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