and the Howell Closing):
4.1 Organization. The Contributor is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation and has all 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. The Contributor is
duly qualified to do business as a foreign limited liability company 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 the Contributor (a "Material Adverse
Effect").
4.2 Power and Authority. The Contributor has all requisite power,
authority and legal right to enter into 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, the "Contributor
Transaction Documents"). The execution, delivery and performance by the
Contributor of this Agreement and the other Contributor Transaction Documents
to which it is a party have been duly authorized by all necessary action on
the part of the
-4-
Contributor. This Agreement has been duly and validly executed and delivered
by the Contributor and constitutes the legal, valid and binding obligation of
the 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. When executed and delivered as contemplated herein, each of the
other Contributor Transaction Documents to which the Contributor is a party
shall, assuming due authorization, execution and delivery thereof by the other
parties thereto, constitute the legal, valid and binding obligation of the
Contributor enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally or by
general equitable principles.
4.3 No Conflicts.
(a) Except as described in Section 4.3(a) of the Contributor
Disclosure Letter delivered by the Contributor to PREIT and the Partnership on
the date hereof (the "Contributor Disclosure Letter"), the execution and
delivery by the Contributor of this Agreement do not, and the execution and
delivery by the Contributor of the other Contributor Transaction Documents and
the performance by the Contributor of all of the Contributor 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 the
organizational documents of the Contributor or any Law applicable to the
Contributor or by or to which any assets or properties of the Contributor is
bound or subject;
(ii) violate or conflict with, result in a breach of,
constitute a default or otherwise cause any loss of any 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 any
Howell Assigned Contract, any Assigned Contract or any other Contract to which
the Contributor is a party or by which the 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 the Contributor or any of
its assets or properties.
(b) Except as described in Section 4.3(b) of the Contributor
Disclosure Letter, the execution and delivery by the Contributor of this
Agreement do not, and the execution and
-5-
delivery by the Contributor of the other Contributor Transaction Documents and
the performance by the Contributor of all of the Contributor Transaction
Documents will not, require the 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 (federal, state,
local or foreign) or to obtain the consent, waiver or approval of, or give any
notice to any other Person.
(c) Except as described in Section 4.3(c) of the Contributor
Disclosure Letter, there are no actions, proceedings or investigations pending
or, to the knowledge of the Contributor, threatened, that question any of the
transactions contemplated by this Agreement or the validity of any of the
Contributor Transaction Documents or which, if adversely determined, could have
a Material Adverse Effect or could materially and adversely effect the
Contributor's ability to enter into or perform its obligations under any of the
Contributor Transaction Documents.
(d) At the Closing and upon execution and delivery by the
Contributor and the Partnership (or its affiliates) of an assignment and
assumption agreement with respect to the Assigned Contracts, the Partnership
will acquire all right, title and interest of the Contributor in, to and under
the Assigned Contracts, free and clear of all Encumbrances.
4.4 Litigation; Orders; Development Contingencies.
(a) Except as described in Section 4.4(a) of the Contributor
Disclosure Letter, there are no, and since the Contributor's inception there
have not been, any, claims, actions, suits, proceedings (arbitration or
otherwise) or, to the knowledge of the Contributor, investigations involving or
affecting the Contributor or any of its assets or properties or any of its
directors, officers, partners or members 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 that could, if
adversely decided, have a Material Adverse Effect. Except as described in
Section 4.4(a) of the Contributor Disclosure Letter, no such pending claim,
action, suit, proceeding or investigation, if determined adversely, would either
individually or in the aggregate, result in a liability in excess of $5,000 in
the case of any single action or $10,000 in the case of all such actions in the
aggregate or could result in the loss or diminution of any benefit or privilege
presently available to or enjoyed by the Contributor. To the knowledge of the
Contributor, except as described in Section 4.4(a) of the Contributor Disclosure
Letter, no such claim, action, suit, proceeding or investigation is presently
threatened or contemplated. There are no unsatisfied
-6-
judgments, penalties or awards against or affecting the Contributor or any of
its assets or properties.
(b) Except as described in Section 4.4(b) of the Contributor
Disclosure Letter, there is no award, injunction, judgment, order, ruling,
subpoena or verdict or other decision entered, issued, made or rendered by any
court, arbitrator, government or governmental agency or instrumentality, or
agreement with any government or governmental agency or instrumentality
(federal, state, local or foreign) (collectively, "Orders") to which the
Contributor or any of its assets or properties is subject. To the knowledge of
the Contributor, no officer, director, partner, member or employee of the
Contributor is subject to any Order that prohibits such officer, director,
partner, member or employee from engaging in or continuing any conduct, activity
or practice relating to its business. The Contributor has complied in all
respects with the terms and conditions of each Order applicable to it.
(c) PREIT and the Partnership recognize that the Howell
Assigned Contracts and the Assigned Contracts relate to real estate projects
that are not yet fully developed. Accordingly, each project is subject to
contingencies such as land use planning, due diligence investigations, and
obtaining financing. Notwithstanding anything to the contrary contained herein,
the Contributor makes and shall make no representation or warranty that any such
project will proceed beyond its present state or that if it does, that it will
be developed or completed ("Development Contingencies").
4.5 Undisclosed Liabilities.
(a) There are no liabilities or obligations of the Contributor
of any nature (whether absolute, accrued, contingent, liquidated, unliquidated
or otherwise) except: (i) those under the Howell Assigned Contracts and the
Assigned Contracts; and (ii) those described in Section 4.5 of the Contributor
Disclosure Letter.
(b) Except for the Internal Commissions (as hereinafter
defined), as of the Closing, there shall be no liabilities or obligations of the
Contributor of any nature (whether absolute, accrued, contingent, liquidated,
unliquidated or otherwise) except for the Contributor's obligations under the
Howell Assigned Contracts (if applicable) and the Assigned Contracts and, in the
case of Howell LLC, the predevelopment costs and expenses relating to Howell
Site.
4.6 Assigned Contracts
(a) Except for the Goldenberg Agreement and this Agreement,
the Contracts listed under the heading "Assigned
-7-
Contracts" in Schedule B-1 are the only Contracts that relate, in whole or in
part, to any of the properties described on Schedule B-2 to which either
Company, any TRO Shareholder or any TRO Affiliate is, as of the date hereof
and as of the TRO Closing, or was, at any time prior to the date hereof, a
party or is or was otherwise bound or affected.
(b) To the knowledge of the Contributor, except for the
Goldenberg Agreement and non-material contracts entered into in the ordinary
course of business for the development and construction of retail shopping
centers and consistent with industry norms, the Third Party Contracts are the
only Contracts that relate, in whole or in part, to any BCRH Property to which
the Goldenberg Group (or any affiliate thereof) is, as of the date hereof, a
party or is otherwise bound or affected. To the knowledge of the Contributor,
the description of the Third Party Contracts set forth in Schedule B-1 is
accurate and complete in all material respects.
(c) There has been no amendment or modification of, or waiver
by the Contributor, either Company, the TRO Affiliates or the TRO Shareholders
of rights under the Goldenberg Agreement.
(d) Prior to the TRO Closing, all of the rights of the
Companies, the TRO Shareholders and the TRO Affiliates in, to and under (i) the
Assigned Contracts shall be assigned, transferred and conveyed, free and clear
of all Encumbrances, to the Contributor and (ii) if the Howell Assigned
Contracts are not included in the Assigned Contracts as of the Closing, the
Howell Assigned Contracts shall be assigned, free and clear of all Encumbrances,
to Howell LLC. No such assignment shall violate or conflict with, result in a
breach of, constitute a default or otherwise cause any loss of any benefit
under, or give to others any rights (including rights of termination, amendment,
foreclosure, cancellation or acceleration) in or with respect to, any of the
Howell Assigned Contracts or any of the Assigned Contracts.
(e) Except as described in Schedule B-1 or in the Goldenberg
Agreement or as otherwise set forth in Section 4.6(e) of the Contributor
Disclosure Letter and except, as of the date hereof (but not as of the Closing),
for the interests of TRO, the TRO Shareholders and the TRO Affiliates, no Person
has any equity or other interest in the Contributor (other than TRO Shareholders
who are the members of the Contributor) or any equity or other interest in, to
or under any of the Howell Assigned Contracts or the Assigned Contracts (other
than Howell LLC if the Howell Assigned Contracts are not a part of the Assigned
Contracts as of the Closing).
(f) Except for this Agreement and as otherwise disclosed or
contemplated herein and as contemplated under the
-8-
Goldenberg Agreement, 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 interest of the Companies,
the TRO Shareholders or the TRO Affiliates in any of the Howell Assigned
Contracts or the Assigned Contracts. To the Contributor's knowledge, except
for this Agreement and except as described in Schedule B-1 or in Section 4.6
of the Contributor Disclosure Letter and except as described in Section 5.20
of the TRO Contribution Agreement, 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 interest in any
of the Pre-Development Properties. None of the Companies, the TRO Shareholders
or the TRO Affiliates has any agreement or commitment, whether oral or
written, to share any profits or cash flow resulting from the ownership,
development, management or leasing of the Howell Site, except that if the
Howell Site is sold to Home Depot certain current employees of TRO will be
entitled to receive commissions consistent with TRO's past practices (the
"Internal Commissions").
4.7 Contracts.
(a) Except as described in Section 4.7 of the Contributor
Disclosure Letter, each of the Howell Assigned Contracts, the Assigned Contracts
and the Goldenberg Agreement 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 4.7 of the Contributor Disclosure Letter, the
Contributor, the Companies, the TRO Shareholders and the TRO Affiliates have
each (i) performed, in all material respects, all obligations required to be
performed by it or him under each of the Howell Assigned Contracts, the Assigned
Contracts and the Goldenberg Agreement; (ii) not waived the performance of any
obligation on the part of any other party under any such Contract. 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.
(b) There are no renegotiations of, attempts to renegotiate,
or outstanding rights to renegotiate any material amounts paid or payable to the
Contributor or any other material provisions of any of the Howell Assigned
Contracts, the Assigned Contracts or the Goldenberg Agreement.
(c) Except as described in Section 4.7 of the Contributor
Disclosure Letter, to the Contributor's knowledge, each Third Party Contract
(other than those listed in Schedule B-1 as "drafts" or as "possible
amendments") is in full force and effect and is valid, binding and enforceable
against the parties thereto in accordance with its terms.
-9-
4.8 Environmental Matters.
(a) Except as described in Section 4.8 of the Contributor
Disclosure Letter:
(i) the Contributor has no knowledge of any fact,
condition or circumstance that would suggest that the environmental reports
listed in Section 4.8 of the Contributor Disclosure Letter (which constitute all
environmental reports relating to the Pre-Development Properties received by the
Contributor or its affiliates for which the Contributor can, after exercising
reasonable efforts, locate a copy) contains any misstatement of material fact or
omits to state any material fact. To the knowledge of the Contributor, except
for matters set forth in Section 4.8 of the Contributor Disclosure Letter, there
are no conditions on, beneath or arising from, and there are no Hazardous
Substances migrating from, any Pre-Development Property which might under any
Environmental Law (A) give rise to liability or the imposition of a statutory
lien upon the owner of the Pre-Development Property or (B) require any Response,
Removal or Remedial Action by the owner of the Pre-Development Property.
(ii) To the knowledge of the Contributor, no wastes
generated by any owner of any of the Pre-Development Properties 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.
4.9 Brokers. No Person acting on behalf of the Contributor or any of
its 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 the transfer of any Contract Interest to the Partnership.
4.10 Accurate Disclosure. All documents and other papers prepared by
or on behalf of the Contributor and delivered by or on behalf of the
Contributor in connection with the transactions contemplated by this Agreement
are accurate and complete in all material respects, and all of such documents
and papers prepared or supplied by the Goldenberg Group are, to the knowledge
of the Contributor, accurate and complete in all material respects.
4.11 Knowledge. For purposes of this Agreement, "to the knowledge of
the Contributor" and correlative terms means the actual knowledge of Ronald
Rubin, George Rubin and the other officers and senior management of the
Contributor, after reasonable inquiry, except that (i) as to the matters
stated in Sections 4.3(c), 4.4(a), 4.4(b), 4.6(f), 4.8(a), 5.1(a), 5.3(a),
-10-
and 5.4(a) of this Agreement, such terms mean that Ronald Rubin and George
Rubin, together with Richard Brown, Edward Glickman and Douglas Grayson, who
are the officers and senior management persons with responsibility for
monitoring TRO's (and its affiliates) interest in the Pre-Development
Properties, have received no notice and have no actual knowledge to the
contrary, but no affirmative inquiry or investigation has been made, and (ii)
as to the matters stated in Sections 4.6(b) and 4.10 of this Agreement, the
phrase "after reasonable inquiry" means that inquiry has been made of The
Goldenberg Group by the Contributor, and the Contributor has received no
response to the contrary.
4.12 FIRPTA. The Contributor is neither a "foreign person" within the
meaning of Section 1445(f) of the Code nor a "foreign partner" within the
meaning of Section 1446 of the Code.
4.13 Investment Representations.
(a) The Contributor acknowledges that the Class A Units to be
issued pursuant to Section 3 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 Contributor' representations, warranties and acknowledgements set
forth in this section.
(b) The Class A Units issued in accordance with this Agreement
will be acquired by the Contributor for its 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 except as contemplated
hereunder, and the Contributor will not distribute any of such units in
violation of the 1933 Act.
(c) The Contributor (i) 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 unless they are subsequently registered under the
1933 Act or an exemption from registration is available, (ii) 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, (iii) is aware that Rule 144 may not be available
for use by the Contributor for resale of the units, (iv) 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 (v) acknowledges that he
has received and read a private placement memorandum relating to the offer of
Class A Units.
-11-
(d) The 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.
SECTION 5. WARRANTIES AND REPRESENTATIONS AS TO THE PRE-DEVELOPMENT PROPERTIES
The Contributor hereby warrants and represents to PREIT and the
Partnership with respect to the Pre-Development Properties as follows:
5.1 Blue Route Metroplex, Plymouth Meeting, Pennsylvania
(a) To the Contributor's knowledge, except for the Agreements
of Sale and amendments thereto set forth on Schedule B-1 hereto and the
Goldenberg Agreement, and except as set forth in Section 5.1(a) of the
Contributor's Disclosure Letter, there are, as of the date hereof, no third
party rights of first refusal on, or options or agreements to purchase all or
any portion of, the Metroplex Site 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 Metroplex Site in favor of any
tenant, lender or any other Person.
(b) To the Contributor's knowledge, except as set forth in
Section 5.1(b) of the Contributor's Disclosure Letter, as of the date hereof, 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 all or any part of the Metroplex Site. To the
Contributor's knowledge, as of the date hereof, there are no pending or
threatened governmental rules, regulations, plans, studies, or court orders or
decisions, which could materially adversely affect the development of the
Metroplex Site for its intended use as a retail shopping center.
(c) Attached hereto as Schedule B-3 is a list that was
delivered to the Contributor by the Goldenberg Group of all executed leases,
executed letters of intent and executed term letters with respect to all
proposed tenants for the Metroplex Site as of the date of said list. The
Contributor has no reason to believe that the list attached hereto as Schedule
B-3 is not accurate as of the date hereof.
(d) The Contributor has no reason to believe that (i) the
zoning classifications for parcels comprising the Metroplex Site are other than
as set forth in Schedule B-4, or (ii) the proposed/intended use of said Site as
a retail shopping center is not permitted under such classifications.
-12-
5.2 Red Rose Commons, Lancaster, Pennsylvania
(a) To the Contributor's knowledge, except for the Agreements
of Sale and amendments thereto set forth on Schedule B-1 hereto and the
Goldenberg Agreement, and except as set forth in Section 5.2(a) of the
Contributor's Disclosure Letter, there are, as of the date hereof, no third
party rights of first refusal on, or options or agreements to purchase any
portion of the property comprising the RRC Site 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 RRC Site in favor of
any tenant, lender or any other Person.
(b) To the Contributor's knowledge, except as set forth in
Section 5.2(b) of the Contributor's Disclosure Letter, as of the date hereof, 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 RRC Site. To the Contributor's
knowledge, as of the date hereof, there are no pending or threatened
governmental rules, regulations, plans, studies, or court orders or decisions,
which could materially adversely affect the development of the RRC Site for its
intended use as a retail shopping center.
(c) Attached hereto as Schedule B-3 is a list that was
delivered to the Contributor from the Goldenberg Group of all executed leases,
executed letters of intent and executed term letters with respect to all
proposed tenants for the RRC Site as of the date of said list. The Contributor
has no reason to believe that the list attached hereto as Schedule B-3 is not
accurate as of the date hereof.
(d) The Contributor has no reason to believe that (i) the
zoning classifications for parcels comprising the RRC Site are other than as set
forth in Schedule B-4, and (ii) the proposed/intended uses of said Site as a
retail shopping center are not permitted under such classifications.
5.3 Christiana Strip Shopping Center, Christiana, Delaware
(a) To the Contributor's knowledge, except for the Agreements
of Sale and amendments thereto set forth on Schedule B-1 hereto, and except as
set forth in Section 5.3(a) of the Contributor's Disclosure Letter, there are,
as of the date hereof, no third party rights of first refusal on, or options or
agreements to purchase all or any portion of, the Christiana Site 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
Christiana Site in favor of any tenant, lender or any other Person.
-13-
(b) To the Contributor's knowledge, except as set forth in
Section 5.3(b) of the Contributor's Disclosure Letter, as of the date hereof, 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 all or any part of the Christiana Site. To the
Contributor's knowledge, as of the date hereof, there are no pending or
threatened governmental rules, regulations, plans, studies, or court orders or
decisions, which could materially adversely affect the development of the
Christiana Site for its intended use as a retail power center.
(c) Attached hereto as Schedule B-3 is a list of all executed
leases, executed letters of intent and executed term letters with respect to all
proposed tenants for the Christiana Site as of the date of said list.
(d) The Contributor has no reason to believe that (i) the
zoning classifications for parcels comprising the Christiana Site are other
than as set forth in Schedule B-4, and (ii) the proposed/intended uses of
Phase I of said Site as a retail shopping center are not permitted under such
classifications.
5.4 West Farms Road and Route 9, Howell Township, New Jersey
(a) To the Contributor's knowledge, except for the Agreements
of Sale and amendments thereto set forth on Schedule B-1 hereto and except as
otherwise provided herein or in Section 5.20 of the TRO Agreement, and except as
set forth in Section 5.4(a) of the Contributor's Disclosure Letter, there are,
as of the date hereof, no third party rights of first refusal on, or options or
agreements to purchase all or any portion of, the Howell Site 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 Howell
Site in favor of any tenant, lender or any other Person.
(b) To the Contributor's knowledge, except as set forth in
Section 5.4(b) of the Contributor's Disclosure Letter, as of the date hereof, 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 all or any part of the Howell Site. To the
Contributor's knowledge, as of the date hereof, there are no pending or
threatened governmental rules, regulations, plans, studies, or court orders or
decisions, which could materially adversely affect the development of the Howell
Site for its intended use as a retail shopping center.
-14-
(c) Attached hereto as Schedule B-3 is a list of all executed
leases, executed letters of intent and executed term letters with respect to all
proposed tenants for the Howell Site as of the date of said list.
(d) The Contributor has no reason to believe that (i) the
zoning classifications for parcels comprising the Howell Site are other than
as set forth in Schedule B-4, and (ii) the proposed/intended uses of the
Howell Site as a retail shopping center are not permitted under such
classifications.
SECTION 6. REPRESENTATIONS AND WARRANTIES REGARDING PREIT AND THE PARTNERSHIP.
PREIT hereby represents and warrants to the Contributor as follows:
6.1 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 all its obligations under each agreement and instrument to which
it is a party or by which it is bound.
6.2 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
-15-
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.
6.3 No Conflicts.
(a) Except as described in Section 6.3 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 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 6.3(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.
-16-
(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.
6.4 Capitalization.
(a) On the date hereof, the outstanding beneficial interests
in PREIT consist of 8,679,598 PREIT Shares, and the outstanding partnership
interests in the Partnership are as described in Section 6.4(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 6.4(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 interests in the Partnership. As of
the Closing, the outstanding partner interests in the Partnership shall consist
of the interests outstanding on the date hereof and the Class A Units to be
issued as contemplated in the TRO Contribution Agreement, the Oxford Valley
Contribution 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
Contributor 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.
6.5 PREIT Reports. PREIT has delivered to the Contributor 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
-17-
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.
6.6 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.
6.7 Material Adverse Change. Except as disclosed in filings with the
Securities and Exchange Commission, since May 31, 1997, there has not been any
material adverse change in the condition (financial or otherwise), assets,
results of operations or business of PREIT on a consolidated basis.
6.8 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 7. CERTAIN COVENANTS AND AGREEMENTS
7.1 Conduct of Business.
(a) Except as expressly provided herein, between the date
hereof and the Closing, except with the prior written consent of PREIT, the
Contributor shall:
(i) carry on its business in the usual, regular and
ordinary course, consistent with past practice and the provisions hereof and in
compliance with all applicable Laws,
-18-
Authorizations and Contracts, preserve intact its present business
organization, maintain its existence as a limited liability company, and cause
TRO to use reasonable efforts to preserve its relationships with the other
parties to the Howell Assigned Contracts and the Assigned Contracts and to
monitor and obtain all relevant information relating to the development of the
Pre-Development Properties;
(ii) pay and discharge all of its debts, liabilities
and obligations as they become due to the extent they are not disputed;
(iii) keep in full force and effect insurance
comparable in amount and scope of coverage to insurance now carried by it;
(iv) 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 and insurance policies;
(v) not, and shall cause TRO, the TRO Shareholders
and the TRO Affiliates not to, amend any of the Howell Assigned Contracts or the
Assigned Contracts or the Goldenberg Agreement or consent to an amendment of any
Third Party Contract;
(vi) not, and shall cause TRO, the TRO Shareholders
and the TRO Affiliates not to, enter into any Contract relating, in whole or in
part, to any of the properties listed on Schedule B-2 hereto;
(vii) not take any action, fail to take any action or
permit to occur any event that would cause or constitute a 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; provided, however, that this
undertaking is subject to the qualification that the Contributor does not
currently have a direct involvement in the development of the Goldenberg
Properties and that the future development of all Pre-Development Properties is
subject to Development Contingencies;
(viii) not make any change in its ownership
interests, grant any option or other right to purchase its ownership shares,
issue or make any commitment to issue any new ownership shares or purchase,
redeem, retire or make any other acquisition of any shares, except that nothing
contained in this Section (vii) shall be deemed or construed to limit or
preclude
-19-
transfers of interests between or among the members of the Contributor, or
transfers by members to family members or to trusts for estate planning
purposes; and
(ix) not enter into any agreement or understanding to
do or engage in any of the foregoing actions.
7.2 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 complete the Closing under this
Agreement, including, without limitation, (i) using its 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 completion of the Closing under this
Agreement and (ii) using its reasonable efforts to cause to be satisfied the
conditions to the consummation of the contribution of the Contract Interests.
7.3 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 members, 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
the Contributor, or PREIT, as the case may be, or any of the transactions
contemplated by this Agreement.
7.4 Rezoning of Christiana Site - Phase II. The Christiana Site
consists of an unsubdivided parcel. A portion of such parcel ("Phase I") is
zoned to permit retail development. The remaining portion ("Phase II") is zoned
office and residential. In the event Phase II is rezoned to permit retail
development, the entire parcel will remain a Pre-Development Property governed
by the terms of this Agreement. Upon the earlier to occur of (i) final rejection
(no longer subject to appeal) by the governmental
-20-
entity having jurisdiction of an application to rezone Phase II to permit
retail development, (ii) a joint decision by the Contributor and the Special
Committee to the effect that a rezoning of Phase II to permit retail
development is not feasible, or (iii) the fifth (5th) anniversary of the
Closing, Phase II will, assuming that it is not then rezoned to permit retail
development, no longer be considered a Pre-Development Property, and the
Contributor shall be permitted to develop Phase II for its own account so long
as Phase II is not developed for retail use and the proposed development of
Phase II does not violate the terms and conditions of this Agreement, the TRO
Contribution Agreement, or any other agreement executed by PREIT, TRO, any of
the TRO Shareholders or any of the TRO Affiliates in conjunction with the
transactions contemplated in the TRO Contribution Agreement. If Phase II
ceases to constitute a Pre-Development Property as described above, PREIT and
the Partnership shall cooperate with the Contributor, at the Contributor's
sole cost and expense, in subdividing Phase II from Phase I and in conveying
Phase II to the Contributor or its designee.
SECTION 8. CLOSING; CLOSING CONDITIONS; CLOSING DELIVERIES.
8.1 Time of Closing. The closing (the "Closing") of the contributions
to the Partnership contemplated by Section 2.1 shall take place immediately
following the TRO Closing at the place that the TRO Closing occurs.
8.2 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 Assigned Contracts 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) Representations and Warranties. Each of the
representations and warranties of the Contributor set forth in this Agreement
that is qualified by materiality shall be true and correct, and each of the
representations and warranties of the Contributor 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. All of the agreements,
covenants and obligations that the 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 Contributor
shall
-21-
have delivered each of the documents required to be delivered by it pursuant
to Section 8.3 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 (other than by PREIT or the
Partnership) that questions the validity or legality of this Agreement or the
transactions contemplated hereby.
(iv) 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 of the Howell Assigned Contracts or Assigned
Contracts, or any other Contract, right or Authorization of PREIT, the
Partnership or the Contributor or (y) shall impose on PREIT or the Partnership
any condition, provision or requirement not presently imposed upon the
Contributor or TRO or any condition that would be more restrictive after the
Closing on the Partnership than the conditions presently imposed on the
Contributor or TRO.
(v) Opinion of Counsel. PREIT shall have received an
opinion of counsel for the Contributor, dated the Closing Date, in form and
substance reasonably satisfactory to PREIT and its counsel.
(vi) TRO Closing. The TRO Closing shall have
occurred.
(vii) Casualty or Condemnation. There shall not have
occurred any damage or destruction to, or condemnation of, any portion of the
Pre-Development Properties that has a material adverse effect on the proposed or
intended development of all or any of the Pre-Development Properties.
(b) Conditions Precedent to the Contributor's Obligations. The
obligation of the Contributor to consummate the contribution of the Assigned
Contracts contemplated by this Agreement and to take the other actions required
to be taken by it 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 the Contributor in its sole discretion:
-22-
(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 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 8.3(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) Partnership Counsel Opinion. The Contributor
shall have received an opinion of counsel for the Partnership, dated the Closing
Date, in form and substance reasonably satisfactory to the Contributor and its
counsel.
8.3 Deliveries at the Closing. At the Closing, in addition to the other
actions contemplated elsewhere herein:
(a) The Contributor shall deliver or cause to be
delivered to the Partnership:
(i) each of the instruments, agreements or documents
listed on Schedule A-1, in a form reasonably satisfactory to the Contributor and
the Partnership, in each case duly executed by each of the signatories thereto
other than PREIT or the Partnership;
(ii) certificates, dated the Closing Date and
executed by an authorized member of the Contributor to the effect that the
conditions set forth in Sections 8.2(a)(i) and (ii) have been satisfied;
-23-
(iii) certificates of good standing of a recent date
for the Contributor certified by the Secretary of State or corresponding
certifying authority of the state of organization of the Contributor and of each
state in which the Contributor is qualified to do business as a foreign limited
liability company;
(iv) copies of the resolutions of the Contributor and
its members authorizing the transactions contemplated under this Agreement and
the Contributor Transaction Documents to which the Contributor is a party or
confirmation reasonably satisfactory to PREIT and the Partnership that the
Contributor's Operating Agreement provides such authorization;
(v) all consents and approvals under the Goldenberg
Agreement and the Howell Assigned Contracts and the Assigned Contracts (if and
to the extent then in existence) necessary or appropriate in connection with the
transactions contemplated herein; and
(vi) 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 Contributor the following:
(i) copies of resolutions of the board of trustees of
PREIT authorizing the transactions contemplated hereunder and under the Buyer
Transaction Documents;
(ii) 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 8.2(b)(i) and (ii) have been
satisfied; and
(iii) each of the instruments, agreements and
documents listed on Schedule A-1, in a form mutually satisfactory to the
Contributor and the Partnership, duly 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 9. [INTENTIONALLY OMITTED]
SECTION 10. INDEMNIFICATION.
-24-
10.1 Indemnification by the Contributor. The 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
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 the
Contributor made in or pursuant to this Agreement (including, without
limitation, the certificate referred in Section 8.3(a)(ii), which, for this
purpose will be deemed to have stated, inter alia, that the Contributor's
representations and warranties in this Agreement were true and correct as of the
Closing Date as if made on the Closing Date); or (b) any breach or
nonfulfillment of any covenant or obligation of the Contributor contained in
this Agreement.
10.2 Indemnification by PREIT. PREIT shall indemnify, defend and hold
harmless the 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 party to or
in connection with the Assigned Contracts after Closing as the result of events
and circumstances first occurring after Closing or, in the case of the Howell
Assigned Contracts, after the Howell Closing.
10.3 Limitations on Liability.
(a) The Contributor shall not have any obligation to indemnify
any Buyer Indemnified Person against Damages pursuant to Section 10.1 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 10.1(b) or based upon a
breach of any representation or warranty made in or pursuant to Sections 4.1,
4.2, 4.3, 4.5, 4.6 or 4.7.
(b) 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
-25-
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 or 4.2 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 TRO Closing.
(c) 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.
(d) Each party's rights under this Section 10 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.
(e) If there is a Howell Closing, the terms set forth in this
Section 10 shall be adjusted as appropriate so that PREIT and the Partnership
achieve indemnification protection comparable to that which they would have had
in respect of the Howell Site and the Howell Assigned Contracts if the Howell
Site had been a Pre-Development Property as of the Closing.
10.4 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 10 relates, such indemnified party shall, if a
claim is to be made against an indemnifying party under Section 10, 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
-26-
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 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 10 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.
-27-
10.5 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.
10.6 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 11. TERMINATION AND ABANDONMENT.
11.1 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 Contributor, 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 December 31, 1997, or such later date as the parties may mutually agree
upon in writing;
(ii) by mutual consent of PREIT and the Contributor;
(iii) by the Contributor, on the one hand, or PREIT
and the Partnership, on the other hand, if a material breach of any provision of
this Agreement has been committed by the other and such breach has not been
waived; or
(iv) by PREIT, if any of the conditions in Section
8.2(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 Contributor if any of the conditions in
Section 8.2(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
the Contributor to comply with its obligations hereunder) and the Contributor
has 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.
-28-
11.2 Procedure for Termination; Effect of Termination. A party
terminating this Agreement pursuant to this Section 11 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 11.1(iii), the terminating party's right to pursue all legal remedies
(including damages and/or specific performance) contemplated by Section 10 will
survive such termination unimpaired.
SECTION 12. GENERAL PROVISIONS.
12.1 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 10 above. Anything in this Agreement to the contrary notwithstanding:
(i) the representations and warranties of the Contributor and the right of the
Buyer Indemnified Persons to indemnification for breach thereof, shall not be
affected by any investigation of the Contributor or the Pre-Development
Properties made by PREIT or its agents or representatives; and (ii) the
representations and warranties of PREIT hereunder, and the right of the
Contributor to indemnification for breach thereof, shall not be affected by any
investigation of PREIT or its affiliates made by the Contributor 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.
12.2 Costs and Expenses. Except as otherwise expressly provided
herein, each party shall bear its own expenses in connection herewith. Any and
all transfer taxes, 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 Assigned
Contracts in accordance with the procedures and the time periods set forth in
Schedule A-2 will not be subject to transfer tax. In the event the Contributor
makes or causes a transfer of Assigned Contracts not in accordance with the
procedures and time periods set forth herein and in the Partnership Agreement,
then the Contributor making or causing such transfer shall be responsible for
the payment of any
-29-
transfer tax and all title insurance premiums and title company charges and
recording costs due as a result thereof.
12.3 Condemnation. If prior to the Closing Date, condemnation or
eminent domain proceedings are commenced against all or any portion of any of
the Pre-Development Properties, the Contributor shall give notice thereof to
PREIT promptly after the Contributor becomes aware of it.
12.4 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 Contributor:
c/o The Rubin Organization, Inc.
200 South Broad Street
Philadelphia, PA 19102
Attention: Ronald Rubin
With a copy to:
Klehr, Harrison, Harvey, Branzberg & Ellers, LLP
-30-
1401 Walnut Street
Philadelphia, PA 19102
Attention: Leonard M. Klehr, Esq.
12.5 Access to Information; Confidentiality. Between the date of this
Agreement and the Closing Date, PREIT, on the one hand, and the Contributor,
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.
12.6 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 Contributor, 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, 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.
12.7 No Solicitation. The Contributor shall not and it 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 interests of the Contributor or any merger, consolidation,
recapitalization, liquidation or similar transaction involving the Contributor
-31-
(collectively, an "Acquisition Transaction"). The Contributor will promptly
communicate to PREIT the terms of any inquiry or proposal that it may receive
in respect of an Acquisition Transaction.
12.8 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.
12.9 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.
12.10 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.
12.11 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.
12.12 Amendments, Modifications and Waiver. The parties may amend or
modify this Agreement in any respect. Any such amendment or modification shall
be in writing executed by PREIT, the Partnership and the Contributor. Ronald
Rubin and/or George Rubin have been granted authority under the operating
agreement for the Contributor to execute any and all amendments to this
Agreement as Ronald Rubin and George Rubin deem appropriate. 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.
12.13 Severability. The invalidity or unenforceability of any
particular provision, or part of any provision, of this
-32-
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.
12.14 Liability of Trustees, etc. No recourse shall be had for any
obligation of PREIT hereunder, or for any claim based thereon or otherwise in
respect thereof, against any past, present or future trustee, shareholder,
officer or employee of PREIT, whether by virtue of any statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise, all such
liability being expressly waived and released by each other party hereto.
12.15 Future Projects.
(a) If prior to the Closing, the Contributor, any of the TRO
Shareholders, TRO or any other TRO Affiliate shall enter into discussions to
acquire any direct or indirect ownership interests in or rights to acquire
additional retail or residential properties not referred to herein, the
Contributor shall cause TRO to promptly advise and continue to advise PREIT and
the Partnership as to the terms and status of each such proposed project. If TRO
or any TRO Affiliate shall desire to enter into any contractual arrangement or
agreement with respect to any such proposed project prior to Closing, the
Contributor shall cause TRO to present, in writing, the terms and conditions of
each such proposed project to PREIT. The Contributor shall cause TRO, the TRO
Shareholders and the TRO Affiliates not to enter into any such contractual
arrangement or agreement concerning such proposed project prior to Closing
unless and until PREIT has given its prior written consent to same. If PREIT has
given its consent for TRO or the TRO Affiliates to enter into any such
arrangement or agreement, the Contributor shall cause all rights of TRO, the TRO
Affiliates and the TRO Shareholders with respect to such project to be assigned
at the Closing to the Partnership, and such project shall constitute a
Pre-Development Property hereunder and shall therefore be eligible for cost
reimbursement as provided in Section 5.17(a) of the TRO Contribution Agreement;
provided, however, that no such property shall be deemed to be a BCRH Property.
(b) The Partnership acknowledges receipt of a notice from TRO
dated July 2, 1997 regarding the potential development of shopping centers in
York, Pennsylvania and Warrington, Pennsylvania. The Partnership hereby elects
to include the York and Warrington projects as described in the July 2 letter as
Pre-Development Properties hereunder, eligible for cost reimbursement as
provided in Section 5.17(a) of the TRO Contribution Agreement (but such
properties shall not constitute BCRH Properties). Accordingly, the Contributor
shall cause all rights of TRO, the TRO Shareholders and the TRO Shareholders
with respect to such project to be assigned at the Closing to the Partnership.
-33-
12.16 Concord Pike.
(a) In the event the Contributor demonstrates to PREIT's sole
reasonable satisfaction that the Option Agreement dated May 10, 1995, by and
between Al-Zar, Ltd. and BMR Associates, L.P. for Concord Pike (the "Option
Agreement") is extended for at least one (1) year and the Concord Pike Property
is rezoned to permit retail development, the Concord Pike Property shall become
a Pre-Development Property, the rights in respect thereof shall be assigned to
the Partnership, free and clear of all Encumbrances (except that the Option
Agreement will be subject to any Agreement of Sale entered into by the
Contributor pursuant to subparagraph (b) below prior to Closing) and the
Partnership shall reimburse the Contributor for all reasonable out-of-pocket
predevelopment costs and expenses of the Contributor or any TRO Affiliate to the
extent not theretofore reimbursed out of the cash flow of Concord Pike. The
Partnership shall have the right at any time to waive the requirements as to the
extension of the Option Agreement and/or the rezoning and to acquire the
Contributor's interest in Concord Pike as a Pre-Development Property. In the
event the Concord Pike Property does not become a Pre-Development Property, the
Contributor shall be permitted to develop the Concord Pike Property for its own
account so long as the Concord Pike Property is not developed for retail or
multi-family use and the proposed development of the Concord Pike Property does
not violate the terms and conditions of this Agreement, the TRO Contribution
Agreement, or any other agreement executed by PREIT, TRO, any of the TRO
Shareholders or any of the TRO Affiliates in conjunction with the transactions
contemplated in the TRO Contribution Agreement.
(b) Notwithstanding subparagraph (a) above, the Contributor
shall have the right between the date hereof and the Closing to enter into an
agreement to acquire the Concord Pike Property without a rezoning for a purchase
price not to exceed Three Million Dollars ($3,000,000); provided, however, that
any such agreement shall provide that the Contributor has the right to assign
its rights under such purchase agreement to the Partnership. The Contributor
shall provide to the Partnership all materials pertaining to the Concord Pike
Property and its right to acquire same and any agreement the Contributor or any
TRO Affiliate or TRO Shareholder has with any partner or other co-venturer in
respect of such property as the Partnership reasonably requests. The Partnership
shall have thirty (30) days after receipt of all such materials to determine
whether the Concord Pike Property will become a Pre-Development Property. If the
Partnership elects to have the Concord Pike Property become a Pre-Development
Property pursuant to this subparagraph (b), the Contributor will assign its
rights to acquire the property to the Partnership and the Partnership will
acquire the Concord Pike Property from the current owner of the property at the
closing provided for under the agreement of sale with such owner (the
-34-
Contributor shall ensure that any such agreement shall provide that closing
thereunder shall not occur until the later of (x) a date at least 30 days
after receipt by the Partnership of materials as aforesaid or (y) the Closing
Date). Upon the acquisition by the Partnership of the Concord Pike Property,
such property shall thereupon become a Pre-Development Property hereunder.
-35-
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, all as of the date first written above.
TRO PREDEVELOPMENT, LLC
By: /s/ Ronald Rubin
--------------------------
Name:
Title:
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:
-36-